The cost-to-income ratio (CIR) is a crucial financial measure when valuing banks, as it shows a bank's costs as a proportion of its income. The lower the ratio, the more profitable the bank—or, in our case, the banking sector—will be. In terms of the EU banking industry, COVID-19 brought a record-low CIR: in the first quarter of 2020, the ratio was 73.29 percent, the highest in the observed period. As the EU economy started to stabilize, so did the CIR, and 2021 was a particularly strong year. During 2023, it stagnated at around 53 percent, and it increased to 53.7 percent in the fourth quarter.
Average cost-to-income ratio for banks in the European Union from 4th quarter 2007 to 4th quarter 2023
Characteristic
Cost-to-income ratio
Q4 2023
53.7%
Q3 2023
52.56%
Q2 2023
52.97%
Q1 2023
53.62%
Q4 2022
59.16%
Q3 2022
60.32%
Q2 2022
59.67%
Q1 2022
59.65%
Q4 2021
61.03%
Q3 2021
59.95%
Q2 2021
60.01%
Q1 2021
59.17%
Q4 2020
63.33%
Q3 2020
62.65%
Q2 2020
63.59%
Q1 2020
73.29%
Q4 2019
64.68%
Q3 2019
63.92%
Q2 2019
64.47%
Q1 2019
66.2%
Q4 2018
65.74%
Q3 2018
64.43%
Q2 2018
64.63%
Q1 2018
65.57%
Q4 2017
64.03%
Q3 2017
62.6%
Q2 2017
62.19%
Q1 2017
64.07%
Q4 2016
65.93%
Q3 2016
63.37%
Q2 2016
63.15%
Q1 2016
66.13%
Q4 2015
63.47%
Q3 2015
60.55%
Q2 2015
59.81%
Q1 2015
61.32%
Q4 2014
63.38%
Q2 2014
62.43%
Q4 2013
65.28%
Q2 2013
59.3%
Q4 2012
65.82%
Q2 2012
62.58%
Q4 2011
62.38%
Q2 2011
60.02%
Q4 2010
60.88%
Q2 2010
61.89%
Q4 2009
59.25%
Q4 2008
70.28%
Q4 2007
65.85%
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ECB. (June 14, 2024). Average cost-to-income ratio for banks in the European Union from 4th quarter 2007 to 4th quarter 2023 [Graph]. In Statista. Retrieved July 22, 2024, from https://www.statista.com/statistics/995174/cost-to-income-ratios-for-banks-in-europe/
ECB. "Average cost-to-income ratio for banks in the European Union from 4th quarter 2007 to 4th quarter 2023." Chart. June 14, 2024. Statista. Accessed July 22, 2024. https://www.statista.com/statistics/995174/cost-to-income-ratios-for-banks-in-europe/
ECB. (2024). Average cost-to-income ratio for banks in the European Union from 4th quarter 2007 to 4th quarter 2023. Statista. Statista Inc.. Accessed: July 22, 2024. https://www.statista.com/statistics/995174/cost-to-income-ratios-for-banks-in-europe/
ECB. "Average Cost-to-income Ratio for Banks in The European Union from 4th Quarter 2007 to 4th Quarter 2023." Statista, Statista Inc., 14 Jun 2024, https://www.statista.com/statistics/995174/cost-to-income-ratios-for-banks-in-europe/
ECB, Average cost-to-income ratio for banks in the European Union from 4th quarter 2007 to 4th quarter 2023 Statista, https://www.statista.com/statistics/995174/cost-to-income-ratios-for-banks-in-europe/ (last visited July 22, 2024)
Average cost-to-income ratio for banks in the European Union from 4th quarter 2007 to 4th quarter 2023 [Graph], ECB, June 14, 2024. [Online]. Available: https://www.statista.com/statistics/995174/cost-to-income-ratios-for-banks-in-europe/