A Research On The Profit Model Of China’s Commercial Banks

The business environment of China’s commercial banks is changing. Firstly, the financial reform continues to advance. Secondly, financial innovation has been deepened. In addition, competition from other banks or other nonbanking financial institutions increases. All above makes commercial banks’ business in trouble. How to get out of these diffBculties and occupy a place in the financial market? This may be a major problem what every commercial bank must think about. Only when commercial banks fully understand the current situation, grasp the development trend and adjust business strategy and profit model according to their customer’s needs, will commercial banks better cope with new challenges.How does China’s commercial bank to set the profit model? This paper reviews theoretical basis of the commercial bank management and analyzes the modern commercial bank’s profit model and profit measure method. According to the source and structure of commercial banks, this paper divides the evolution of the profit model of Commercial Bank of our country into four different stages. In addition, this paper compares the business of China’s large state-owned commercial banks and joint-stock commercial banks. At the same time, through the external factors and internal factors of the comprehensive analysis, this article comes to the conclusion that the profit model of China’s commercial banks need to transform. This paper select of 14 listed banks’ data as empirical samples from 2007 to 2015. Through empirical analysis of how commercial banks’ net interest income and intermediate business income influence their return on asset.The main conclusions are as follow:1. Given the comparison of two different banks, China’s state-owned commercial banks operating efficiency is lower. And if the state-owned commercial banks can not timely change their profit model, they will face more and more pressure to survive in future.2. Net interest income and intermediate business net income both have a significant positive contribution on total asset return rate, but the latter reflects a higher influence. Commercial banks should pay more attention to the development of the intermediate business and diverse business.3. The commercial banks also need to take notice of corresponding risk prevention and control measures. These measures will guarantee the profitability of commercial banks in the long run.Finally, given the conclusions above, this paper proposes suggestions adapted to the commercial banks’ profit model innovation, and offer some references for China commercial banks’ profit strategy and the profit pattern.