And when interest rates rise they can increase the interest rate spread they earn.
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The index benefitted also from the interest rate spread and rising housing permits.
High savings (sometimes mandatory), interest rate controls, and high economic growth let Chinese banks enjoy a steady interest rate spread and a larger loan volume.
Just as in the past, high yield bonds trade at an interest rate spread over Treasury bonds, which are more liquid and less subject to default risk.
The Cleveland Fed inflation estimates, based on financial market data including the interest rate spread between ordinary and inflation-protected Treasury bonds, show expected inflation of 1.4 percent per year over the next ten years.
But given the size of those reserves, and the banks overwhelming need for income, it might not take much in the way of interest rate spread expansion to get some monetary inflation of the double digit variety from these banks.
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Worries about export earnings, given Argentina's high debt-to-export ratio, increase the interest-rate spread the country pays over United States interest rates, which have themselves risen this year.
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According to Reuters, the two-year U.S. interest rate swap spread--a gauge of financial system stress--was quoted at a record high 166.5 basis points in Asia, suggesting that concern about defaults among banking counterparties were worsening.
The company makes money from the spread between the interest rate paid by a hog buyer and the yield built into the sale of a package of loans on Wall Street.
They have a spread on the interest rate they charge the other person over what they pay you and this pays for the buildings, the unpaid loans, the staff and everything else.
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American Express earns a net interest income on the spread between the rate it earns from un-loaned amounts sitting in bank deposits and short-term investments in financial securities and the rates at which it extends credit to card members.
Yet, even after the central banks' announcement, dealers cited by TradeTheNews.com said that some interest rate spreads were still high, with the TED spread (which is price difference between three-month futures contracts for U.S. Treasuries and three-month contracts for Eurodollars) still above 30 basis points.
The greater the spread between the high-interest debt and the rate of return on investment, the greater the financial advantage for paying off the debt first.
Take, for example, one indicator of the market's appetite for risk, the spread between swaps of fixed- and floating-rate interest payments (see chart).
Moreover, they should compete to borrow any funds that are offered in private markets at rates below the interest rate on reserve balances because, by so doing, they can earn a spread without risk.
The leasing companies borrow from a bank at one interest rate and offer the lease at a higher one to the driver, making money on the spread.
The new increase of 2.5 percentage points on Mr. Martin's line will effectively double the spread over the prime rate to 5%, yielding an 8.25% interest rate.
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Despite the recent rate decreases, private jumbo mortgages still provide a bigger-than-usual spread between the interest banks receive and what they are paying on deposits.
What is most worrying the Bank, in the current climate, is the rise in the spread between the very low bank rate it has set to spur growth and the much higher interest rates that banks are charging to lend to companies and households.
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