Transformation Of China's Commercial Banks Profit Model Under The Interest Rate Market

With the china’s gradual porgress of market-oriented interest rate reform, the traditional profit pattern of Chinese commercial banks, which is based on the interest margin, will be faced with several challenges. Under the circumstance that the macroeconomic policies and global financial environment are constantly changing, commercial banks become aware of the importance of optimizing the profit-making structure. Commercial banks urgently need to develop new intermediate business so that commercial banks could reduce the negative impact from market-oriented interest rate reform implement new profit pattern.This research is based on the analysis of profit pattern of domestic and foreign commercial banks. By investigating the current situation of China’s commercial banks, the author trys to identify the problems of commercial banks’traditional profit pattern and provide the recommendations and solutions by referencing the experience of bank interest rate reform in developed world.In the experimental part, we select financial data of10listed banks from first quarter of2008to the third quarter2013as samples. Firstly, the variables in the regression model are M2, GDP growth, non-performing loans. Then, we use the econometric analysis of panel data to analyze how interest rate changes and how intermediate business income affects the banking operating profit. After that, by comparing the influence of intermediate business income and net interest income between joint-stock banks and state-owned banks, we come to the the conlusion.The conclusions are as follows. Currently China’s commercial banks still rely on interest income while the intermediate business is in low proportion. The tightening interest margin has a critical impact on the four state-owned banks than the joint-stock banks. In the experimental research section, we come to the conclusion that intermediary business income of commercial banks raise better operating profits than the net interest income. And the intermediate business of Joint-stock banks is higher efficiency than the state-owned banks in terms of banking profitability. Therefore, it is inevitable for commercial banks to develop new intermediate business financial product to optimize their profit structure.The recommendation is that Chinese commercial Banks should not only keep focusing on the traditional net interest income but also put more effort on the development of intermediary business. China’s commercial Banks should shift their role from traditional financing intermediary agent to comprehensive financial service provider. Furthermore, the banks should gradually diminish the dependence on net interest income so that they can optimize the profit structure to form a new sustainable profitable pattern.