Magazine article American Banker

Bigger Can Mean Better, in Efficiency Rankings

Magazine article American Banker

Bigger Can Mean Better, in Efficiency Rankings

Article excerpt

Banks' efforts to improve efficiency are paying off. At the top 100 bank holding companies, efficiency ratios - a measure of how much it costs a bank to generate $1 of revenue - have been improving dramatically.

The average for the group is 57.40% for the first nine months of this year, compared to 59.44% in 1995. (See chart below.) And that's down from nearly 62% in 1994.

Bankers and analysts said two factors explain the improvement - a continuing focus on expense reductions as well as boffo profits that boosted the revenue side of the equation.

Many banks long respected for their efficiency remain in familiar positions in the top 10, including Valley National Bancorp, First Bank System Inc., Bank of New York Co., and Fifth Third Bancorp. The top slot with an astonishingly low 39.54% ratio of gross operating expenses to revenues - went to North Fork Bancorp. on New York's Long Island. …

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