Revenue Structure Of China’s Commercial Banks

With the rapid development of China’s financial markets, the operating environment of the commercial banks is changing quietly. With the ongoing market-oriented interest rate reform, banks are speeding up the pace of optimizing revenue structure. However, operating income and non-interest income, a bright high growth performance of operating income and non-interest income not only failed to give the commercial banks to bring all kinds of praise, but let it fall into the awkward position. Huge revenue of the commercial banks in successive years and the growing number of fee-based services project has attracted a community widely criticism. Especially in the context of accelerated decline in overall profit in the current manufacturing industry and the sharp deterioration in the operating environment for SMEs, commercial banks have become a target for public opinion. So at this time, it is so important to help the public to achieve an objective understanding of the huge revenue and the rapid growth income of the commercial banks.The paper which studies the commercial banks revenue structure, introduced the three major sources of China’s commercial banks operating income, and its structure’s changing description in recent years, pointed out that although in recent years, China’s commercial banks have spared no effort to adjust the income structure, but still could not effectively reduce the reliance on interest income. Shortly thereafter, the article compared the difference between the revenue structure of the domestic and foreign commercial banks, about which, the financial market environment, the differences in asset allocation structure and business strategy are the root causes. After empirical analysis, the article pointed out that profitability and revenue structure of China’s commercial banks should be subject to asset size, the net interest margin, asset allocation and other factors, among which the net interest margin is the key factor. In the last part of the article, it summarizes the study result of the revenue structure of China’s commercial banks, and draws the following conclusions:First, because of our current financial market environment, commercial banks dominate the financial markets, the objective conditions provide a guarantee to help commercial banks made huge income. Although China is ongoing reform of the financial markets, but still could not change the condition in which the commercial banks dominate the traditional in a short period of time, so the current revenue structure of commercial banks will continue to exist in the future for a long time. And it will become increasingly difficult for banks to optimize its revenue structure, especially in the case of regulatory agencies charging behavior to curb commercial bank’s reliance on traditional means of income structure optimization. Third, in terms of China’s commercial banks, the improvement of the proportion of non-interest income in operating income has limited advantage to help improve its profit, the net interest margin still remains the primary factor, in order to better face the financial market reform and the interest rate market, ways to optimize should be adjusted.The innovation of this paper is the combination of comparative analysis and empirical analysis. In the study of revenue structure, we not only understand the sources constitute its trend of China’s commercial banks operating revenue, but also understand the differences between domestic and foreign commercial banks revenue structure as well as the formation of the root causes of the differences; recognize not only the net interest margin is still the primary factors that affect the profitability and revenue structure of China’s commercial banks, but also recognize that commercial banks need to adjust its ways to optimize revenue structure. In short, we have obtain a a more objective understanding of commercial banks’ huge revenue and its structure.