If banks are to narrow their net interest margins without  2  BIS central bankers’ speeches  reducing their profits, they must become more efficient and control their operating costs, perhaps by exploiting economies of scale and scope. The second area where I think there is some justifiable concern about the performance of banks is the sectoral composition and characteristics of bank lending.
I have already highlighted the very impressive growth in aggregate bank lending since the start of the millennium. However, most of this lending is extended to the non traded goods sectors, especially trade, construction and telecommunications, and to the household sector.