do bank profits when interest rates rise
As interest rates rise, profitability on loans also increases, as there is a greater spread between the federal funds rate and the rate the bank charges its customers. In these conditions, there is a better chance that borrowers will be able to pay back their loans.ncreases in the Federal funds rate directly increase the yield on this cash, and the proceeds go directly to earnings. An analogous situation is when the price of oil rises for oil drillers. The benefit of higher interest rates is most notable for brokerages, commercial banks and regional banks.