Quarterly cost-to-income ratio of EU banking industry 2007-2023
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.