Research On Performance Evaluation Of Small And Medium-sized Banks Based On Fund Transfer Pricing

In November 2015,Premier Li Keqiang chaired an executive meeting of the State Council,which decided to deepen interest rate market reform and urge financial institutions to improve internal control.With the acceleration of interest rate marketization,competition in the financial market has intensified,the narrowing of deposit and loan spreads within commercial banks and the decline in profitability have become normal.The traditional balance fund management model of my country’s commercial banks cannot accurately calculate the source of profits,and performance evaluation is unscientific.In order to cope with these impacts and improve core competitiveness,small and medium-sized banks in my country have borrowed the advanced experience of domestic and foreign commercial banks and began to introduce the fund transfer pricing(Funds Transfer Pricing,FTP)fund management model to evaluate the performance of commercial banks.In this paper,the research on K branch of Z Bank mainly adopts the method of combining comparative analysis method,interview method and case analysis.Through profit analysis of all dimensions of its products,customers,lines,and organizations,it shows that FTP-based performance evaluation can clearly calculate the profit contribution deducting the cost of capital,so that the performance evaluation is more fair.At the same time,there are many shortcomings in the FTP-based performance assessment.Through interviews with leaders and employees at all levels of the Z Bank K branch,the author summarizes the following questions: FTP-related indicators and weights in the assessment are unscientific,and the FTP-based assessment model The singleness and lack of effective communication and feedback in the assessment led to a low level of recognition in FTP performance assessment and inadequate use of FTP-related assessment results.In response to the above problems,the author has proposed a number of corresponding optimizations by reading a lot of literature,consulting experts,and drawing on the advanced experience of the same industry: increasing economic profit indicators instead of FTP net profits,adjusting the weight of mid-income indicators;setting FTP-related indicators for evaluation in urban areas Counties,towns,townships,and branches,as well as various departments of the government;apply the FTP assessment results to the optimization of resource allocation and cost allocation,give full play to the effects of FTP-based performance assessment,and maximize the overall benefit of the branch.Based on the above research,the following enlightenment is drawn: FTP can clearly calculate the profit source of all dimensions and fair performance;differentiated assessment of FTP-based performance can mobilize employees’ work enthusiasm and improve work efficiency;strengthen communication and feedback can improve employees’ Recognition of FTP performance assessment;FTP-based performance assessment can optimize resource and cost allocation.The research in this paper is helpful to clarify the mechanism of FTP in performance evaluation,and it is also conducive to the overall performance evaluation of the K branch of Bank Z.It also has a certain reference significance for small and medium-sized banks that have not yet implemented FTP performance evaluation in my country.