Debtfree Issue 202303 - DB SE
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DEBT REVIEW AND YOUR CREDIT SCORE<br />
HOW BANKS MAKE<br />
MONEY<br />
You may wonder: How do banks<br />
make their money?<br />
It’s complicated. At its core, they make money<br />
by charging for services like protecting your<br />
money, and charging people who want to<br />
borrow money (eg. initiation fees and interest).<br />
Banks also have shareholders who buy into<br />
their bank, and thereby have a small say in<br />
how the bank is run, and get a bit of the profit<br />
when the bank is doing well.<br />
Investors may take on shares, or may invest in<br />
various types of bonds that the bank offers. This<br />
provides the bank with more money to use.<br />
Let’s dive a little into the mysterious way banks<br />
work, and look at what they do and see how<br />
that can leave them exposed. To start with<br />
let’s figure out what stocks and bonds are, and<br />
how securitisation works. Then let’s see how<br />
banks make money and how they can lose it.
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