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Are banks really making less profit when interest rates are low? 
profit has nothing to do with the level of interest rates. Is this correct? In theory, yes. The difference that you're getting at is called net interest margin. As long as this stays constant, so does the bank's profit. According to this article: As long as the interest rate charged on loans doesn't decline faster than the interest rate received on deposit accounts, banks can continue to operate normally or even reduce their bad loan exposure by offering lower lending rates to already-proven borrowers. So banks may be able to acquire the same net interest margin with lower risk. However the article also mentions new research from a federal agency: Their findings show that net interest margins (NIMs) get worse during low-rate environments, defined as any time when a country's three-month sovereign bond yield is less than 1.25%. So in theory banks should remain profitable when interest rates are low, but this may not actually be the case.