Banks earn a profit on the difference between:

A) the interest charged from depositors and the interest offered to borrowers.
B) the interest charged on loans and the interest paid on deposits.
C) the deposit and loan balances.
D) liabilities and deposits.
E) dividends and interest.

Banks earn a profit on the difference between the interest charged on loans and the interest paid on deposits. This is known as the "net interest margin." Banks borrow funds from depositors (paying them interest) and then lend these funds out to borrowers at higher interest rates. The difference between these two rates is the bank's profit.