Made by: 网媒1501 马琳雯 20151302852
Interpretation
The chart indicates TOP 30 most profitable companies in Fortune 500 around the world in 2017, regardless of industries. Apple ranks in the thefirst place, which are followed by four Chinese State-owned Banks at the first glance. On The Top 50 Companies List, 26 companies are from the US, regarding Pharmacy, Energy, Entertainment and Banking industries etc. In comparison,12 Chinese companies take part in the ranking result, in which two companies are independent of banking industries exclusively. Apart from Russian, Korean and Japanese companies, European countries get involved in terms of some profitable companies that we are familiar with. In respect with industry concentration, banking and technology are most eye-catching.
Explanation
Look insight into 12 Chinese companies, the performance of banking institution is outstanding and there are reasons behind I want to explain. The phenomenon is as below on China’s condition base. Chinese banks dominate the TOP 30 List with a total of six and four among the top five ranks. These are the Industrial and Commercial Bank of China, the China Construction Bank, the Agricultural Bank of China, the Bank of China, the Bank of Communications.
To begin with, banks make loans to individual or corporate clientsand charge interest so as to contribute bank’s profit conventionally.
In the last few years, housing cost is climbing year by year andthis trend keeps going on, which is increasingly related ordinary people’slive. There is no deny that housing estate are solid demand for Chinese peopleand most of us are struggling for a self-owned apartment. In the fear of increasing burden cost and future unaffordability, people ask for loans from bank to own their house in front of their complete affordability. As a result, the amount of outstanding individual loans boost, which are significant source of incomein bank’s annual financial statement. It is in response to the statistic in“2017 individual house loan balance” chart.
The other interpretation is Artificial Intelligence are replacing human labor in daily life. To put it specific, the introduction of Intelligent Counter are eroding the function of a traditional bank counter and some of banking staffs are laid out in the last few years according to the sliding number of involved staff. Take construction and commercial bank of china for example, the shutdown physical branch in some areas and transfer offline service to online system like the promotion ofmobile banks. In a nut shell, banks are benefit from cutting branches to eliminate unnecessary operating expense. What’s more, the layout of staffs helps to save ahuge labor cost like salary and pension.
From financial statement’s perspective, the profit deducted of expense surge.
Review
Some argument is raised that considerable individual loan mightdeteriorate operating environment of banks. Nonperformance loan (NPL) and loanloss reserve(LLS) are two important indicators to judge a bank, in terms of operating risk and the projection of banks’ loss due to non-active loan. Tookglance at NPL ratio, nearly all the banks involved are better-off in 2017 than 2016,which means banks are highly cautious to unqualified loan applicant to crackdown the possibility of bad loans. In addition, banks allocate sufficient reserve in case of default of loan payment. To a certain extent, the action enhances confidence of investors and run a virtuous banking cycle. To conclude, the whole operating environment are less risky.