Intermediary Business Report of China Banking Industry, 2007-2008
  • Feb/2008
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With the continuous buildup in the revenue proportion of the intermediary business to bank's total, developing the intermediary business has become the priority of the banking industry. At present, the ratio of non-interest revenue to the bank's total in major countries is all around 20% and that of some individual banks is even as high as 70%. So the non-interest revenue has become an extremely important factor in deciding the total revenue of a bank. Our research shows that the average ratio of non-interest revenue to the total of a bank in the United States of America and Canada is 45%, that in European countries is 44% and that in Australia is 28%. The more developed a country's economy is, the higher the ratio of non-interest revenue will be in the country. 

In China, every listed bank had a big growth in business performance in the fist half of 2007. The rapid growth in the revenue of the intermediary business has become another reason for the surge in profit of a bank, in addition to the conventional interest revenue.

Take service charge and commission, the most typical revenue in the intermediary business, for instance, in the first half of 2007, the combined income from service charge and commission of the Bank of Communications reached RMB3.63 billion, 2.24 times the figure in the same period of 2006, that of the China Merchants Bank stood at RMB3.01 billion, 2.28 times the figure in the first half of 2006 and that of the China Citic Bank arrived at RMB715 million, up 77% year on year.

According to statistics, half of the intermediary business revenue of the listed banks was related to fund commission service in the first half of 2007. The unusual surge in service charge and commission has led to a big rise in ratio of the intermediary business revenue to the total. At present, the China Merchants Bank's proportion of the intermediary business revenue to the total in all banks in China is the highest, reaching 16%, 1.7 percentage points higher against the end of 2006, followed by 11.34% from the Bank of Communications, 9.0% from China Citic Bank, 9.0% from Shenzhen Development Bank, and 6.5% from Industrial Bank. All of them had a growth more or less.

The unusual surge of the handling charge and the commission leads to a big increase of the intermediary business revenue ratio. Currently, China Merchants Bank gets the highest intermediary business ratio for 16%, 1.7 percentage points higher than the end of the first half of year. The second one is Bank of Communications with the ratio of 11.34%, CITIC Industrial Bank 9.09%, Shenzhen Development Bank 9% and Industrial Bank 6.5%. All of them got an increase more or less.

Intermediary Business Revenue of China Banking Industry, 2000-2006


Note: The chart only provide you with data from China's top five banks, namely the Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank and Bank of Communications. The top five banks' combined revenue of intermediary business amounted to 91.3% of China's top 12 banks' total at the end of 2006.

Growth Differentiation of Interest Income and Service Charge Revenue of China's Commercial Banks, 2006


 Although the intermediary business in China has develops very fast in recent years, there still exists a big gap between China and developed countries no matter in the quantity or in the quality. On the one hand, the proportion of intermediary business revenue to the total in most of the commercial banks in China is about 10%, much lower than the U.S. and Europe, and even compared to Asian countries like Japan and Singapore, the proportion is still lower. On the other hand, the varieties of intermediary business in China's commercial banks are very limited, focused only on the conventional products, like settlement, agiotage, bill payment service, credit card, letter of credit and bill of draft and so on, and the high-tech and high value-added intermediary business regarding the consulting service, investment and financing and derivative trading is much needed.

Therefore, to accelerate the development of intermediary business has become a crucial issue to China's banking industry. We should promote the establishment of automatic clearing system in the same city to automatize accounts process and we should also make more efforts to develop private banking business and asset securitization so as to lay a solid foundation for future development.

1 Overview of Intermediary Business
1.1 Definition
1.2 Classification
1.2.1 Payment & settlement business
1.2.2 Bank card business
1.2.3 Commission service business
1.2.4 Guarantee business
1.2.5 Pledge business
1.2.6 Swap business
1.2.7 Fund custodian business
1.2.8 Consulting business

2 Status Quo of Intermediary Business of China Banking Industry
2.1 Development of intermediary business
2.2 Analysis of development characteristics
2.2.1 Mode of spread earnings
2.2.2 Notable increase of bank's asset quality
2.2.3 To exert unique advantages according to local conditions
2.2.4 To establish good relationship between banks and clients
2.3 Problems China faces in the development of intermediary business
2.4 Proposals on China's development of intermediary business

3 Development of Intermediary Business of Foreign Banks 
3.1 Characteristics
3.2 Intermediary business of American banks
3.3 Intermediary business of Japanese banks
3.4 Intermediary business of Indian banks
3.5 Intermediary business of European banks
3.6 Intermediary business development of Chinese and foreign banks
3.6.1 Business scope and its varieties
3.6.2 Intermediary business revenues of Chinese and foreign banks
3.6.3 Technology and service 

4 Analysis of Intermediary Business of Key Chinese Banks
4.1 Intermediary business development of Bank of China
4.1.1 Bank Profile 
4.1.2 Analysis of its intermediary business development
4.2 Intermediary business development of Agricultural Bank of China
4.2.1 Bank Profile 
4.2.2 Analysis of its intermediary business development
4.3 Intermediary business development of Industrial and Commercial Bank of China
4.3.1 Bank Profile 
4.3.2 Analysis of its intermediary business development
4.4 Intermediary business development of China Construction Bank
4.4.1 Bank Profile 
4.4.2 Analysis of its intermediary business development
4.5 Intermediary business development of Bank of Communications
4.5.1 Bank Profile 
4.5.2 Analysis of its intermediary business development
4.6 Intermediary business development of China Merchants Bank
4.6.1 Bank Profile 
4.6.2 Analysis of its intermediary business development
4.7 Intermediary business development of China Minsheng Bank
4.7.1 Bank Profile 
4.7.2 Analysis of its intermediary business development
4.8 Intermediary business development of Industrial Bank 
4.8.1 Bank Profile 
4.8.2 Analysis of its intermediary business development
4.9 Intermediary business development of China Citic Bank 
4.9.1 Bank Profile 
4.9.2 Analysis of its intermediary business development
4.10 Intermediary business development of Hua Xia Bank
4.10.1 Bank Profile 
4.10.2 Analysis of its intermediary business development

5 Trend of Intermediary Business Development of China Banking Industry
5.1 Development opportunities
5.2 Trend of all-round development
Intermediary Business Revenue of China Banking Industry, 2000-2006
Analysis of Profit of Key Commercial Banks, 2002-2006
Proportions of Intermediary Business Revenue and Interest Income of Key Commercial Banks, 2003-2006
Growth Differentiation of Interest Income and Service Charge Revenue of China's Commercial Banks, 2006
Composition of Non-interest Revenue of the U.S. Commercial Banks
Revenue Sources of Japanese Banking Industry, 2000-2006
Revenue Structure and Economic Growth of Japanese Banking Industry
Proportion of Non-interest Revenue of Indian Commercial Banks 
Proportion of Non-interest Revenue of Bank of China, 2003-2006
Proportions of Non-interest Revenue Breakdown of Bank of China, 2003-2006
Insurance Agent Service and Handling Charge Income of Agricultural Bank of China 
Number of Golden Grain Card and Its Transactions of Agricultural Bank of China
Revenue of Service Charge and Commission of China Construction Bank
Net Interest Income from Corporate Clients of China Construction Bank
20071H Revenue of Net Service Charge of China Construction Bank
Growth of Net Service Charge & Commission of China Construction Bank in 20071H
20071H Revenue of Service Charge & Commission of Bank of Communications
Changes of Spread Level of China Minsheng Bank in the Recent Years
Pledge Business Development of Industrial Bank
Proportion of Non-interest Revenue of Hua Xia Bank
Structure of Net Non-interest Revenue of Hua Xia Bank
Changing Trend of Revenue Sources of China's Banking Industry in Coming 5 Years
20071H Revenue of Bank Card Business of China's Banking Industry
Development of Financial Derivatives of China's Commercial Banks
Total Market Value and Growth Rates of Trust Funds from China's Commercial Banks in 2007
20071H Revenue of Trust & Custody Business of Bank of China
20071H Revenue of Wealth Management Business of Bank of China
2007 Revenues of Service Charge from China's Commercial Banks
2007 Proportions of Service Charge to Operating Revenues from China's Commercial Banks
Classification of Intermediary Business by Degree of Risk 
Proportions of Non-interest Income of Commercial Banks in Major Countries
Revenue of Commercial Banks in U.S.A. in 2006
Changes of Revenue Structure of Commercial Banks in U.S.A. in 1980-2006
Proportion of Non-interest Revenue of Bank of America in 2001-2006
Partial Financial Data of Indian Banking Industry in 2006
Proportions of Intermediary Business Revenue of Large Banks in Asian-Pacific Region
Business Scope of Commercial Banks in China and Developed Countries
Number of Foreign-invested Banks in China
Proportions of Non-interest Revenue of Various Commercial Banks in China, EU and U.S.
Classification of Revenue Sources of Banking Industry in Key Countries and Regions in 2005
2006 Revenue of Non-interest Revenue of ICBC
2006 Composition of Net Service Charge & Commission of ICBC
2006 Other Non-interest Revenue of ICBC
20071H Composition of Non-interest Revenue of ICBC
20071H Composition of Service Charge & Commission of ICBC
20071H Other Non-interest Revenue of ICBC
Revenue of Service Charge & Commission of China Minsheng Bank in 2005-2006
20071H Revenue of Service Charge & Commission of China Minsheng Bank 
2006 Revenue of Service Charge & Commission of Industrial Bank
Development of Trust Business of Industrial Bank in 2006
20071H Revenue of Service Charge & Commission of Industrial Bank
2006 Revenue of Service Charge & Commission of Hua Xia Bank

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