Interpretation of intermediate business terms

Intermediary business refers to the bank's handling of receipts and payments and other entrusted matters on behalf of customers without changing customers' claims on deposits, such as paying wages, buying goods and collecting telephone charges.

Intermediate business is also called off-balance sheet business. The intermediary business of commercial banks mainly includes local and foreign currency settlement, bank card, letter of credit, standby letter of credit, bill guarantee, loan commitment, derivative financial instruments, agency business and consulting business. In foreign countries, the intermediary business of commercial banks has developed quite maturely. The intermediary business income of commercial banks in the United States, Japan and Britain accounts for about 40% of the total income, while the off-balance-sheet business scale of commercial banks in China accounts for more than 15% of their total assets.

Generalized intermediary business is equivalent to generalized off-balance-sheet business, which can be divided into two categories, narrow financial service business and narrow off-balance-sheet business. In our daily work, the intermediate business is the generalized intermediate business stipulated by the People's Bank of China, while the off-balance sheet business refers to the narrow off-balance sheet business reflected from the perspective of accounting standards. Therefore, according to the traditional business and development of commercial banks, the business of commercial banks can be roughly divided into three categories: asset business, liability business and intermediary business, or can be divided into four categories: asset business, liability business, intermediary business and off-balance sheet business.

Intermediary business covers a wide range, including settlement, agency, guarantee, trust, leasing, financing, information consultation, derivative financial instrument trading and so on. Therefore, there are different standards for the classification of intermediate business.

The role of intermediary business:

Compared with the on-balance-sheet assets business of commercial banks, the intermediary business of commercial banks has the following functions.

First, it does not directly constitute the on-balance-sheet assets or liabilities of commercial banks, and the risk is small, which provides tools and means for the risk management of commercial banks. Commercial banks do not directly participate as creditors or debtors when handling intermediary business, and do not directly constitute on-balance-sheet assets or liabilities of commercial banks. Although some businesses will generate contingent assets or liabilities, compared with the on-balance-sheet businesses, the risks are relatively small, which changes the asset-liability structure of commercial banks. In the intermediary business of commercial banks, the risk of financial derivative business is relatively large. However, there are some risks in this part of the business, which also provides tools and means for commercial banks to manage their own risks, and improves their asset and liability management capabilities and risk prevention means.

Secondly, it provides a low-cost and stable source of income for commercial banks. Because commercial banks usually do not use or directly use their own funds when handling intermediary business, the operating costs of commercial banks are greatly reduced. Intermediary business income is non-interest income, which is not affected by changes in deposit interest rates and loan interest rates. Because of the small credit risk and market risk, the intermediary business generally will not suffer the loss of customer default, even if it does, the impact is not great. In this way, intermediary business can bring low-cost and stable income sources to commercial banks, which is conducive to improving the competitiveness of commercial banks and promoting their steady development. Intermediary business income has become the main part of the operating income of western international commercial banks, accounting for 40% to 60%, and some banks even reach more than 70%.