At its core, a lending business has three main profit impacting activities: (a) borrowing, (b) lending and (c) recovering the principal with interest. In theory, the best lender is someone who can borrow at lowest rates, lend at highest rates and recover all with interest. In practice, this is an impossible combination especially the latter two activities because lending rates and asset quality usually are inversely related.
High interest rates are usually charged to high risk borrowers or asset classes wherein chances of default are high. In practice, a good lender is someone who has discipline in underwriting and willingness to walk away if he is not remunerated for the risk assumed. Owing to incentive-structures that drive growth at any cost, very few lenders pass this test.
Another hallmark of a good lender is access to a diversified, granular base of low cost deposits. Concentration in deposit base increases risk of run on the lender. That coupled with concentration in loan book has been recipe for bank closures world over in past. Only a lender with trust and wide distribution network can command a low cost and diversified deposit base.
In lending, liabilities are the real assets and assets are real liabilities.