Quarterly cost-to-income ratio of EU banking industry 2007-2023

The cost-to-income ratio (CIR) is a crucial financial measure when valuing banks, as it shows a bank's costs as a proportion of its income. The lower the ratio, the more profitable the bank - or in our case the banking sector - will be. In terms of the EU banking industry, COVID-19 brought a record-low CIR: In the first quarter of 2020, the ratio was 73.29 percent, the highest in the observed period. As the EU economy started to stabilize, so did the CIR of the banking sector, and 2021 was a particularly strong year. During 2023, the cost to income ratio of the EU banking industry stagnated around 53 percent, and it dropped to 52.5 percent in the third quarter.