costtoincome
The cost-to-income ratio, often abbreviated as CIR, is a financial metric used to measure the efficiency of a company, especially banks and other financial institutions. It expresses operating costs as a percentage of operating income, providing a straightforward gauge of how well a firm converts revenue into profits after expenses.
Calculation and components: The ratio is typically computed as CIR = operating expenses / operating income. In banking,
Uses and interpretation: CIR serves as a benchmark for efficiency across institutions and over time. A lower
Limitations and considerations: The CIR can be affected by one-off items, accounting standards, and cyclical factors.
Relation to other metrics: The CIR is closely related to the efficiency ratio used in many markets;