Study Of Commercial Banks EVA Management And Performance Assessment

Economic value added has long-term history and profound theoretical basis, which is put forward first by the U.S. Sitengsite company, but it is a breakthrough in recent years, which is as a set of advanced management tools that are widely used in the field of enterprise management. Economic value added is equal to the enterprise net profit minus the opportunity cost of the investment capital in the enterprise, and the results show the value that the enterprises create for shareholders during a certain period of time.Firstly, we contrastive analysis economic value added and accounting profit, with the concept about cost of capital and the concept of opportunity cost, and then we point out the indicator which has the salient features such as the cost of comprehensive coverage, in line with maximizing shareholder value, a long-term and clear, etc. Then we creative use Marxist philosophy point of view for connotation speculative and digging the "economic value added", and then with understanding and grasping its essence, we have the four levels of judgment about systematic, balanced persistence and global of economic value added. Secondly, we come from a practical point of view of the bank’s business, and have the important conclusion that economic value added is the best indicator that measure to maximize the value, as economic value added has validity, advanced and systemic. There is a reasonable and necessary about the introduction of economic value added along with bank in its operation and management, performance evaluation and incentive and restraint system construction. On this basis, we build the basic idea of the economic value added assessment system from the establishment of the EVA performance evaluation, EVA incentive system, and the EVA management system. According to the different characteristics of the corporate, we adjust to accounting profit and calculate the economic value added. In order to induce managers as owners as concerned with the improvement of corporate performance, we establish an effective incentive mechanism that paid to managers the EVA growth of a fixed proportion of the amount as bonuses. Because EVA is a financial concept throughout the bank to operate the whole process, we structure EVA management system, which’s aim to put the bank’s business objectives focus to value creation. Combined with the actual development of the banking reform, we discuss the limitations of the assessment of the economic value added, that has the insufficient in considering the long-term value creation, lack of resources and the potential to consider not easily monetized measured, and the lack of consideration of capital gains. In order to make up for its shortcomings, we consider increasing the assessment of non-financial indicators, and the introduction of the Balanced Scorecard performance for the measurement and performance evaluation which EVA accounted for the major proportion with customers, processes, employees learning and growing as an important supplement. Finally, we propose the main way to improve the economic value added from five aspects:to establish the concept of maximizing the value, to establish economic added value as the core performance evaluation mechanism, to strengthen economic capital budget management, to reflect the risks and benefits to match assets and portfolio strategy, to supernormal develop intermediary business that reflecting revenue streams diversified, to improve asset quality that reflecting the risk control to create value, and to implement a comprehensive cost management that reflecting the financial management to create value.