Discussion Of Ningbo Bank Valuation Based On The EVA Valuation Model

Over the past decade,China's banking industry has been in a period of rapid development.According to the British "Banker" magazine published in 2015,the world's largest list of large banks,calculated as capital strength,three of the world's top five banks are Chinese banks.China's comprehensive strength of banks increased through restructuring,IPO,importing of strategic investors to expand the overall strength and international visibility.And it also through acquisitions,mergers and other ways to complete the reorganization,then improve the corporate governance structure.In the course of these capital operations,the validity is all based on the validity of the bank value assessment.Because of China's capital market is immature.And we don't have a wide range of value management philosophy yet,it is easy to lead to IPO prices are often much higher than the share price or lead pricing disputes in the foreign shares.Effective bank value assessment methods can help us reduce the uncertainties in capital activities and improve the efficiency of capital activities and the industry as a whole.The financial statements and valuation methods of listed banks are different from those of other companies.In the case where the traditional method of valuation does not apply to our commercial banks,we need to find a value assessment method applicable to our commercial banks to make a reasonable estimate of the value of the bank.Among the enterprise value assessment methods,income approach is popular because of its scientific and preciseness.And economic value added(EVA)method in recent years has gradually applied to the evaluation of various types of enterprises in foreign countries.EVA is a residual income which is net profit after deducting equity and debt costs and it's reflecting the side of the enterprise income.We can calculate the historical EVA,then forecast the future EVA through a reasonable scientific method,finally brought the date into the EVA valuation model to obtain business value.The principle of EVA is based on the creation of value,which allows shareholders and investors to understand the bank's management status,investment value more clearly,understand the intrinsic value of the enterprise,make the management consistent with the shareholders' interests and help the company to effectively organize and develop the business.On the basis of the relevant theoretical research results,this paper holds that the value of commercial banks is inherently fragile,business differences,special capital structure and franchise so that the valuation of commercial banks is different from the general enterprises characteristics.These characteristics include: the business of a variety of special,cash flow is difficult to estimate,difficult assessment of intangible assets,dependence on the macroeconomic environment.Taking into account the specificity of the value of commercial banks,using the method of comparative analysis,case analysis and modeling approaches,this paper try to use EVA theory in commercial value of the assessment and constructs the value evaluation model of commercial banks based on EVA valuation method.Taking Commercial Bank-Bank of Ningbo as an Example for analyzes and evaluates the enterprise value of bank through the EVA value evaluation model.Hoping to through the EVA theory improve the operating conditions of commercial banks and the value creation ability,then provide the advice for investors to invest in China's commercial banks.Through case studies in this paper: The valuation model based on EVA valuation method is more suitable for the application of commercial bank value evaluation.The advantage of comparing traditional valuation methods is that the model takes into account the cost of equity capital,weakens the impact of accounting distortions,focuses on the sustainable development of banks and is conducive to the unity of bank decision-making objectives.And it can correctly assess its own profitability and overall value while helping banks to establish capital cost awareness.Therefore,it can be an effective assessment tool in the enterprise value assessment of commercial bank and have a great practical significance to the development of the valuation of commercial banks in China.This paper is divided into the following sections: In the first part,the background and significance of the intrinsic value evaluation of commercial banks has be briefly summarized,and analyzed the domestic and foreign scholars' research on the status quo of theory,then introduces the content and structure of this paper.In the second part,its analyzes the influencing factors,the characteristics and the characteristics of the commercial banks,and analyzes the current value evaluation methods based on the enterprise value evaluation theory,analyzes the value evaluation methods of traditional commercial banks and their application limitation;In the third part,the EVA valuation model is introduced,and its application to the advantages of commercial banks is described.According to the characteristics of the main business and capital structure of China's commercial banks,then detail analysis of the commercial bank indicators of the accounting adjustment project and adjustment methods to build a valuation model suitable for China's commercial banks;In the fourth part,taking Ningbo Bank as an example to analyze the case,combined with the financial data of Ningbo Bank in the past five years,evaluate its the financial status,then the value evaluation model based on EVA valuation method is applied to the bank value evaluation of Ningbo Bank;In the fifth part,the author analyzes and verifies the results of the evaluation by combining the relevant data,and puts forward some problems that should be paid attention to in the evaluation of commercial banks by EVA valuation method,And in this part of the paper describes the limitations of this study and the place to be improved.