What is Cost to Income Ratio? The Cost to Income Ratio (CIR) is a crucial financial metric that measures a bank’s operational efficiency. It compares the bank’s operating expenses to its net income, helping investors assess how well a bank controls costs relative to its earnings. A lower CIR indicates better efficiency, while a higher…
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Net Interest Margin (NIM) in Banking: A Key Profitability Metric
What is Net Interest Margin (NIM)? Net Interest Margin (NIM) is a key profitability metric used in the banking sector. It measures the difference between the interest banks earn on loans and the interest they pay on deposits, relative to their total earning assets. A higher NIM indicates that a bank is efficiently managing its…
How U.S. Inflation Impacts Interest Rates: A Simple Guide
Introduction Inflation and interest rates are two key economic indicators that shape financial markets and personal finances. But how are they connected? This guide explains the relationship between U.S. inflation rates and interest rate decisions by the Federal Reserve in a simple and easy-to-understand way. What Is Inflation? Inflation refers to the increase in prices…
Why Do U.S. Bond Yields Fall When Interest Rates Drop?
If you’re new to finance, you might have heard that when interest rates fall, U.S. bond yields become less attractive. But what does that really mean? Let’s break it down in simple terms. What Are Bond Yields? A bond is like a loan—you lend money to the government or a company, and they promise to…