Bank Efficiency Ratio

The Bank Efficiency Ratio calculator computes the bank efficiency ratio based on the non-interest expense, net interest income, non-interest income and gains on investment securities.

INSTRUCTIONS: Choose units and enter the following:

• (NIE) Non-interest expense
• (NtII) Net Interest Income
• (NII) Non-interest Income
• (GIS) Gains on Investment Securities

Bank Efficiency Ratio (BER): The calculator returns the ratio as a real number. However this can be automatically converted to a percent via the pull-down menu.

The Math / Science

A bank's efficiency ratio is a measure of how well a bank is controlling its operating costs, for example salaries and advertisement. Generally, it is the ratio of expenses to revenue. The lower the ratio the better the efficiency.  The formula for bank efficiency ratio is popularly computed as:

     BER = NIE  ÷ (NtII + NII − GIS)

where:

• BER is Bank Efficiency Ratio
• NIE is Non-interest expense
• NtII is Net Interest Income
• NII is Non-interest Income
• GIS is Gains on investment securities