Y’all y’all will recall the Great Potato declaring that banks simply do not need deposits. They only take them as a favour to customers.
Profits at Lloyds Banking Group fell by more than a quarter in the first three months of the year after Britain’s biggest domestic lender was hit by tougher competition for deposits and mortgages.
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Its net interest margin, which is the difference between the interest it pays on deposits and charges on loans, fell to 2.95 per cent from 3.22 per cent a year ago, which it blamed on “headwinds due to deposit churn and asset margin compression, particularly in the mortgage book as it refinances in a lower margin environment”.Net interest margins are a key measure of banks’ profitability and had surged since late 2021 as the Bank of England lifted interest rates to combat inflation. This is because commercial lenders were slower to raise the rates they paid to savers than they had been for their borrowers, boosting their margins and profits but prompting criticism from politicians and regulators that depositors were being treated unfairly.
If banks don;t need deposits then why are they competing for them on price?
Taking a stab at this: the government has put rules in place that banks can only lend in a ratio with deposits, so they end up competing for the deposits so they can lend more.
Of course he thinks the rule shouldn’t be there (on odd days), so the banks can buy more government debt.
On even days, all banks are rich b*stards, so they should all be nationalized.
Is that about right?