See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/312032971

The Role of corporate banking profitability in the portfolio of banking services

Article · May 2016

CITATIONS READS
0 2,168

4 authors, including:

Habibollah Danai
Payame Noor University
27 PUBLICATIONS   19 CITATIONS   

SEE PROFILE

Some of the authors of this publication are also working on these related projects:

Review How to Increase Iran's Carpet Exports Abroad View project

All content following this page was uploaded by Mohammad Heydari on 13 September 2017.

The user has requested enhancement of the downloaded file.

Special Issue INTERNATIONAL JOURNAL OF HUMANITIES AND
May 2016 CULTURAL STUDIES ISSN 2356-5926

The Role of corporate banking profitability in the portfolio of banking services

Maryam Abbasi
Master of Business Administration in International Business student orientation, Payame
Noor University, Unit of Rey, Iran

Golsan Ahsani
Master of Information Technology in knowledge management student orientation, Payame
Noor University, Unit of Tehran West, Iran

Mohammad Heydari
"Corresponding Author", Master of Business Administration in International Business
student orientation, Payame Noor University, International Center of Assaluyeh, Iran

Habibollah Danai
PhD in Business Administration and Professor, Payame Noor University, Tehran, Iran

Abstract

The main objective of this study was to evaluate the profitability of corporate banking is in the
basket of banking services. Since the issue is the interpretation of analytical and statistical tests
are commonly taken by a thematic analysis; Therefore, to determine the exact purpose of this
study to define the parameters that lead to profitability in the corporate banking and then bring it
to highlight. Target entities, are legal persons. In this paper, the concept of corporate banking,
the parameters that the profitability of the sector and its deployment in the world's banking
industry are examined. The results of this study show flexibility in applying the tools available to
banks to interact with customers in the field of corporate banking, designed to fit service's
business and deep understanding of their activities, increasing the speed, various banking
services, understand the managers and the related employees of organizations with banking
services with a promotional approach (not training) customers become trusted advisor's banks
not only in banking but also in other financial areas such as proposals to create value for
customers to the banking company.

Keywords: comprehensive banking, corporate banking, value creation, profitability.

http://www.ijhcs.com/index.php/ijhcs/index Page 247

Special Issue INTERNATIONAL JOURNAL OF HUMANITIES AND
May 2016 CULTURAL STUDIES ISSN 2356-5926

1. Introduction

Developments in the banking business environment, moving towards a different approach with
customers by bankers during the past few years has made it referred to as comprehensive
banking. Based on the framework of across-the-board banking, customers are segmented in
various fields of corporate banking is an important part of it. (KPMG 2012).

Today, after several years of corporate banking experience first, not bank on the way banking is
not working or is not thinking about it. Yet for many bankers are not afraid of correct definition
of corporate banking, and to draw common thinking, corporate banking product introduced, so
the first and most important step is to provide comprehensive views and definitions in this area
can deploy and culture building effective. The aim of this paper is to briefly explain part of this
new concept of banking profitability in the portfolio of banking services deal.

According to popular perception, corporate banking with banking and financial products and
services. This means that corporate banking is trying to first, all products and services for
businesses of banking and financial services), insurance, leasing, credit, investments, currency
exchange and ... (integrate and manage. Second, corporate banking opens your look long
customers want products and services they provide throughout the life cycle of a firm, which
previously was noticed only in the growth stage companies. (Mistrulli PE, 2011).

Third, the banking and corporate banking products and financial services gave depth. The depth
of the resulting close connection with bank customers can also sample products and services;
unique solutions provide enterprise customers. Solution's unit includes measures such as need’s
assessments, creation of customized packages of products and services, advising on all long-term
use of products and services and ultimately provides feedback for continuous improvement.
(Schena C., 2012).

The basic definition is corporate banking, the corporate banking strategy. The main opportunities
recognize the strategic nature and concentration of resources for the realization of their potential
benefits. A successful strategy should target appropriate and proportionate to the environmental
conditions, internal resources to obtain the opportunities and turn them into opportunities for
consistent action. Corporate banking strategy in the first step by dividing customers into groups
with the highest value creation opportunity, begins. What is certain is that more than any other
part of the Bank's corporate banking - because of the size of the portfolio under management - to
increase the bank's health effects. Thus, the strength of the sector and the strategies, structure and
methods of creative, competitive and efficient in this area, banks can improve their health
indicators and enhanced value for all stakeholders hope. (Riding, A., 2007)

http://www.ijhcs.com/index.php/ijhcs/index Page 248

Special Issue INTERNATIONAL JOURNAL OF HUMANITIES AND
May 2016 CULTURAL STUDIES ISSN 2356-5926

• Featured Clients
• Legal Clients

Business Corporate
Banking Banking

Retail Private
Banking Banking
• Ordinary
customers
• Real customers

Figure (1): From the book Private Banking, Mostafa Ismail Nia

2. Theory and literature

2.1 literature:

One of the accepted methods of banking in all the world's banks, corporate banking (Corporate
Banking) is. Corporate banking drive all parts of the bank.
Perhaps one of the most attractive segments of corporate banking financial services in terms of
profitability ... "This sentence is the introduction of the Global 2012 accredited company
(McKinsey & Co) entitled" Review of corporate banking - Find new routes, "it begins.
Corporate banking is a complex and systematic business model and strategy whose aim is
macroeconomic and corporate customers' needs all the banking needs of customers are very
different from other sectors to take advantage of the structure; models and processes are quite
different from the past, the answer. (Http // corporatebanking.persianblog.ir)

It provides banking services to companies that go beyond small businesses and a greater volume
of resources to engage in economic activity. These companies are also a range of companies from
small and medium enterprises (SMEs1) to multinational companies to include. The services
include risk management, liquidity management, funding a variety of facilities and services,
financing through capital markets, foreign exchange services, Business services, project
financing, receivables management services business, insurance and so on a. Note that the service
offered to large companies is much more complicated, more sensitive, more diverse and more of
the service that are offered to small businesses...

1
small and medium-sized enterprises

http://www.ijhcs.com/index.php/ijhcs/index Page 249

Special Issue INTERNATIONAL JOURNAL OF HUMANITIES AND
May 2016 CULTURAL STUDIES ISSN 2356-5926

Note the company in different sizes has different needs, some banks, this sector is also divided
into smaller groups that generally referred to corporate banking. Corporate Banking
comprehensive effort to focus on the needs of corporate customers and create solutions tailored to
meet the banking and financial efficiently and accurately to them. Corporate banking business as
a basic need in today's world, on the one hand, to the financing of the different sectors of the
global financial markets for its customers pay, on the other hand, a variety of banking services to
help facilitate and accelerate commercial transactions around the world provides its customers
value chain. The world's top banks offer corporate banking services normally funded by the 6
main advantage of services and products, operations, human resources, technologies, marketing
and customer relations, by adopting appropriate strategies and structures to provide the best
banking and financial solutions to corporate customers, and the markets that companies exploit
the advantages of the main actors are considered and consequently, the profit obtained from the
Services in companies. (Zecchini, S., 2009).

Manage and develop business relationships with customers in order to increase profitability and
improve the overall quality of their credit. Interact with customers and improve the overall
quality of their credit portfolio management with the aim of increasing the profitability of the
unit. (Khalil Lu, 4102).

Leading banks are trying to focus on a new approach to providing services to their own
customers (companies) more differentiation and value to bring to fruition. The atmosphere in the
banking system of Iran has always stressed to attracted fresh customers, but in the highly
competitive and the importance of the contribution of the customer rather than market share,
retention and loyalty of our customers, especially corporate clients and private profit is the
primary priority. 25 the main differences between corporate and retail customers in the following
table are expressed.

Table )1(: 25 The main difference between retail customers and corporate
Person Company Issue
Limited Widespread The extent of activity 0
Non-specialized Specialized Sphere of activity 4
multidisciplinary
Personal assets take stock Ownership 3
Individual Organizational Decision making 2
Lack of structure Financial structure Financial structure 5
identified
Transaction records Financial statements and The basis authentication 6
and account turnover performance indicators

Person assets Company assets and Receipt of payments 7

some managers
Difficult to measure measurable Risk 8

http://www.ijhcs.com/index.php/ijhcs/index Page 250

Special Issue INTERNATIONAL JOURNAL OF HUMANITIES AND
May 2016 CULTURAL STUDIES ISSN 2356-5926

The large number of Few sums up electronic banking 9

small payments
For specific Usual Consulting services 01
customers
Account holder Company staff Faced with the customer 00
Unspecified Reflected on the balance Sales and profitability 04
sheet
Unspecified Specified Figure assets 03
low Supervision High Supervision The scope of supervision by the 02
institutions
low High Trading volume 05
Unspecified Growth and The utilization of funds 06
development of
enterprises and activities
Inheritance law Rules of law trade Bankruptcy / death 07
limited Unlimited Working life 08
Low Average The cost of moving (left bank) 09
Easy Complex Business negotiations 41
Lower middle Top Bargaining power 40
Easy Complex Satisfaction measurement 44
limited Widespread Complementary markets (selling 43
other bank products like credit cards,
and insurance.)
limited Widespread To participate in long-term 42
investments
Difficult possible Forecasts development trends 45

After reviewing the documentation indicated in the table above provide services to the company
is profitable because it is the standard practice for corporate customers evaluating income, sales
and profitability that are being identified and documented evaluation of individuals is very
limited. The monitoring of financial practices should be more than they are under control, so it's
important they affect the financial and banking practices and for bank's criterion for deciding on
the customer is considered. As one of the main criteria in assessing the volume of customers and
their impact on banks' profitability and income in these two sectors are very different, though, for
companies this size can be unlimited but for people limited legal obstacles. Transport company
because of the high-cost impact on the profitability of the bank, is high and the low. The
corporate customer service is top priority for banks. (Tracy, Michael, 4115)
Here are some aspects of profitability in corporate banking examine:

http://www.ijhcs.com/index.php/ijhcs/index Page 251

Special Issue INTERNATIONAL JOURNAL OF HUMANITIES AND
May 2016 CULTURAL STUDIES ISSN 2356-5926

1. Personalization Products and services: Services that all aspects of product design,
pricing, and distribution to customers are personalized and available to them.
2. Customer retention: In the atmosphere in the banking system of Iran has always stressed
to attracted new customers, but in the highly competitive and the importance of the
contribution of the customer rather than market share, retention and loyalty of our
customers, especially corporate clients and private profit is the primary priority.
3. Pricing: Pricing of services to the public in the banking system has witnessed and been
the same for all customers. The new paradigm offers new services such as private banking
and corporate pricing require new models based validation, risk management and
customer share in profit is determined.
4. The promotional activities: Books, one of the organizations in the field of promotional
activities and advertising are expensive. To date, promotional programs and advertising to
the general public are planned and implemented, so in addition to the very high costs that
their effectiveness has been questioned; messages are not always suitable for a general
audience and failed to fully link the bank with your audience; However, private banking
and corporate promotional activities and advertising its own demands. These activities can
include features that are important. First, private banking and corporate media have their
own audience, bilateral relations with them, the messages, each of them with different
customers; direct marketing is efficient.
5. Quality and customer satisfaction: To date, quality and customer satisfaction in the
banking system for assessing its suitability for their research organization that collects
customer feedback and statistical sampling models and the results would generalize to all
customers, but in private banking. Because of the importance of their role in the
profitability of banks and corporate customers and the importance of their loyalty,
satisfaction of every one of them should be measured and criteria for action. This
attention to quality (fit the expectations of the services received) and measure their
satisfaction will not be effective without a full understanding of customers. In any private
and corporate banking services with attitudes, approaches and systems cannot last. To
provide correct and true science infrastructure and services should be provided and
implemented. First and foremost infrastructure, mechanisms and systems are the ones that
make possible of the recognition of our customers. (Allen, Martys. 4103)

2.2 Background Research:

- Study Research Institute "Greenwich Associates" in 2013 that "Deutsche Bank" and
"BNP Paribas Bank" top European banks in corporate banking. About 50 to 55 percent of
European companies of the two banks are banking circuit. (Ernest & Young. 2013)
- So you can see the world's top 30 banks in terms of the position of Corporate Banking
provides significant results; 23 banks have an independent department for corporate
banking, corporate banking 3 bank have similar titles; Two Banks have no independent
corporate banking but banking services. The company and two banks are under no focus
on corporate banking.
- To view the status of Iran's 26 banks in terms of corporate banking position following
results was obtained: 1 bank has a separate section for corporate banking "Eghtesad
novin," 1 Bank with similar titles corporate banking "Dey," 8 banks have no independent

http://www.ijhcs.com/index.php/ijhcs/index Page 252

Special Issue INTERNATIONAL JOURNAL OF HUMANITIES AND
May 2016 CULTURAL STUDIES ISSN 2356-5926

corporate banking sector, but corporate banking services and 16 banks focused on
corporate banking is lacking. In this regard, the need to establish the reasons cited,
focusing on corporate banking in the structure and the action are greater than ever before.
Books from micro to macro approach customer will provide much benefit at large.

3. Research Methodology

This research purpose and research method is descriptive. In this study, for collecting and
compiling the literature on the subject of the investigation records, a (library resources, internal
and external publications, the Internet) use. This means that the books and papers in the library,
articles on the Internet as well Persian letters had been completed in this area. It should be noted,
in particular, the content of the analytical part of the proposal relating to India, the empirical
research and field experience, he has also been used.

4. Data analysis

Corporate banking customers as "high net worth clients" are called, generally with high
intelligence business customers; strict and high qualities are desperate for that mission at all-
round service providers in preparation for entering this market will be heavier. Not many wealthy
clients (clients with high net asset value) of that in any way by the financial institutions identified
in the community, are wary. From the perspective of the economic climate, the debates on the
moral value of such activities are carried out in such a way how this market segment only means
to serve more very affluent ignored and But to be in addition to the profitability of this issue for
the banks effective way, ultimately to the benefit of the entire country's economic environment
led the market. Each average between 4 to 10 banks is operating. The main focus is on increasing
the share of corporate banking customers. Last approach based corporate banking (see the
previous year's balance sheet) with a forward-looking approach (see the objectives; strategy and
budget incorporate.)

5. Conclusion

Validation corporate banking, risk management, monitoring consumption, constant

communication with customers and learn from them a significant role in reducing non-
performing loans is updated. It should be noted world-class banks of the capacity of non-banking
company to manage its current facility by improving the close working relationships and deep,
accurate authentication systems, effective supervision, consultation, .... work.

A. Executive proposals
1. The possibility of establishing corporate banking in banks and institutions that have
been deprived of this profitable sector.
2. Create training programs for staff involved in the banking system in the area of
corporate banking
B. Suggested topics for future research
1. Obstacles to the correct implementation of corporate banking in accordance with
international standards
http://www.ijhcs.com/index.php/ijhcs/index Page 253
Special Issue INTERNATIONAL JOURNAL OF HUMANITIES AND
May 2016 CULTURAL STUDIES ISSN 2356-5926

2. Align international experience with domestic banks

3. Effects of the use of corporate banking

http://www.ijhcs.com/index.php/ijhcs/index Page 254

 Special Issue INTERNATIONAL JOURNAL OF HUMANITIES AND
May 2016 CULTURAL STUDIES ISSN 2356-5926

References

Allen, Martys (4103). Corporate banking, corporate banking pamphlet 60_40

ernest & Young. (2013), Successful Corporate banking, Report of Research, EPGM Limited, 20-
26

http//corporatebanking.persianblog.ir

Khalil Lu Reza. (4102), corporate banking in Iran, "Opportunities and Challenges". Publication:
Rashedin

KPMG (2012), Credit access guarantees: a public asset between the State and the Market.
International survey on guarantee market players, KPMG Advisory

Mistrulli P.E., Vacca V., Corbisiero G., del Prete S., Esposito L., Gallo M., Graziano M., Lozzi
M., Maffione V., Marangoni D. and Mig A. (2011), “Mutual Guarantee Institutions
(MGIs) and small business credit during the crisis”, Questioni di Economia e Finanza
(Occasional Papers), 105, Bank of Italy,Economic Research and International Relations
Area.

Riding, A., Madill J. and Haines G. Jr. (2007), “Incrementality of SME Loan Guarantees”, Small
Business Economics 29, pp. 47–61.

Schena C. (2012), “L’adeguatezza patrimoniale dei Confidi: profile normative e prospettive

gestionali”, in R. Locatelli (ed.), Rischi, patrimonio e organizzazione nei Confidi,
Associazione Ricerche su Imprese, Intermediari, Mercati – ARIME, Milan.

Tracy, Michael. (4115), the market leading solutions, translated by Abdolreza Rezai Nejad
doctor. Third edition. Publication: expressive cultural services. Tehran

Zecchini, S. and Ventura, M. (2009), “The impact of public guarantees on credit to SMEs”, Small
Business Economics, vol. 32, pp. 191-206.

http://www.ijhcs.com/index.php/ijhcs/index Page 255

View publication stats