What it is
For a shop, revenue is sales. A bank has no sales, so the equivalent is total operating income: net interest income plus net fees and commissions plus trading gains (foreign exchange, securities) plus other income.
It is the number against which you judge the bank's costs. Operating expenses ÷ total operating income is the 'cost to income ratio' analysts quote.
Some reports label this 'Total operating income'; the Punji engine maps it to revenue.
How it is calculated
Net interest income + Net fee and commission income + Net trading income + Other operating income.
Worked on Nabil Bank Limited, FY 2082/83 Q4
NABIL's total operating income for FY 2082/83 was Rs 2,233.44 crore, of which net interest income was Rs 1,700.93 crore and fees Rs 466.74 crore. Operating expenses of Rs 809.27 crore are 36.23% of that.
Operating expenses, the sum of the three printed lines: personnel expenses, other operating expenses, depreciation and amortisation.
What good looks like
Growing faster than operating expenses. A low and falling cost-to-income ratio means the bank runs efficiently.
Watch out
- Trading gains are lumpy; a good quarter on foreign exchange is not repeatable.
- Do not compare a bank's 'revenue' with a hydropower company's; they mean different things.
- Some filings print gross interest income as the top line; check which total you are reading.
In Nepal
NRB's quarterly template shows 'Total operating income' after interest expense, so it already nets out the cost of deposits.
Questions
Because revenue here is after paying depositors. Interest income is gross; total operating income is net of interest expense.
Operating expenses divided by total operating income. Lower means the bank spends less to earn each rupee.