Study On Loan Pricing Based On Customer Profitability Analysis

The research about loan pricing is not a new topic, different angles may lead to different solutions. This paper studies loan pricing , which attempts to solve following three problems.Firstly, what type of background do we study loan pricing in? On the one hand, our country has joined WTO since the end of 2006, foreign capital banks started to be allowed to manage the Renminbi service; Three state-owned commercial banks succeed in changing the system for the joint stock system commercial bank, which gives state-owned commercial bank a new development; At the same time, the domestic other joint stock system commercial banks establish branchs all over the country. A competitive loan market has already been formed in our country. On the other hand, with development of the marketization of interest rate, there is no limitation on loan interest rate ceilings of financial institution by the people's bank of china. So, the commercial bank can decide the loan pricing by themselves. Therefore, this paper under the condition of interest rate marketization, studies the commercial bank loan pricing in the competitive loan market .Secondly, how to establish an appropriate loan pricing model under the above background?Foreign traditional loan pricing models include cost-plus Loan pricing, bench mark added made, custom profitability analysis. The paper introduces and compares these three kinds of pricing models. Then the paper points out that we should establish custom profitability analysis under the condition of interest rate marketization.Finaly, which factors affect the loan pricing if we establish custom profitability analysis? The commercial bank obtains the income from the customer , which includes the loans interest, the deposit compensated interest as well as middle services to receive. But the commercial bank has to pay to costs when providing these services , such as fund cost, cost of operation, risk premium. Moreover, the commercial bank should get the goal profit .In short , there are three aspects that affect loan pricingAll in all, this paper under the condition of interest rate marketization, establishs custom profitability analysis. The paper pays much attention on the factors affecting loan pricing .this all has the certain instructly significance regarding our country current loan pricing in the theory and the practice.The first part in this paper introduces marketization of interest rate and competitive loan market, the author want to emphasize they are intrinsic request and inevitably request when we establish customer profitability analysis.The second part is commercial bank loan pricing basic theory and our country commercial bank loan pricing analysis.The third part is the center of this paper. To begin with, the author establishs custom profitability analysis. Then the author spend the massive lengths to introduce how to measure four kinds of economical capital cost: surveying the fund cost with internal fund transfer pricing, using activity-based costing operation system to determine the operational cost of bank, using KMV model to estimate risk premium, forecasting the bank goal profit margin according to The New Basle Capital Accord. Finally the author constructs a simulation case to make a feasibility study of the loan pricing model.It is not doubt that the loan pricing model in the paper can produce the fine loan price, but it is extremely complex in calculation of the loan cost, particularly activity-based cost in the commercial bank. what satisfied us is that most domestic commercial banks start to take the cost management, with the aid of to the computer technology, we will have possibility to establish custom profitability analysis in the future.