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Non Interest / Total Income ratio measures the proportion of bank's total income that have been generated by non-interest related activities (eg fees and commission, trading gains, forex activities etc).
It is calculated as
(Total Income - Interest Income) / Total Income
The interpretation of this ratio is subject to some controversy. Some analysts view a high number as good, since it shows that the bank is not dependent on its lending activities to generate a profit. However others take the opposite view and view a high number as indicating that the bank is dependent on unstable revenues that are not predicatable for its profitability. |