How A Bank Makes Money


To some of you this will be totally elementary,

but it’s still good to get a refresh.

Via a Deutsche Bank report, here’s a breakdown of bank revenues based on the industry average.


the biggest source of income is Net Interest Income.

chart of the day, bank revenue breakdown, may 2011

Here’s Deutsche’s definition:

The largest component of a bank’s revenue is net interest income (NII)
– which accounts for about 65% of revenues on average.

NII is the dollar difference between the interest earned on a bank’s earning assets
(i.e. loans, securities and other interest earning investments)
and the funding cost of a bank’s liabilities
– which consists of deposits and borrowings.

NII is driven by volumes (i.e. assets) and spreads (net interest margin)


Next Post

The International Monetary Fund & The Northern Imposed Imbalance

Sun May 15 , 2011
  [ Maps courtesy of the IMfuckingF ] [youtube]lntNYsw7Fc0[/youtube]