Abc Bank To Improve The Profitability Of Housing Mortgage Loans Explore

Chinese economy has achieved great success in the past 30 years due to the reform and opening policy. The Chinese bank transformed its function from a government unit to taking full responsibility for its own profits and losses. The large sized bank, whose main target is to maximize the shareholder's value, takes fierce competition with its rivals in various banking sections. While the small and median sized bank, restricted by capital inadequacy, human resource shortage and poor management, can not compete with large bank in the corporate banking field, but only has to operate as a supplementary unit in the private banking section. With the reform and development in the Chinese real estate and financial industry in recent years, the private housing mortgage loan (briefed as mortgage loan in the following content) has become a major product in commercial bank's loan portfolio. This kind of loan accounts for 70% to 80% in the bank's private loan package, and holds around 10% in the bank's whole loan asset. With the public growing demand for improving their housing quality, the mortgage loan standing ratio is expected to experience a sound expansion in the future, and its position and the profit contribution ability will present a significant and impressive performance.As a good-quality earning asset, the mortgage loan is the most desired business in the commercial bank, but unfortunately, this business volume occupied only a very tiny portion, less than 5%, in the commercial bank's total loan asset, and its return is poor as well, which is contradicting to the small and median sized bank's strategy-transformation policy. This thesis analyzed the private housing loan performance in a median sized bank in the city of Chongqing, and took deep examination in this loan profitability issue in five chapters. The first chapter introduced the research purpose of this paper and presented some academic background knowledge. The second chapter focused on analyzing the whole credit market in the city of Chongqing and the target bank's management condition. Through comparison, this thesis revealed and stated the substantial problems embodied in the bank's internal management system, covering the valuation policy, the market research, the innovation ability and the marketing skill. The third and fourth part of this thesis mainly examined the above existing problems, and suggested some measures to improve the profitability, these include:1. reforming management mechanism, reengineering and construct the process bank,2. strengthening the market research to capture market share,3. paying more attention on the product research and development work, and introducing standardized private housing loan product. After that, this paper stated some feasible measures to enhance the bank's profitability:1. improving the loan pricing management skill and efficiency,2. reengineering the fund transfer pricing system to assess the business performance more scientifically,3. strengthening the loan cost control to create adequate space to market competition. Finally, the fifth part of this paper extended the discussion on the following issues including interest risk management, IT support, performance evaluation, liquidity management.Through the comprehensive analysis on the mortgage loan profitability in the ABC bank, we clearly recognized the underlying causes that lead to the lower market share and poor accounting performance in the bank. The author to the conclusion that the small and median sized bank should make its decision to modify its management system constantly to increase its market share and mortgage interest income, only this way can lead the bank to realize the business strategy switch successfully.