Research On The Transformation Of A Commercial Bank Profit Model Under Interest Rate Marketization

All the time,in the face of interest rate control,China's commercial banks comply with the expansion of scale oriented business development strategy.In addition,they are committed to the development of the deposit and loan business,expanding the traditional operating mode that large state-owned enterprises,listed companies and intermediary business are in a subordinate position,80%or more of operating income are from interest income.Deposit and loan business bring more lucrative and stable profits for the commercial banks.However,with the deepening reformation of the interest rate marketlization in our country since the beginning of the year 1996,especially fully liberalized lending rates of financial institutions regulation in 2003,the abolition of the deposit interest rate floating ceiling,the interest rate market-oriented reforms is largely completed in 2015.The traditional profit pattern of commercial banks in China to treat cost of carry as the dominant in the past is faced with severe challenges.Direct financing tools are constantly presented in money market and capital market.Intermediary business products are too simple,low-tech and lack of innovation.Pricing mechanism of interest rate is facing challenges and risk management is becoming much more difficult.In fact,interest rate liberalization has forced commercial banks to review its operating strategy and development plans.Facing challenges,it is essential to have a positive attitude and stimulate the transformation of profit-making models.First of all,the essay introduced two economic concepts about interest rate liberalization and profit-making models of commercial banks and pointed out the positive and negative influences of interest rate liberalization.Then it took a branch of state-owned commercial banks(It is short for a A commercial bank")as an example,deeply analyzing its current status and the content and increasing trend of net profit:,the correlation between increase of deposit and loan.What is more,it compares rate of return of loans and the rate of interest payment and describes the composition of operating revenue.By all analysis,the reformation process of A commercial bank in the context of interest rate liberalization,the characteristics of current profit-making models and problems are found.The problems are as follows.the cost of carry income is still the main source of revenue and the growth rate of net profit is prominently decreasing.The improvement of the loans and deposit business does not stimulate the profit-making processes.The development of intermediary business is lagging behind and the support function to profit-making aspect is waiting to be developed.Lastly,the problem-solving solution,the transformation of profit-making models is found.Those techniques include the improving deposit and lending spreads,improving the proportion of intermediary business,reducing operating costs,improving service qualities,strengthen risk control and strengthen precise management.Through transformation of profit-making models,the profit-making capacities and profession competiveness could be improved.