Non-interest Income and Bank Profitability

In the U.S. commercial banking systems, non-interest income contributes to as much as over 40% of net operating income, compared to only 20% in 1980, which demonstrates non-interest income is playing a very important role. To test how non-interest income affects U.S. commercial banks’ profitability for recent decade, we accepted accounting ratios to measure the links between non-interest income and other factors contributing to the bank profitability from 2000 to 2010. The results show that banks with higher non-interest income normally have stronger power of profitability. It also indicates that the impact of non-interest income on bank performance can be different, depending on how performance is measured. Thus it can be a helpful complimentary for nowadays non-interest income research.