Chinese Banking Enjoying Overwhelming Profit Shares
Over the next 10 years, Chinese banking will face dramatic changes. It is estimated that the annual profit of Banking Sector will grow by about 10% in China.
Corporate banking's profits share will decline to about half by 2013. Currently, this sector is enjoying an overwhelming share of profit. It is expected that retail banking profits share will increase with time, thereby, reducing the profit share of corporate banks. Three main forces will propel these developments. The first being the strong & largely consumption-driven Gross Domestic Product (GDP) growth that ranges from 7 to 9% in current years.
The second factor is demand for conventional corporate-banking items, mainly loans and deposits will come down. With companies in China centralizing their cash management, the "stocks" of deposits in possession of their provincial operations will be significantly reduced.
Third factor is that in the next 5 to 7 years, it is believed that the government of China will slowly deregulate the interest rates. This will considerably bring down margins on deposits & corporate lending.
Chinese government is thinking that by applying all the above-mentioned parameters to the stock market, the new shareholders and the market will regulate the Banks in China, and that will incorporate the functioning style of "real commercial banks" in them.
The major thing, which account for Chinese Banks growth, is the far-fetched 49% high investment. The overseas banks have further heightened the competitiveness of financial institutions in China. The foreign shareholders participation helps Chinese banks to further improve the risk management and corporate governance.
The foreign banks, at present, are limited by guidelines to foreign currency deposits & loans, mostly to the affluent locals and expatriates.
For further information on China Banking Sector, read the report "China Banking Sector Analysis (2006-2009)" published by RNCOS at: http://www.rncos.com/Report/IM056.htm
RNCOS is an industry leader in the field of online business research. We specialize in industry research on various business verticals. To read our other reports, visit us at: http://www.rncos.com/Report.htm or email us at info@rncos.com
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