Banking Practice Exam

A common characteristic of profitable bank customers is that they have large loan balances. Customers with significant loans often generate interest income for the bank, which is a primary source of revenue. These customers typically engage in various financial products, including mortgages, personal loans, and business loans, which further enhance the bank's profitability.

While avoiding service charges may seem beneficial from a customer perspective, it does not necessarily correlate with overall profitability for the bank. In fact, customers who pay service charges can also be profitable due to their usage of other bank services that generate revenue.

The option stating that profitable customers make up a substantial fraction of all bank customers may not hold true as profitability is typically determined by a small percentage of customers who engage more deeply with multiple financial products rather than being spread evenly across the customer base.

Finally, while some customers may prefer high-service banks, this characteristic does not inherently relate to profitability. Customers seeking high service may or may not contribute significantly to the bank's profitability depending on their financial behaviors and commitments.