Should Investors Normalize Banks’ Securities Portfolios?
Banks are judged largely by their net interest income (NII), which accounts for about 60% of revenue for your typical regional bank (about 40% is from fee income), but NII includes two very different components – income from lending activities and from the bank’s securities portfolio.
“Although securities portfolios contribute a comparatively small share of revenue, it is important to note that the incremental margin on this revenue is much higher than . . .
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