Do All Banks Have Moats?
Our thoughts on the banking industry's widespread competitive advantages.
You might be surprised to hear that nearly all banks have a sustainable competitive advantage--an economic moat. Warren Buffett and Charlie Munger were surprised, too. Buffett once remarked, "Charlie and I have been surprised at how much profitability banks have, given that it seems like a commodity business."
At Morningstar, we've long recognized the moats of banks, and it's nearly impossible to understate their importance. Without a robust analysis of a company's competitive advantage and the sustainability of that advantage over time, investors run the risk of buying one-hit wonders that burn out fast�along with shareholders' money.
Jim Callahan does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.