Maybe I am being too simplistic but this is how it looks to me.
The bank borrows 100000 from ECB at 3% over 20 years - they then repay this
Mary borrows 100000 from the bank on a tracker 3% plus% and repays it monthly over 20 years.
Is the bank not making a 1% profit?
The bank has 100000 on deposit and pays 1% interest
It lends the money out on a tracker at 3% plus 1% - is this not a 4% profit?