Commercial Bank Valuation Models

Due to the need to develop the business of banks, banks will continue to carry out such activities as mergers and recapitalization, in order to better expand the size and profits of commercial banks, an urgent issue was a reasonable assessment of business conditions and the cost of commercial banks. Therefore, among the many methods of assessing the value of the enterprise it is important to determine a suitable and effective method of assessing the value of the enterprise commercial banks, based on the differences between commercial banks and ordinary business operations. Therefore, comparing various methods of enterprise value estimation, in this work one of the most suitable and effective methods of value estimation is chosen, which serves as a guide in choosing the method of enterprise value estimation for the listed commercial banks and promotes the use of this model in the financial system when approving the value of the banking sector. In this paper, the EVA valuation model for measuring the business value of China Merchants Bank is adopted, the specific concept of commercial bank valuation and related factors based on the differences in business liabilities of a commercial bank are explained, the disadvantages of the asset valuation method, market comparison method, discounted cash flow method and option pricing method are pointed out, and four traditional methods of commercial valuation are explained, resulting in the EVA valuation method being excellent. Then, based on the introduction of EVA theory and EVA assumptions, adjustments are made to the relevant accounts involved in valuing the EVA model to establish an effective two-step EVA value measure. Based on the above study, the EVA valuation was conducted using data on China Merchants Bank's operations over the past five years as an empirical study to discuss and examine what factors influence the results and extent of China Merchants Bank's valuation in order to arrive at an effective means of increasing China Merchants Bank's value. The superiority of the EVA valuation model is based on comparison with the results of other valuation models.