Efficiency Ratio Calculator: Measure Bank Performance Instantly
Use the calculator by entering your non-interest expense and revenue; it returns expense ÷ revenue × 100. Lower percentages mean leaner operations; U.S. banks averaged 54.1 % in 2022 (FDIC Quarterly Banking Profile, 2023).
Efficiency Ratio Calculator
Efficiency Ratio:
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How to use the tool
Complete four quick steps to gauge cost efficiency:
1. Enter Non-Interest Expense — e.g., $275,000 or $600,000.
2. Enter Revenue — e.g., $900,000 or $1,000,000.
3. Press “Calculate”; the script divides expense by revenue and multiplies by 100.
4. Compare the percentage with industry targets to spot savings or revenue gaps.
Figures come from income statements in SEC Form 10-K filings (SEC, 2023).
FAQ
What is the efficiency ratio?
The ratio shows how much you spend to earn one revenue dollar by comparing non-interest expense with revenue (Investopedia).
Why monitor it regularly?
Lower ratios correlate with higher profitability and stronger market valuations (Deloitte Global Banking Outlook, 2022).
What number counts as “good”?
“An efficiency ratio below 50 percent is generally considered excellent” (Federal Reserve Bank of St. Louis Bank Performance Report, 2023).
How often should you calculate it?
Quarterly checks match financial reporting cycles and capture seasonal cost swings (PwC Financial Reporting Guide, 2023).
Can the ratio be negative?
No. Expense and revenue are non-negative; a zero or negative revenue value invalidates the calculation.
What pushes the ratio higher?
Excess staffing, legacy IT, and weak fee income inflate costs relative to revenue (McKinsey Global Banking Review, 2021).
How do you lower it?
Digitising workflows, closing underperforming branches, and renegotiating vendor contracts cut costs without harming sales (Accenture Banking Report, 2022).
Is it the same as the expense ratio?
No; the expense ratio compares total costs to assets, whereas the efficiency ratio compares operating costs to revenue (Morningstar Methodology, 2023).
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