Re:Why is everyone a bank?
by PeterisP on Tuesday November 19, 2019 @05:58AM
(#21571965)
I don't know anything particular about the Dutch market, but some rough estimates:
Current 3m euribor is -0.4% so 1.6% interest rate means 2% margin. Assuming that your initial costs of selling/assessing/processing the mortgage are covered with fees, something like 0.5% would be enough to cover the main (non-systemic) risks and expenses for decent quality mortgages, so you get 1.5% of pure profit; for every billion in your portfolio you'd get 15 million profit each year; Dutch banks have 500B of housing loans so that's a capacity of something like 7-8 billion of profit per year from housing loans alone.
And various short-term loans have lower volumes, but much higher interest rates and room for profitability.
Current 3m euribor is -0.4% so 1.6% interest rate means 2% margin. Assuming that your initial costs of selling/assessing/processing the mortgage are covered with fees, something like 0.5% would be enough to cover the main (non-systemic) risks and expenses for decent quality mortgages, so you get 1.5% of pure profit; for every billion in your portfolio you'd get 15 million profit each year; Dutch banks have 500B of housing loans so that's a capacity of something like 7-8 billion of profit per year from housing loans alone.
And various short-term loans have lower volumes, but much higher interest rates and room for profitability.
Looking at the stats in https://www.statista.com/topics/3442/the-banking-sector-in-t... it's clear that the net interest income dominates, it's something like 5x the fee income.