I have just been wondering if anyone on this forum ever calculated the 'cost-of-capital' for the leading banks in this country, e.g. what interest is paid in relation to the deposits from customers, i think this could be quite interesting as i think depending on the breakdown of the account types it could make a huge difference, e.g. the higher paying interest accounts, savings and moneymarket accounts have higher cost of capital to banks, whereas the current/cheque accounts that dont pay much/any interest has a much lower cost of capital, so if one thinks the banks that offer services to the lower end of the market might have a higher capital cost to the more corporate/business and higher end market customers. E.g. Capitec could have a higher cost of capital to Standard Bank, i'm thinking SBK could the be best off in this situation. Do you guys think this makes sense?
Isn't the key number the so-called "net interest margin" - i.e. the spread between interest paid on funds borrowed (that is deposited in or invested with the bank) and interest charged on funds lent to customers?
yip, makes perfect sense, and is my thoughts correct that the more cheque accounts the cheaper the capital, or basically lower interest bearing accounts are more preferred by the banks, will have to check which bank has the higher portion of loans through no-interest accounts. e.g. players that attract lower income people might be more expensive as they have savings accounts that offer a small interest. companies or small businesses that have current accounts with no interest would be better, not?
true, thanks for pointing it out. I really find the SA banking system quite interesting, some people dont agree, but we sit with very high fees, only a handfull of really large stable banks and i am 100% sure its a excellent long term investment. Which banking accounts have the highest charges? i think check/current account is higher than savings, or moneymarket?
Look at the data, LG, and you will find the two almost neck and neck in our large banks. They have effectively doubled their business since the good old days when the interest turn alone was enough to feed a bank shareholder!
I have this idea: as a single person i will not be able to change the charges banks impose on us citizens, so i rather join them and cash off the millions of clients they have and this far exceeds the costs i pay on my accounts (which actually have never bothered me).