Analyzing
the cost to income ratio Cl- (employee expenditure + other operating
expenditure)/(net interest income + other income) for banks we see a stark
difference between public and private sector banks. For private banks CI has consistently
been on the downtrend coming down from 47 per cent in FY12 to 43 per cent in
FY17. Whereas for public sector banks this ratio has increased from 44 per cent
to 49 per cent in the same time period. Keeping overall costs under control is
a major competitive advantage as it improves the return on assets which enables
the firm to perform on both fronts - it delivers sufficient return to the
existing shareholders and provides opportunity to raise more capital for
further expansion. competition wizard magazine
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