Most subscribers own banking stocks, so let's examine how banks work and what drives their profits.
The Romans did more than popularise bloodsports and central heating. They also pioneered a banking network that extended throughout much of Europe, Asia and parts of Africa. Jesus, as we now know, didn't think much of it and bankers have been suffering from low self-esteem ever since.
But that hasn't stopped many subscribers from buying bank shares. Most investors own either a regional banking stock or one of the big four, and many own both.
So, to give you a better understanding of their attractions as an investment, we're going to explain over the coming issues what drives a bank's profit.
Banking basics
The basics of banking haven't changed much since Jesus threw the moneychangers out of the temple. Banks take your money, paying you a rate of interest for the privilege, and lend it out at a higher rate. Assuming they get it back, the difference is how they make their money. But before explaining this measure, let's look at a typical bank's structure.
We all know about retail banking, where the products consist of home loans, credit cards, personal loans and priority and private banking. Irritating queues and broken ATMs are also among the product offerings.
Business banking usually concerns small to medium sized businesses, typically with needs of less than $50m, with larger clients handled by corporate or institutional banking.
Finally, the newest and most rapidly growing area of a bank's activities is wealth management. This area handles funds management, financial planning and trustee services on behalf of clients.
The biggest and most recent change in the way that banks have operated has occurred with the switch from relying on interest margins to fee income.
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