It is a good thing That Bank doesnt sell Lettuce

Craig1 · Guru

It is a good thing That Bank doesnt sell Lettuce

Mike Harding · Guru

I don't think so.

4.8 - 1.35 = 3.45

3.45% of $10 is $0.34.5

Therefore the retail price would be $10.35

86GTS · Guru

Lettuce get down on our knees, lettuce pray that prices will come down soon.

Craig1 · Guru

Mike, cost of "goods" is $1.35, selling price of "goods" is $4.80 lor close to 3 times

Mike Harding · Guru

Ah, OK, I see what you mean.

smwhiskey · Senior Member

Craig1 wrote:
Wholesale lettuce price yesterday was $10, so retail $12-13, not much of a margin.
But Banks wholesale for money is 1.35%, but sell it on at 4.8%

All comes down to scale.

So at the risk of being attacked by bank bashers...

If you look at the total profit (which would include profit from other non-lending sources like FX trading) of (for example) CommBank ($8.65b in 2021) against the amount of money invested in home loans (approx $510b) to achieve that profit, you'll find the profit margin for a bank on loans is somewhat less than 1.5%.

Compare that to your lettuce example where the margin is 20-30% and (being generous) the profit margin is probably still at least 10%.

Simon

Craig1 · Guru

Simon, That bank actually owns very little, sold most of their own buildings, get a lot of " their" money from fools like most of us and then broker a big percentage to hopefuls to pay back for A long time, so I dont get the return on investment calculation by you. So maybe I am dense ?