Banking
CASA ratio
The share of deposits held in low-cost current and savings accounts.
Facts checked against sources onWhat does CASA ratio mean?
CASA stands for current account and savings account. The CASA ratio is these deposits divided by total deposits, a term used most in India and other parts of Asia. Current accounts pay little or no interest, and savings accounts pay less than fixed (term) deposits, so a high CASA ratio means cheap funding and a wider net interest margin. Example: a bank with 400 in current and savings accounts and 600 in term deposits has a CASA ratio of 40 percent. Banks chase salary accounts and everyday payments because customers who transact often keep money in CASA.
Where does it come up in case interview prep?
Related terms
- Net interest margin (NIM)What a bank earns on its loans and investments after paying for its funding, as a share of those assets.
- Deposit betaThe share of a change in policy interest rates that a bank passes on to depositors.
- Loan-to-deposit ratio (LDR)Loans divided by deposits: how much of its deposit base a bank has lent out.
- Cost-to-income ratioOperating costs as a share of operating income. Lower means a more efficient bank.
- Cost of riskLoan loss charges as a share of loans, usually quoted in basis points.
- Non-performing loan (NPL) ratioThe share of a bank's loans that borrowers have stopped paying.
- CET1 capital ratio (and risk-weighted assets)A bank's highest-quality capital as a share of its risk-weighted assets.
- Liquidity coverage ratio (LCR)Whether a bank holds enough easy-to-sell assets to survive 30 days of stress.
Learn it in context
See CASA ratio at work in a lesson from Retail and commercial banking, with checks as you go.
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