Measurement of customers´ profitability in corporate banking

The dissertation thesis aims to establish a complex theoretical basis for a measurement of customer's profitability which can be easily used in the practice. The main reason for that is the absence of such publication in the current academic sphere. A combination of management accounting and knowledge of banking enables to achieve the aim. The thesis itself is closely linked to the banking practice. There are derived customer's profitability indicators as modifications of the popular RAROC in which a customer margin is used instead of net profit. There is designed a simplified way of operational cost allocation. Questionnaires and interviews with senior representatives of seven Czech banks helped to identify the most significant labor-intensity factors of corporate customers. The description of principal features of risk costs and derivation of formulas for profitability variances are also the part of the thesis. The theoretical part is followed by the practical one where a contemporary banking practice of corporate customer's profitability measurement on the Czech market is explored. It identified three weak points -- cost allocation, profitability variances and one-year horizon of a calculation. At the end, the theoretical basis is applied on an existing customer portfolio and the result is compared with a currently used customer's profitability measurement.