The Research On China's Commercial Banks' Profit Model Transformation

Commercial Bank's profit model is the comprehensive reflection of both its external institutional environment and internal operating conditions in the field of its balance of payments structure. At the same time, it is also the premise which determines on the bank's profit-ability, market-competitive-ability, and value-creative-ability. As a special industry which dealing with currency and credit, the profitability of a bank not only provides a way for its internal capital accumulation, but also provides a channel for improving its safety and liquidity of assets. Furthermore, bank's profitability also can enhance the confidence of the public, thus maintaining the stability of the whole social credit system.However, with the deepening process of China's market-oriented reform of its interest rate, at present, interest rate controls have been fully liberalized except for the deposit rate, besides, the floating range of interest rate caps on deposit rate continued to expand, and now it is at 1.5 times the benchmark deposit rate. The marketization of interest rate not only expands the independent pricing space of commercial banks significantly, but also makes the level of profitability of banks quietly changed. In recent years, attributed to combined influence of China's economic restructuring, the deepen reform of financial market, the rise of the Internet financial products and other factors, intermediate business has gradually become a powerful weapon for commercial banks to against fierce industry competition, to compete for deposits source, and to adjust the business structure under the background of interest rate marketization. Meanwhile, in the case of narrowed interest spreads of loan and deposit, the income of intermediate business has also become a new profit growth point for commercial banks. Therefore, commercial banks' traditional profit model must be transformed, and in this paper we provide six specific suggestions for transformation on the basis of the combination of theory and empirical analysis of commercial banks' profit model.