Sorry about mentioning of AIB's share price. I was not being specific but using it as an example. Surely the increasing and decreasing of rates affect banks in the same way. The sell off of shres is affecting all financial stocks.
When I borrow on my mortgage the bank quotes me a margin of say 1% above the base rate.
If the base rate is 4% the the bank charges me 5%. The banks profit margin is 20% to 25%. However when interest rates fell to 2% the bank continued to charge me a margin of 1% which meant that their mark up became 50%.
How would a normal business survive if their profit margins were cut in half?
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