Financial profits in the US are very high; they now amount to about one-third of all company profits, compared with less than 5% 20 years ago. Financial profit margins are at peak levels – about 25% above average – and, given that such margins tend to revert to their mean, it is unlikely they can be sustained. A similar view emerges from the apparent connection between the rise in financial profit margins over the past 20 years and the accompanying fall in interest rates. Analysis of the sources of bank profits and the prospects for each main contributor points to the same conclusion.
Different risks
