Intermediate business terminology

Intermediate business refers to the business that does not constitute the bank's on-balance sheet assets and liabilities and forms the bank's non-interest income, including the business of charging service fees or buying and selling spreads on behalf of customers, such as wealth management business, consulting and advisory services, agent buying and selling funds and bonds, buying and selling funding products on behalf of customers, agent fees, custodianship, payment and settlement, and so on.

Intermediary business has the following characteristics:

Not applying or not directly applying the bank's own funds;

Not bearing or not directly bearing the market risk;

Handling the business for the customer on the premise of accepting the customer's entrustment;

Gaining the revenue by charging the service fee (handling fee, management fee, etc.) and earning the price difference;

Multiple types and a wide range, accounting for an increasing proportion of commercial banks' operating income.

Intermediate business, refers to the commercial bank agent customers for collection, payment and other entrusted matters and charge commission business. Banks do not need to use their own funds, relying on business, technology, institutions, reputation and talent and other advantages, in the capacity of intermediary customers to undertake the collection and payment and other entrusted matters, to provide a variety of financial services and based on the receipt of commission business. Banks do not need to use their own funds to operate intermediary business, which is generated on the basis of banks' asset-liability credit business and can lead to the development and expansion of banks' credit business. The proportion of intermediate business in the bank's income has been increasing year by year

Broadly speaking, the intermediate business of commercial banks "refers to the business that does not constitute on-balance-sheet assets and liabilities of commercial banks, and forms the bank's non-interest income" (July 4, 2001, the People's Bank of China issued "Interim Provisions on Intermediate Business of Commercial Banks"). It includes two major categories: intermediary business that does not form contingent assets or contingent liabilities (i.e., financial services business in the general sense) and intermediary business that forms contingent assets or contingent liabilities (i.e., off-balance sheet business in the general sense). China's intermediary business is equivalent to off-balance sheet business in the broad sense, which can be divided into two major categories, financial services-type business and off-balance sheet business.

Financial services business refers to the commercial banks as an agent for customers to handle a variety of business, in order to obtain fee income. It mainly includes: payment and settlement business, bank card business, agency intermediary business, fund custody business and consulting business.

Off-balance-sheet business refers to those activities that are not included in the balance sheet, but are closely related to on-balance-sheet assets and liabilities, and will be converted to on-balance-sheet assets and liabilities under certain conditions. It mainly includes three categories: guarantees or similar contingent liabilities, commitment-type business and financial derivative business.

Business Distinction

Broadly defined intermediate business is equivalent to broadly defined off-balance sheet business, which can be categorized into two main types, narrowly defined financial services business and narrowly defined off-balance sheet business. In our daily work, what we call intermediary business is the broad intermediary business according to the regulations of the People's Bank of China, while 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 broadly categorized into three major categories of asset business, liability business and intermediary business, or can be categorized into four major categories of asset business, liability business, intermediary business and off-balance sheet business.