A brief research of the state-owned banks in conditions and profit model
1、The current economic conditions faced by state-owned banks
In the june,2015,the chief economist of Bank of Communications Lian Ping made a speech and he believes that now China is suffering the pressure of economic downturn. He thinks there 3 main factors contributing to the condition. First, in the past several years the production has been surplus and there are no evident effect on the structural adjustment of manufacture and industry. Second, the adjustment of real estate in last year is a periodic and structural project. And real estate influence 60 to 70 businesses, which will be stressed on a season economy. Third, the finance of local governments is periodically influenced when they are operating the economy. Apart from what Lian said, economic downturn leads to the increasing rate of bad loans. The interest rate marketization reform leads to shrink the interest margin between deposits and loans. Also the rise of internet finance has been an important factor challenging the banks.
2、The policy of central bank
On October 24, 2015, the People’s Bank of China announced that decrease the financial department’s rate of reserves and rate of deposit and loan. Financial department’s RMB reserve rate would be decreased 0.5%, RMB loan rate would be decrease to 4.35% and RMB deposit rate would be decreased to 1.5%.
According to the analysis of the specialists, the policy will leads the banks give out 600billion to 700billion RMB for real assets. And the policy decreases the interest
margin of banks which shrinks banks’ revenue.
3、what should state-owned do to change the running way and enhance profitability.
a、Government should create a suitable environment for state-owned banks. It should be faster to transform the state-owned joint-stock. A clear equity structure is beneficial to optimize the structure of firms and prove the operation efficiency, which ultimate optimize the profit model.
b、Change the current profit model as the banks’ main income. The state-owned banks should increase the percentage of poundage and commission income and non-interest income by kinds of approaches.
c、Customer-centric marketing. Banks should communicate with customers closely, realizing every customer’s personality, demand and expectation, consumption, and so on. On this basis banks may develop the suitable case for particular customer so expand the industry chains.
d、After the marketization of bank, state-owned commercial banks should consider the markets regular more. The time of fix interest margin has gone. So the state-owned banks should explore the valuable profit growth point. For example, when the loan market is very depressed, the banks can temporarily abandon the deposit market to reduce the profit loss.
e、Finding the core profit source. Although there several universal banks in the world, they didn’t become this in a minute. So banks should develop their core resource and prove the other field development. Take the industrial and
commercial banks for an instance, it is a professional bank providing deposit and loan service for town industrial and commercial enterprise over the history. For the specialization in years, the bank provided most service for industrial and commercial enterprise and individuals between the big 4 state-owned banks. Dealing with most data, this bank first reformed the electronic banking.
f、Apart from what mentioned above, state-owned should pay more attention the risk management. Nowadays there are more and more market risk, operation risk and credit risk, which are more and more complex with the time goes by. The ability to control the risk directly influences the profit of banks. Therefore, the state-owned banks should strictly control the potential risk to reduce loss.
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