Definition
Other Income (Banking)
Other income, or non-interest income, is the fee, commission, trading and miscellaneous income a bank earns beyond interest on loans.
Other income includes processing fees, distribution commissions (insurance, mutual funds), forex and trading gains, ATM and card fees and treasury profits. It diversifies revenue away from the interest-rate cycle that drives NIM.
A high and stable share of fee-based other income is valued because it improves the cost-to-income profile and cushions earnings when margins compress. Indian banks with strong cards, wealth and transaction-banking businesses tend to enjoy richer, more durable other income.
Related terms
- Net Interest Margin (NIM)Net Interest Margin is the difference between the interest a bank earns on advances and investments and what it pays on deposits and borrowings, expressed as a percentage of average interest-earning assets.
- Cost-to-Income RatioThe cost-to-income ratio measures a bank's operating expenses as a percentage of its operating income, gauging operational efficiency.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.