Profitability Study Of YC Bank

With the opening of the domestic financial market and the market-oriented reform of financial policies,the traditional income channel is narrowing,and domestic commercial banks not only face the competition from domestic urban commercial banks,Internet finance and non-financial institutions to capture the traditional financial market,but also have to participate in the full competition of international financial institutions in the same industry.In such a context,it is difficult to continue to maintain the traditional development path of economic benefits through scale expansion,and most of the traditional commercial banks’ profitability comes from the spread income,which is declining year by year.Profitability model is an inevitable choice for commercial banks.YC Bank was classified as a large state-owned commercial bank in 2019.Compared with the other five large state-owned commercial banks,it is a meaningful research topic to ensure its long-term and stable development in the midst of fierce competition.Based on the theory of economies of scale and information asymmetry,the paper selects YC Bank as a case study and uses literature analysis,case study method,Du Pont analysis,and serial substitution method to analyze the profitability of YC Bank by combining the financial related data from 2017 to 2021.Then,the author analyzes the factors of its profitability and finds that net interest income rate,net fee and commission income rate,other non-interest income rate,and operating expense rate are the most important influencing factors,so as to analyze the above key factors and finds that YC Bank has unreasonable income structure,substantial and unreasonable increase of management expense,and lack of credit risk prevention.Then,based on the theory of economy of scale and information asymmetry theory,the reasons for the problems of YC Bank: the decline of the main interest business income and the lack of competitiveness of the income from the expansion business;the substantial and unreasonable increase of savings agency fees and staff costs;the inadequate pre-lending investigation work and the inadequate post-lending management.The following countermeasures are proposed to address the causes of the above problems: developing traditional intermediate business market and new intermediate business market,combining new Internet marketing methods to promote and strengthen intermediate business products,carrying out refined cost management,strengthening internal management of personnel,strengthening post-loan identification and investigation work,and strengthening post-loan management.By studying the profitability of YC Bank,this paper aims to map out an appropriate development path for YC Bank,which is meaningful for other commercial banks to cope with the competitive environment,improve their profitability and realize the expansion of their competitive advantages.