Among the 15 largest European banks in terms of total assets, Deutsche Bank had the highest cost-to-income ratio (CIR) in 2022. The German bank's CIR stood at 74.9 percent. It was followed by UBS AG and Groupe BPCE, both with a CIR above 70 percent. Banco Santander reported the lowest CIR, at 45.8 percent. The cost-to-income ratio is an important financial metric for determining the profitability of banks. The measure looks at the cost of running operations as a percentage of a bank’s operating income. Lower ratios mean that a bank is running more profitably, whereas a higher ratio indicates that the bank's operating expenses are too high. In Europe, cost-to-income ratios varied between 74.9 percent and 32.2 percent in the first half of 2023.
Profitability and stability
Low profitability has been highlighted several times by the ECB as a key risk to the financial stability of the Euro area. Prolonged low profitability can have a knock-on effect on an economy’s growth. On the other hand, sustained periods of higher-than-average profitability can also mean trouble, as was seen in the period leading up to the financial crisis.
Indicators of size
Rankings of banks can be constructed using a multitude of indicators. Frequently employed to determine the size of a bank is market capitalization, or the total dollar market value of a company's or bank's outstanding shares. Market capitalization is calculated from the current market price of one share and the number of shares outstanding for a company. Another indicator of a bank's size is its total assets.
Cost-to-income ratio (CIR) of the largest banks in Europe in 2022
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Cost-to-income ratio
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Statista. (November 13, 2023). Cost-to-income ratio (CIR) of the largest banks in Europe in 2022 [Graph]. In Statista. Retrieved July 03, 2024, from https://www.statista.com/statistics/1090104/leading-banks-in-europe-cost-to-income-ratio/
Statista. "Cost-to-income ratio (CIR) of the largest banks in Europe in 2022." Chart. November 13, 2023. Statista. Accessed July 03, 2024. https://www.statista.com/statistics/1090104/leading-banks-in-europe-cost-to-income-ratio/
Statista. (2023). Cost-to-income ratio (CIR) of the largest banks in Europe in 2022. Statista. Statista Inc.. Accessed: July 03, 2024. https://www.statista.com/statistics/1090104/leading-banks-in-europe-cost-to-income-ratio/
Statista. "Cost-to-income Ratio (Cir) of The Largest Banks in Europe in 2022." Statista, Statista Inc., 13 Nov 2023, https://www.statista.com/statistics/1090104/leading-banks-in-europe-cost-to-income-ratio/
Statista, Cost-to-income ratio (CIR) of the largest banks in Europe in 2022 Statista, https://www.statista.com/statistics/1090104/leading-banks-in-europe-cost-to-income-ratio/ (last visited July 03, 2024)
Cost-to-income ratio (CIR) of the largest banks in Europe in 2022 [Graph], Statista, November 13, 2023. [Online]. Available: https://www.statista.com/statistics/1090104/leading-banks-in-europe-cost-to-income-ratio/