Study Of Chinese State-owned Commercial Banks' Profitability

Annually released by British magazine "The Banker", the ranking "Top 1000 Banks Worldwide" is considered as the scalar for the worldwide bank industry and banks' comprehensive ability, especially for the largest 1000 banks worldwide.Although all the four state commercial banks of China rank top, both in capital and total assets, they are exceeded by more than 600 competitors in ranking of profit index. Hidden troubles are meanwhile reflected in aspects such as security and efficiency, in studies on Chinese state commercial banks held by foreign consultant companies.Safety, profitability and liquidity are the banks' business aims. Too much focus was however put on historical problems such as non-performing loan rate and the quality of assets, compared with that on profitability, which is the soul of enterprise. Improving the profitability of banks turns out to be the most efficient method of solving the previously mentioned problems. The country provides little funds as non-performing loan with successive financial deficits. In order to digest the non-performing loan, solve the question left over from history, State-run commercial bank should have enough profit. Involved in nowadays fierce market competition, the state-run banks have to constantly strengthen profit ability to stick to the present leading position.Taking a different point of view from those adopted in former researches, this report chooses the profit ability of the state-run commercial bank as visual angel, including weighing financial indexes such as assets earning ratio, rate of returns of capital, income expenses rate, per capita profit etc. This paper combined financial annals of four major state-run commercial banks from 1998 to 2003 to analyze the profit ability, comparing the profit index with the domestic shareholding system commercial bank and worldwide bank ranking the top ten to Investigate the profit level of the state-run commercial bank in an all-round way. This paper probe into the reason of low profitability of state-owned commercial bank environmental factorsand inside management factors, and proposed the way and tactics to improve profitability.The paper defines the profit ability of the bank at first, describe the relevant theory of the profit ability of the bank, and analyze the basement of commercial bank profit ability aim from profit max in economics. The main factors to affect the profit of commercial bank are analyzed through balance sheet and profit sheet.Theoretical method is used to study the current status of state-run commercial bank in our country. This paper conducts empirical analysis on commercial bank's current loan balance, market share, net profit, operation profit before withdrawing bad debt, capital earning ratio and assets earning ratio, evaluates Big Four Commercial bank's profitability and compares the profitability with stock banks and foreign banks through analyzing data. State-owned bank will face the fierce competition from domestic share system banks and foreign banks. Comparing with foreign bank of the top ten and ten domestic stock banks of 2002 in assets, scale of assets, pretax profit, capital profit rate, assets earning ratio, cost and expense and the index of per capita ability to make profit, the disparity between state-run commercial bank and the rivals are announced.The economy factors and system factors for the low ability of China state-owned commercial banks have been analyzed. Because of China being under planned economic system all the time, credit of the bank always effected by the governance, the state-owned commercial banks have displayed an performer of government's policy-related loan all the time, ignore the approval and benefit of the loan. Most creditors of the state-owned commercial bank are the state-owned enterprises, state-run enterprise and state-run commercial bank property right belong to countries together. Just because property rights belong to countries together, causing owner's omission, the phenomenon of insiders controlling is seriously. Low profitability of the state-own...