The efficiency ratio of the U.S. banking industry fluctuated significantly between 2003 and 2024, signalling the varying performance and stability of the industry. The ratio, which measures the non-interest expense as a percentage of the net operating revenue, was 65.49 percent in the first quarter of 2024, notably lower than in the previous quarter. The highest efficiency ratios were measured during the global financial crisis in 2008.

Banamex had the highest efficiency ratio among the leading banks in Mexico in 2024. The bank reported an efficiency ratio of 64.7 percent, and was followed by HSBC with a ratio of 58.3 percent.

Among Canada's largest banks, Toronto-Dominion Bank (TD Bank) reported the highest efficiency ratio in 2024 at 62 percent, followed by the Royal Bank of Canada (RBC) at 59.7 percent. The Canadian Imperial Bank of Commerce (CIBC) recorded the lowest efficiency ratio, at 55.8 percent. The efficiency ratio - also known as the cost-to-income ratio or productivity ratio - is a key measure of operational efficiency, calculated by dividing non-interest expenses by total revenue. A lower ratio indicates more efficient operations.

European banks are showing varied levels of operational efficiency, with Portugal leading the pack in the third quarter of 2024. The cost-to-income ratio (CIR), a key indicator of bank profitability, reveals significant disparities across EU countries. In the third quarter of 2024, Portugal's banking sector boasted the lowest CIR at 31.9 percent, followed closely by Greece, indicating their high operational efficiency. In contrast, Liechtenstein, France, and Germany faced challenges with higher CIRs, suggesting room for improvement in their banking operations. Similar differences can also be observed at the individual bank level, where some of the largest European banks reported CIRs well above 70 percent in 2023. Recent trends in the EU banking sector The European Union's banking industry has experienced notable fluctuations in recent years, which was reflected in the EU's aggregate cost-to-income ratio. In the first quarter of 2020, the COVID-19 pandemic caused the CIR to spike to 73.29 percent, the highest in recent history. However, the sector has since rebounded, with the CIR stabilizing around 53 percent throughout 2024. This improvement coincides with a significant increase in total operating income, which reached 759.45 billion euros in 2023, up from a low of 561.27 billion euros in 2020. Profitability and growth outlook Despite challenges, the EU banking sector has shown resilience and growth. The operating income growth rate reached approximately 16 percent in 2023, the highest in the observed period. This positive trend is particularly noteworthy following the substantial decline in income growth during the 2020 pandemic-induced economic contraction. As banks continue to adapt to changing economic conditions, their ability to maintain low CIRs while increasing operating income will be crucial for sustained profitability and stability in the European financial landscape.

Ranks of Saudi banks using CAMEL composites (E, L).

In 2024, the efficiency ratio of Scotiabank in Mexico declined to 47.8 percent, down from 51.2 percent when compared to the previous year. In 2023, Scotiabank was ranked third among the leading banks with the highest efficiency ratio in Mexico.

European banks demonstrated varying levels of operational efficiency in 2023, as revealed by their cost-to-income ratios (CIR). UBS AG topped the list with the highest CIR at 95 percent, followed by Deutsche Bank and Société Générale, both exceeding 73 percent. On the other end of the spectrum, UniCredit reported the lowest CIR at 39.7 percent. This wide range of ratios highlights the diverse operational strategies and challenges faced by major European financial institutions. Profitability and operational efficiency The CIR serves as a crucial indicator of a bank's profitability, measuring the cost of running operations as a percentage of operating income. Lower ratios generally indicate higher profitability, while higher ratios suggest operational inefficiencies. Cost-to-income ratios in Europe varied between 32.1 percent and 79 percent in early 2024, with Greece's banking sector leading in efficiency. This disparity in CIRs reflects the ongoing efforts of European banks to optimize their operations and adapt to changing economic conditions. Revenue and profit landscape Despite varying CIRs, European banks continue to generate substantial revenues. In 2023, HSBC led the pack with annual revenues of approximately 59.85 billion euros, closely followed by Banco Santander at 57.42 billion euros. HSBC also demonstrated strong financial performance in terms of profits, reporting nearly 24.6 billion U.S. dollars in 2023. These figures underscore the resilience of major European banks in navigating challenging economic environments while maintaining their position as key players in the global financial landscape.

In 2024, the efficiency ratio of HSBC in Mexico stood at 58.3 percent, up from 57.2 percent registered a year earlier. In that same year, HSBC ranked among the leading banks in 7 with the second-highest efficiency ratio. The ratio is calculated by dividing administrative expenses by income.

Deutsche Bank's tier 1 capital ratio reached 17 percent in 2024, marking the sixth consecutive year of improvement for this key measure of financial strength. This upward trend in capital adequacy comes amid a period of mixed financial performance for Germany's largest bank, highlighting its efforts to bolster stability in the face of various challenges. Asset growth and profitability fluctuations While Deutsche Bank's total assets grew to approximately 1.39 trillion euros in 2024, up from 1.31 trillion euros the previous year, this figure remained below pre-2018 levels. The bank's profitability has shown significant volatility in recent years. Despite strong performances in 2022 and 2023, net profit declined notably in 2024, though it remained well above historical lows. This uneven financial trajectory underscores the importance of maintaining a robust capital position. Income trends and quarterly performance Deutsche Bank's income before taxes reached about 5.7 billion euros in 2023, the highest since 2007, and remained similarly high in 2024. The bank reported profits in every quarter from 2020 to 2024, with the last quarter of 2022 yielding a net profit of approximately 1.98 billion euros, the highest in over a decade. However, profitability sharply declined in the second quarter of 2024, with net profit falling to around 52 million euros, the lowest since 2020. These fluctuations in income and quarterly performance highlight the ongoing challenges faced by the bank despite its improving capital ratio.

In 2020, the efficiency ratio of Banamex in Mexico stood at 63.6 percent, 6.1 percentage points less than the previous year. In that same year, Banamex ranked among the leading banks with the highest efficiency ratio in Mexico. The ratio is calculated by dividing administrative expenses by income.

Among the five largest banks in the United Kingdom (UK), HSBC Holdings had the lowest cost-to-income ratio (CIR) in 2024, at 20.2 percent. It was followed by NatWest and Standard Chartered, both with CIRs between 50 and 60 percent. The CIR is a key financial metric used to assess a bank’s profitability, as it compares operating costs to income. A lower CIR indicates higher profitability and operational efficiency, while a higher ratio suggests that a bank's operating expenses are too high relative to its income.

Capital One received the highest customer satisfaction score among the largest banks in the United States as of 2024, with a score reaching 689 points out of 1,000. JPMorgan Chase, the largest U.S. bank, ranked second, and TD Bank and U.S. Bank followed, both above the industry average. Wells Fargo, Bank of America, and Citigroup received the lowest scores. Most important factors for bank customers worldwide According to a survey conducted by Statista among more than 75,000 bank customers across 32 nations worldwide, trust is the most important factor when customers think about their banks. More than half of all respondents highlighted trust as the most important factor. Banks seem to understand this and put focus on increasing their trustworthiness, which can be seen by the high level of customer satisfaction with the trustworthiness of their banks. More in-depth information can be found Statista's global bank customer satisfaction survey. Largest banks in the U.S. There are several aspects to consider when determining the largest banks in the United States, but JPMorgan Chase consistently stands out as a leader. Across key financial metrics, such assets, market capitalization, market share, deposits, revenue, and net income, JPMorgan Chase tops the list. CET1 ratio and total capital ratio seem to be two of the few key performance indicators where JPMorgan Chase did not rank first in 2024.

In 2024, Scotiabank's net income of Scotiabank declined to 10.93 billion Mexican pesos after reaching its peak of 11.3 billion Mexican pesos in the previous year. In 2024, the bank was ranked third among leading Mexican banks in terms of efficiency ratio, amounting to 47.8 percent.

HSBC stood as Europe's only bank with a market capitalization exceeding 100 billion U.S. dollars as of December 31, 2024. The UK-based financial institution reached a market value of approximately 176.71 billion U.S. dollars, significantly ahead of its closest European competitor, UBS, which was valued at 97.76 billion U.S. dollars. Throughout the past decade, despite market fluctuations, HSBC has consistently maintained its position as Europe's most valuable bank by market capitalization. European banking: single representative in global elite Among the world's 15 largest banks by market capitalization in December 2024, HSBC was Europe's sole representative. JPMorgan Chase, headquartered in the United States, led the global rankings with a market value exceeding 678 billion U.S. dollars. What is market capitalization? Market capitalization - calculated by multiplying a company's outstanding shares by its share price -serves as a widely used measure of company size. While this metric provides investors with an easily calculated indicator for risk assessment, it represents just one way to evaluate banks' performance. European banks can also be measured by other important metrics, including total assets, revenue, and cost-to-income ratio (CIR). These alternative measurements may paint a different picture of their relative strength and market position.

The European banking sector showed significant disparities in net interest margins (NIM) during the second quarter 2024. Hungary and Poland topped the rankings with identical NIMs of 4.4 percent. In contrast, several Western European nations reported markedly lower figures: Germany at 1.2 percent, Denmark at 1.1 percent, and France with the lowest at 0.9 percent. NIM, a key indicator of bank profitability, measures the difference between interest income earned from lending activities and interest paid to depositors, expressed as a percentage of interest-earning assets. Profitability and stability Low profitability has been highlighted several times by the ECB as a key risk to the financial stability of the Euro area. There are several ways to examine profitability in the banking sector, such as the cost-to-income ratio. Prolonged low profitability can have a knock-on effect on an economy’s growth. On the other hand, sustained periods of higher than average profitability can also mean trouble, as was seen in the period running up to the financial crisis. Other key measures There are several other metrics that can also be used. Return on equity (ROE), which divides net income by shareholders' equity, looks at how well a company’s management is using its assets to create profits. Another key measure of a bank's profitability is to look at the return on assets (ROA), which divides a bank’s net income by its total assets during a given period.

The return on equity (ROE) of European banking sectors showed significant disparities in the last quarter of 2024, with Romania leading at 22.4 percent and Liechtenstein trailing at 5.8 percent. This wide range reflects the diverse financial landscapes across the continent, influenced by factors such as market conditions, regulatory environments, and economic stability. While ROE is a crucial indicator of banking efficiency, it's important to consider it alongside other metrics for a comprehensive view of the industry's health. Digital transformation reshaping European banking The banking sector in Europe is undergoing a digital revolution, with online banking penetration reaching impressive levels. In 2024, Denmark lead with a 97.76 percent penetration rate, closely followed by Norway at 96.8 percent. This shift towards digital banking is not only changing how traditional banks operate but also paving the way for the rise of digital-only banks. Neobanks like Revolut have seen rapid growth, with the UK-based fintech reaching 50 million users by November 2024, highlighting the increasing consumer preference for digital financial services. Consolidation and asset growth in European banking Despite the high number of banks operating in Europe, with 4,804 institutions in the EU as of December 2024, the industry is dominated by a few large players. In 2023, HSBC Holdings lead European banks with total assets exceeding 2.9 trillion U.S. dollars in 2023, followed closely by BNP Paribas SA with over 2.8 trillion U.S. dollars. This concentration of assets among top banks, coupled with the ongoing digital transformation, suggests a trend towards consolidation in the European banking sector, potentially impacting future ROE figures across the continent.

As of March 2024, Bangkok Bank was the largest bank in Thailand, with total assets of around 4.51 trillion Thai baht. Other leading banks in terms of total assets were Kasikorn Bank and Krungthai Bank, which were also considered Thailand's leading commercial banks. Thailand’s banking market Despite Bangkok Bank being the largest in terms of total assets, other leading banks in Thailand also include Siam Commercial Bank, Kasikorn Bank, and KrungThai Bank which leads the banking market in terms of net profit. Despite the vast array of financial products and services offered by the major banks, the financial health of these commercial banks is largely determined through the quality of a bank’s loans, which is ultimately driven by the size of non-performing loans. Despite the recent COVID-19 pandemic, banks in Thailand have managed to maintain the quality of their loans through the issuance of soft loans and debt restructuring. Towards digital banking Driven by the high number of mobile phone subscribers and internet penetration rate in Thailand, financial activities have continued to evolve to accommodate more digital platforms. The leading banks in Thailand have now implemented diverse mobile applications and websites to cater for the widening range of online financial activities. In 2017, the Bank of Thailand together with the ministry of finance introduced PromptPay as an easy way to transfer money digitally by using the user’s phone number. Ever since its release, the platform has continuously contributed to the constant rise in Thailand’s digital banking scene.

This statistic shows the tier 1 capital ratio value for the Clydesdale Bank PLC in the United Kingdom (UK) from 2014 to 2020. Between 2014 and 2020, the tier 1 ratio, used to evaluate the risk levels of bank business performance, fluctuated with an overall increase. In 2020, the ratio was set at 17.1 percent.

Digital banking adoption has reached remarkable levels across Europe, with the Nordic region leading this transformation in 2024. Denmark stands at the forefront with an extraordinary 97.76 percent of its population using online banking services. Norway follows closely with 96.8 percent of its citizens managing their finances digitally, while the Netherlands rounds out the top three at 96.35 percent. These impressive figures highlight how thoroughly Northern European countries have embraced digital financial services, supported by robust technological infrastructure and a population comfortable with digital solutions. The widespread adoption reflects broader regional trends toward digital innovation and the ongoing shift away from cash transactions, as consumers increasingly prefer the convenience and efficiency of online banking. Digital banks on the rise The emergence of digital banks has marked a significant shift in the banking landscape, with these institutions rapidly gaining momentum worldwide. Some of the largest digital banks in the world now boast over 100 million users, showcasing the widespread adoption of digital banking services. Particularly in Europe, leading digital banks like Revolut have experienced exponential growth in recent years, rapidly expanding their customer bases. The UK-based neobank has been on a trajectory of rapid expansion, reaching 50 million users in November 2024. Attitude toward digital banks in the U.S. Opinions on digital banks in the U.S. vary widely within the banking industry, with a growing number of bank executives viewing them as a significant threat to traditional banking models. The rapid rise of digital banks has prompted concerns about market disruption and competition, as these agile fintech players offer innovative solutions and attract a sizable customer base. In the U.S., awareness, popularity, and usage of leading neobanking and neobrokerage apps have steadily increased, underscoring the shifting preferences of consumers towards digital financial services. As digital banks continue to gain traction and reshape the industry landscape, traditional financial institutions are facing pressure to adapt and innovate to remain competitive in the evolving market.