Are returns in traditional middle-market banking peaking? Although the prime-Libor spread remains high, it is expected to decline. And, for most banks, loan volume continues weak.

Today's margins equate to a return on equity of less than 15% after tax for the lending portion of a typical middle-market business unit (although this varies widely by customer.) If we take into account the sale of ancillary services, the typial ROE for the overall business moves up to about 18% to 20%, and higer in the best-performing banks.

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