Effect Of Transformation To Retail Banking On Profit Of Commercial Banks

In the past 30 years,great changes have taken place in the global economic environment and information technology develops rapidly.The new external environment and technical means have changed the traditional profit model of commercial banks.In particular,the business model relying on the scale expansion and deposit loan interest margin has made the bank's profit space continuously compressed Banks have upgraded retail banking business to strategic level This paper focuses on the impact of the transformation of China's commercial banks to retail banking on their profitability.First of all,on the basis of literature review at home and abroad,this paper makes a theoretical analysis on the transformation of retail business of commercial banks in China based on SWOT analysis and risk dispersion theory analysis,aiming to show that the transformation of commercial banks to retail business has already had good opportunities and advantages;more importantly,retail business has the characteristics of low volatility and low correlation with corporate business,so retail business has become a hot topic Business transformation can increase the overall income level of commercial banks.Secondly,this paper describes the development and profitability of retail banking in China.In terms of profitability after the transformation of commercial banks to retail business,the interest income of commercial banks has shown an overall growth trend,but the growth rate has dropped in recent years;while the income of intermediate business has been steadily increasing,and the growth rate has dropped to 10%after rapid growth in 2015.After the transformation of retail business,the proportion of income in retail business of commercial banks is gradually increasing,and the proportion of non interest income in total revenue has increased significantly compared with that before 2014.Thirdly,this paper empirically tests the impact of the transformation of commercial banks to retail business on their profitability.This chapter selects the sub operating data of 100 Chinese banks from 2009 to 2018,and the rate of return on total assets is selected as the explanatory variable.The retail business HHI is used to measure the diversification process of retail business,and the net interest margin of retail business is used to measure the deposit and loan business.The empirical results show that the retail net interest margin and retail HHI have a positive impact on the return on total assets,which indicates that the diversification of retail business is helpful to improve the profitability of commercial banks.The subsample test based on the nature and location of banks further shows that compared to the local commercial banks,the retail diversification transformation has brought stronger promotion effect on the profitability for national commercial banks;compared to the central and western regions,the retail diversification transformation has a more significant role in promoting the profitability of commercial banks in the eastern region.Finally,on the basis of the conclusion of the full text,this paper puts forward the corresponding policy suggestions on the retail business transformation of China's commercial banks from the aspects of optimizing the retail business structure,adjusting the assessment strategy,improving the channel efficiency,improving the customer experience,and realizing the customer clustering and stratification.