Efficiency Ratio
A banks non-interest operating expense divided by its total revenue (net interest income plus non-interest income). The efficiency ratio measures how much it costs the bank to generate a dollar of revenue. Lower is better: mid-50s is strong, above 70 percent is weak. Efficiency ratios are reasonably comparable across the large US banks and tend to be sticky over time because most of the gap reflects structural choices (technology investment, branch density, scale economies) that do not flip quarter-to-quarter.
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