Q » How do banks make a profit (the business model of commercial banking)?
17 Oct, 2025
A » Banks primarily profit by lending money at higher interest rates than they pay on deposits. They offer services like loans, mortgages, and credit cards, charging fees and interest. Additionally, banks earn from investment services, trading activities, and transaction fees. By managing risks and diversifying portfolios, they optimize returns. This model hinges on leveraging deposits to fund loans, balancing liquidity with profitability, and maintaining regulatory compliance.
17 Oct, 2025
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