Revaluation Of Commercial Banks Driven By Wealth Management

With the improvement of residents’ financial awareness and the increase in non-deposit financial assets,the market size of Wealth Management(WM)is expanding rapidly.This paper gives the definition of WM,which is commercial banks or securities companies will tailor portfolio and provide consulting services for individual investors according to their needs,financial status and risk preferences under supervision.This paper distinguishes terms related to WM,sorts out the regulations,finds out the market structure and predicts the market size of WM.Compared with Deposit,WM can better promote the development of commercial banks since it can better connect the Credit,Asset Management,Investment Banking and other businesses of commercial banks.After considering the stratification of domestic commercial banks,this paper believes that joint-stock commercial banks are more suitable for the transformation to the management model which takes the WM business as the core.By analyzing the income source of the WM business of commercial banks,based on Divide Discount Model,this paper establishes a valuation model for commercial banks which takes the WM business as the core,and takes China Merchants Bank(CMB)as the case.This paper firstly analyzes the operating conditions of CMB from 2016 to 2020.After comprehensively considering the future economic development,the market size of WM and the business strategy of CMB,this paper uses the model to value CMB.This paper finds that the performance of CMB can be improved in many ways based on the management model which takes the WM business as the core.As the result,CMB was valued at RMB 54.67 per share on December 31,2020,which was higher than the closing price of RMB 42.70 on that day.Finally,this paper proposes the transformation strategy of commercial banks.This paper establishes a valuation model for commercial banks which takes the WM business as the core,which has made a certain contribution to the development of commercial bank and improvement of valuation system for commercial banks.