Indeed Sonofgloin we have and you seemingly still can't read
a balance sheet.

Rehctub, banks have assets and liabilities. That is quite different
to equity. The 4 major banks earn around 20 billion, on 2 trillion
worth of assets on their books. About 1% is left after all
expenses.

If you have a mortgage with them, its an asset, if you have a
bank deposit book, its a liability. It just shows you how much
money that people and businesses have borrowed.

But don't forget, our 4 major banks also dominate NZ banking and
NAB owns quite a few British banks. ANZ are busy expanding their
banking business in Asia and the banks other income stream is
superannuation, where they have a major interest

rehctub,

Your assumption about bank margins ignores the concept of the Fractional Reserve system we are under.

The bank doesn't lend only the money it actually has on hand - the funds held represent only "a fraction" of the amount it is able to lend.

Simply it means that if you deposit $100 then the Bank can loan say $1000 to somebody else, and the margin is really the difference between paying interest on a $100 deposit and charging interest on a $1,000 loan.

*if you deposit $100 then the Bank can loan say $1000 to somebody else, and the margin is really the difference between paying interest on a $100 deposit and charging interest on a $1,000 loan*

Ah wobbles, just like Arjay, you remain highly confused as to how
the system actually works. If your confusion were true, Australian
banks would never have to borrow from overseas etc.

What fractional reserve banking means is that banks need to hold
reserves of around 10% of total loans outstanding. The money supply
does increase, as bank a lends to say me, who spends it and somebody
else redeposits it, etc.

If you don't believe me, go to any banks website, check out their
financials and check out how much interest they actually pay
out, in comparison to interest earned. Perhaps then it will
be clearer for you.

Rechtub I am not having a go at you.
This thread/subject conflicts with other views you have put here.
In part, no small part, freeing up Australia's banks, under Labor, maintained by Howard,saw us become this current trading nation.
Our banks,far better than others,Americas mashed potato ones, we are doing well.
Re regulating banks, is unwise,may even be a form of Socialism.
The bottom line, profit,of banks is linked to all our welfare.
We do need to keep our eye on them, they are not saints but in this matter?
Super profits are not involved.
Rechtub here is the difference, super profit was about digging holes in our country,
Taking forever and once, the much needed minerals.
By over seas owned firms and ours.
The tax was to be an extra dividend for Australia.

Are the banks getting away with blue murder (as do most institutions)
Yes !

It is a constant surprise to me that so few people (as represented on this forum, at least) understand the banking system, either in concept or in their daily activities.

>>You see banks generally work on about a 2.5% margin,this means they borrow at say 4.5%, then lend at 7%.<<

The difference between the two is generally described as "spread" as opposed to margin. Margin is more easily understood in a simple retail environment, where it is derived from profit/revenue. At a product level - say the purchase and sale of a tin of baked beans - it is gross margin. After the wages of the shop staff and delivery boy have been taken into account, it becomes the net margin.

Banks borrow funds from many sources, the composite of which is "cost of funds". They then lend it out in a multiplicity of ways, at different "spreads" to the cost of funds. In no way does the process equate to the buying and selling of baked beans, hence the confusion of equating interest spread with operating margins.

>>What of their assetts, bricks mortar land, their assets have grown by over 700% in the past 10 years.<<

This is probably the hardest concept to grasp, apparently. Yabby explained it, but it's probably worth revisiting.

When the bank lends you money, it records it as an asset, carrying a term and an interest rate. In order to lend you the money in the first place, it has to borrow it from somewhere. That is recorded in the books as a liability, also carrying a term and an interest rate. So the growth in assets of "over 700% in the past 10 years" will be matched by a similar growth in liabilities.

It cannot work any other way. That's why we have double-entry bookkeeping.

And the continuing ignorance of the fractional reserve system is, frankly, frightening.

>>...it means that if you deposit $100 then the Bank can loan say $1000 to somebody else<<

But they must borrow the money in order to do so. It is not "created out of thin air".