Cost to Income Ratio
लागत-आम्दानी अनुपात
Also called Efficiency Ratio, Cost-Income Ratio
Formula
Cost to income ratio = Operating expenses / (Net interest income + Non-interest operating income) × 100
- Numerator
- Operating expenses excluding interest expense and impairment charges
- Denominator
- Total operating income (net interest income plus non-interest income)
The cost to income ratio compares a bank's operating expenses with its operating income to show how efficiently it is run.
What the value tells you
A lower ratio indicates better efficiency; a rising ratio shows costs growing faster than income.
Explained
The ratio is operating expenses (staff costs, rent, depreciation, IT and other administrative expenses) divided by operating income (net interest income plus fee, commission and other operating income). Interest expense and loan loss provisions are normally excluded from the numerator, because interest expense is already netted in income and provisions reflect credit quality rather than cost control.
A lower ratio means the bank spends less to earn each rupee of income. For example, a ratio of 40% means 40 paisa of operating cost for every rupee of operating income. A rising ratio can come from branch expansion, wage increases, technology spending or falling income.
The ratio is often used to compare banks of different sizes and to judge merger benefits, since mergers are expected to cut duplicate branches and staff. It is part of the earnings and management assessment in supervisory ratings.
Example
Operating expenses Rs 3 arba, net interest income Rs 6 arba and other operating income Rs 1.5 arba. Ratio = 3 / 7.5 × 100 = 40%.
बैंकको सञ्चालन खर्चलाई सञ्चालन आम्दानीसँग तुलना गरी व्यवस्थापकीय दक्षता देखाउने अनुपातलाई लागत-आम्दानी अनुपात भनिन्छ।
अनुपातले के देखाउँछ
न्यून अनुपातले राम्रो दक्षता देखाउँछ; बढ्दो अनुपातले आम्दानीभन्दा खर्च छिटो बढेको देखाउँछ।
व्याख्या
यो अनुपात सञ्चालन खर्च (कर्मचारी खर्च, भाडा, ह्रासकट्टी, सूचना प्रविधि र अन्य प्रशासनिक खर्च) लाई सञ्चालन आम्दानी (खुद ब्याज आम्दानी + शुल्क, कमिसन र अन्य सञ्चालन आम्दानी) ले भाग गरी निकालिन्छ। ब्याज खर्च र कर्जा नोक्सानी व्यवस्था सामान्यतया अंशमा राखिँदैन।
न्यून अनुपातले प्रत्येक रुपैयाँ आम्दानीका लागि कम खर्च भएको देखाउँछ। शाखा विस्तार, तलब वृद्धि, प्रविधि खर्च वा आम्दानी घट्दा अनुपात बढ्छ। गाभ्ने/गाभिने प्रक्रियापछि दोहोरो शाखा र कर्मचारी घटाएर यो अनुपात सुधार्ने अपेक्षा गरिन्छ।
उदाहरण
सञ्चालन खर्च रु ३ अर्ब, खुद ब्याज आम्दानी रु ६ अर्ब र अन्य सञ्चालन आम्दानी रु १.५ अर्ब भए अनुपात = ३ / ७.५ × १०० = ४०%।
Related
Sources
- Wikipedia: Efficiency ratioArticle
Updated