SAN ANSELMO, Calif.-The interest expense banks are paying for retail funds is now the lowest ever, according to analysis from Market Rates Insight.
In 2011, banks paid an average of $0.16 in interest expense on deposits for every $1 they earned in interest on loans. In 2007, prior to the last recession, banks paid an average of $0.51 in interest expense on deposits for every $1 they earned as interest on loans.
MRI said total interest income from loans at FDIC-insured institutions in 2007 was $725 billion, and total interest expense paid for deposits amounted to $372 billion, which is a cost of $0.51 in interest paid for every $1 of interest earned. In 2011, total interest income was $507 billion, and total interest expense paid for deposits amounted to $84 billion, which is a cost of $0.16 in interest paid for every $1 of interest earned. The 2011 cost of $0.16 is the lowest ever since the FDIC made such figures available in 1992.
For info: www.marketratesinsight.com
