Twitter is abuzz with comments that SA banks look cheap, so let me try to explain banking in 800 words. The traditional banking model is to obtain funding by attracting retail deposits and issuing wholesale money market instruments. That money is subsequently lent out at a higher rate. The difference is called net interest income (NII) and the ratio of this income to average interest-earning assets is called net interest margin (NIM).
The complexity is that the bank can focus on both sides of the NII equation. For example, access to cheaper funding means that the bank can either expand its NIM (as the cost of money is lower) or maintain its NIM while cutting the pricing of its debt to consumers and thus rapidly growing its book...
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