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Bank Costs Won't Stay Cut

Financial institutions continue to grapple with efficiency ratios as control, compliance, and technology expenses mount.

By Rick Green, Bloomberg | Updated on March 14, 2014

U.S. bankers who vowed last year to boost profit by shrinking expenses are finding costs don’t always stay cut.

While spending is down at the biggest commercial banks, efficiency ratios—a key gauge of management’s ability to control expenses—deteriorated at more than half of the 20 largest lenders during the fourth quarter, led by Bank of America Corp. and Citigroup Inc. Analysts including Mike Mayo at CLSA Ltd. are pressing them to do better this year, even as bankers say basic costs of doing business have gone up.

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