Topic: How do banks generate income? - page 4. (Read 1193 times)

If governments do not take the necessary steps, interest rates in banks are constantly rising. People who need money in countries for reasons such as inflation experience difficulties due to high loan interest rates. In such cases, banks always make a profit. This shows what kind of a system we are part of. In the near future, the repayments of loans taken with high interest rates will also be delayed and another problem will arise.

There are many other areas where banks generate income. Real estate investments, land investments, company operations, etc.

From everything that you have listed, it is obvious that the summary is of how banks generate income is through other people's money. That is how financial institutions stay wealthy. They use other people's money, invest in businesses and make a massive ROI. Banks don't have money of their own.  In addition, if you have ever taken out a loan from a bank, you'd be amazed by how high the interest rate is. It's crazy. This is another way they generate income. Other people's money and high interest rate sums it all.

They bank will generate income are The main business of the bank is to match customers demand and supply for money and The bank charges higher interest on their loans than what they are paying on the savings to make a profit and Now with the new high interest rate environment it becomes very expensive if the bank needs to raise money itself to meet the outflows and The difference is the bank's profit, known as the interest spread or margin.

Running a bank has been a lucrative business in the past for its owners, but this doesn’t mean that all banks are a money printing business. Over the years there has been quite a lot of banks that went bankrupt. Even this year we saw big American banks struggle with the continues interest rate rises by the FED. The main business of the bank is to match customers demand and supply for money. Usually, you have one side depositors who leave their money long term with the bank and are looking for some interest on their savings account. Against that you have the borrowers, that require money short term for consumption, investments or mortgages. The bank charges higher interest on their loans than what they are paying on the savings to make a profit. But there is a maturity mismatch between deposits and loans which creates risks for the banks. Especially when there is a huge deposit outflow the bank will struggle to meet the capital requirements. Now with the new high interest rate environment it becomes very expensive if the bank needs to raise money itself to meet the outflows. I think that the banking business model only really works for the largest banks that have millions of customers, because the government would always step in to protect the customers and can’t let it go bankrupt, for smaller banks it’s much riskier to operate in high interest periods.

they collect money from customers with the title of savings and they lend it back to customers with interest that is greater than the interest on savings, so they get profit from it. On the other hand, banks also trade on the stock market or other markets, so they will get a bigger profit from that too. even though there are not a few bad loans, they also have calculated the risk from the start, so this can minimize the risk.

This is the cons when you do trust up that much these institutions on which on the time that there would be no claimants of those richness that you do have or simply the money you do have in bank then it would  
really be considered to be forfeited or they would really just simply absorbed it. We know that there are lots of sources or ways or methods on which they could make out money which is simply into those giving loans into people and businesses which their rates are really that high compared into the dividends and annual interest that they do give out into their depositors. These institutions would be using up peoples money
for them to generate revenue or income on which sounds to be great right?

Here are some additional details about how banks generate income:

• Loan interest is by far the largest source of revenue for banks. Banks make money by charging borrowers a higher interest rate than they pay depositors. The difference is the bank's profit, known as the interest spread or margin.

• Fees and charges have been increasing as a source of revenue for banks in recent years. Banks charge fees for everything from checking accounts to wire transfers to overdrafts. The larger the bank, the more fee-based income they tend to have.

• Mortgage lending has become highly profitable for many banks. Mortgage interest rates are usually higher than other loan rates, and mortgages are paid back slowly over 30 years.

• Credit card income also consists of both interest charges on balances and annual fees. Late fees and penalty fees also add to card-related revenue. However, credit card loans tend to be riskier for banks.

• Revenue from investment activities is dependent on interest rates and financial market conditions. When rates rise, banks' investment returns typically increase.

• Interchange fees - the small percentage banks get from every credit/debit card transaction - can add up substantially, though regulation of these fees is increasing.

• ATM fees have become a notable source of revenue for large banks that have extensive ATM networks. But customers generally dislike these fees.

• The "float" is the least transparent source of income for banks, but it can generate millions due to the large deposit volumes that banks handle.

So in short, loan interest remains the most important revenue source for sustaining bank operations and profitability. However, fees, premium services, and other sources are important additions to a bank's overall income statement.

From the experience I have had banking in my country, there a lot of ways that banks generates income , such as through disbursement of loans, and service charge such as ATM card maintenance fees, sms charges, ATM issuance card charges, withrawal charges from using their ATM machines and whole lot of other changes that they generate their income from like the FX market. But their major income generating source is through giving out customers money on loans on high interest rate while they pay the savers peanut for the money in their account.

All that you listed is right, though some are official and legal while some are part of their mischievous and dubious act. Also, they get money from interest on loans and some people lost access to their property when they default on the payment.

Banks are dishonest, but I assume that anybody with large sums of money in their bank account will inform their lawyer, wife, or children about the status of their account and what to do when they are no longer in existence. However, it is the responsibility of the banks to locate the next of kin in order to have access to the deceased account and do whatever the will says, but I have seen a situation where the bank declares a person's account to be dead; banks are fraudulent organizations that cannot be trusted for one second; it is like putting your life on a ticking time bomb that could blow up at any time.

they are smart in business, I'm sure every bank has a good financial adviser, because of that they can last a long time in their bank business. take advantage of businesses that are very suitable for their profit fields in customer money circulation. if what you mean point is in they earn, well that's one of them, but i believe they still have big investment behind it to generate more profit for the bank itself.

Banks are one of the oldest institution created for the purpose of handling people's valuable assets & properties since many centuries ago, such as gold, money & documents. But apart from what you listed above, here are some other two important reasons how banks generate income, such as lending loans to people in need while charging high interest rates, and also using money deposited in fixed accounts for forex trading, and other low risk investments such as buying company shares and bonds, so it could appreciate so as to make more money.

I'm not disagreeing with your opinion but, It is important to distinguish between personal opinions and generalizations. While some individuals may have concerns about the banking system and prefer cryptocurrencies such as Bitcoin for various reasons, to claim that a bank engages in illegal activities or deliberately deceives customers is wrong and that only bad persons have dirty minds stealing customers' money. and the consequences will also apply. just like crypto also related parties trace it where the money went.

Banks operate within a legal framework and provide various services such as lending, investment and transaction processing to generate income. Trust in banks and cryptocurrencies can vary between individuals based on their experiences and perspectives I think.

Product is something that is removed from a process.
So my view of bank products is the service itself (Services = Products/Products = Services). That's the mindset about the product that is issued, the things that are issued are products either in the form and non-shaped. You must understand that the product does not always have a shape.
So the service is also a product, both borrowing money, savings, cash withdrawals, ATMs and others are products from the bank authorities .

The methods used by the bank are always considered legal even though they apply illegal methods by carrying out the main activities of banking services that the customer does not know about. The presence of Cryptocurrency has disturbed central bank authorities, the ease and speed of transactions makes some bank customers trust Bitcoin more than bank authorities.
The banks are very aware that the presence of Bitcoin is a threat to them, if everyone believes more in Bitcoin and other Crypto assets the bank will soon go bankrupt because no one uses their services anymore. Banks are like leeches that always suck the blood of their customers. They will not be responsible when there is lost customer money, so I don't really trust the bank.

Although the information you have given varies between countries but it is partially correct. The sources from which banks provide the largest flow of funds and money generally consist of savings provided by clients. In addition other options with high income are provided from the commissions obtained from the service fees offered as well as the income from the investments as you mentioned. Finally, considering that banks operate in the service sector, can you explain what you mean by the "product"?

What do you mean by product?  I have no idea that the bank has any products. Because I have always known that banks always provide various services like lending, processing international payments, keeping customer's money as collateral etc. the bank keeps the customer's money and then lends it to other customers and takes a high rate of interest from it and gives some part to the customer and keeps the rest for themselves. From here the bank makes most of their profit. And some other charges are taken from the customer like SMS charges, maintenance charges, credit/debit card charges etc but it they are taken annually. The bank earns a lot of income from here too

Banks generate income through different product and services like one of the primary ways is by lending money to customers at a higher interest rate than the rate at which they borrow money from other banks or the central bank. The difference in interest rates, known as interest rate spread allows banks to earn a profit on the loans they make. Banks also charge fees for various services such as account maintenance, ATM usage and wire transfer. Banks may invest their own funds in various financial instruments such as stocks, bonds and real estate to earn a profit on their investment. Some banks generate income by providing advisory services to clients or by offering insurance products.

Good a thing you're surprised at this information and you may not be the only one. It's so unthinkable that in some countries especially those of the third world countries every bank services are being paid for by the customers even to the extent of checking of account balance and receiving of money transaction both the receiver and the sender are charged fees. And this policies necessitates the question, what exactly is the profit gain of the bank account users except for pillaging of their little funds by the bank but by bit through incessant fees with no % of interest giving to even savings account holders at the end of the month's but it's rather the opposite over here.

I am sure everyone today must use banks for storage of their assets, because banks are now fully trusted by the public because the security they apply is very high so it is very rare for us to hear of break-ins at certain banks, and banks are currently one of the institutions that can get very large profits, because there are many ways they apply to be able to benefit and can help many people so many  The program they apply can run well, so don't be surprised if the bank is a very rich financial institution.