The trade off between interest income and non-interest income of Vietnam commercial banks

Vu Thi Le Giang & Hoang Hai Yen | 719 The trade off between interest income and non-interest income of Vietnam commercial banks VU THI LE GIANG University of Economics HCMC – giangvtl@ueh.edu.vn HOANG HAI YEN University of Economics HCMC – yenhh@ueh.edu.vn Introduction The main traditional activities of banks include deposit taking and lending Besides these activities, banks also diversify their activities to non-interest income activities and this trend become more and more popular Research of Stiroh (2004) on American banks stated that in 1980s non-interest income activities account for 19% total banks’ income while 2001 this number was 43% Studies of Lepetit, Nys, Rous, and Tarazi (2008) on European banks also got the same results, the percentage of non-interest income increased from 26% to 41% This trend is also repeated in other countries such as Australia, China although the growth rate is not as high as in US and Europe The strong increasing in non-interest income raises a question for bank managers and researchers: whether increasing in non-interest income activities is good for banks? Should banks continue this trend? Many researches related to this field are conducted but results are mix findings Vietnam also follows this trend With difficulties in credit expansion, banks are increasingly seeking revenues from non-interest income activities Results of this shift are not fully assessed Prior researches in Vietnam only studied about the sole impact of diversify income (interest income and non-interest income) to profit or to risk but these researches haven’t assessed systematically the trade-off between risk and return of interest income activities and non-interest income activities That the reason why we study about “the trade-off between interest income and non-interest income of Vietnam commercial banks” 720 | ICUEH2017 Non-interest income include “fiduciary income, service charges, trading revenue, and fees and other income” (Stiroh, 2004) In our research, we use “Total Non-interest Operating Income” in the balance sheet of banks as a noninterest income To exploit the problems, we use two ratios to measure the trade-off between risk and return (Vi and RAP as Williams and Prather (2010) Data from 27 Vietnam commercial banks between 2006 and 2015 is collected from Bankscope We find that diversification activities to noninterest income increases return against one unit of risk However, this return will reduce if we continue to shift to non-interest income activities This result encourages banks to invest in non-interest income activities but they also need to control these activities to avoid over-investment Our paper is constructed into five parts The next part will be literature review about income diversification The third part describes data and methodology The fourth part discusses the results and final part is conclusions Literature review Researches about diversification banking activities to noninterest income activities got mix findings Some research conclude that shifting toward noninterest income activities can bring back higher returns for banks while other studies prove that diversification doesn’t add benefit for banks but banks have to suffer higher risks However, all the researches agreed at the same point that traditional activities are less risk than noninterest activities DeYoung and Roland (2001) examines on 472 US commercial banks between 1988 and 1995 They tried to answer whether, how and to what degree the shifts to noninterest income affect the volatility of bank earnings Results reveal that shifting from traditional activities to non-traditional activities was increasing and bank’s return increased when they diversify to noninterest income activities However, the volatility of bank earnings was also higher Stiroh (2004) had the same point of view with DeYoung and Roland (2001) that non-interest income was more volatile than traditional income Author studied US banks from the late 1970s to 2001 to examine the affections of non-interest income to banks profit and revenue He found that there was a reduction in volatility of bank revenue growth in 1990s but this was because of the lower volatility of net interest income “rather than the diversification benefits from increased noninterest income” (Stiroh, 2004) He concluded that noninterest income was still more volatile than net Vu Thi Le Giang & Hoang Hai Yen | 721 interest income Other research conducted in Europe by Lepetit et al (2008) using data from 734 banks also found the same result Authors compared risk level of banks which diversified to untraditional activities with banks which didn’t follow this strategy Results revealed that diversifying banks suffered higher risks and these risks highly correlated with commission and fee incomes than trading activities In Vietnam, (Vo & Tran, 2015) studied 37 commercial banks from 2006 – 2013 They concluded that banks increasing fee-based activities may get lower profits and higher risks than banks pursuing traditional activities In contrast with the above researches, the following studies confirmed that shift to noninterest income activities bring benefits to banks Smith, Staikouras, and Wood (2003) studied the variability and the correlation between interest and non-interest income for banks in European countries from 1994-1998 Sample included 200 large banks having total assets over 10 billions USD and 2455 small banks The research found that shift to non-interest income make profits in European banks stable in the research period In addition, recent study of Lee, Yang, and Chang (2014) for 967 banks of 22 Asia countries from 1995 to 2009 about the impacts of non-interest income on profits and risks found that non-interest income reduced risks but did not increase profit Especially, results became complicated when bank specialization and a country's income level were considered To saving banks, profit reduced and risks increased when they shift to noninterest income activities In high income countries, these activities increased bank risks while in middle and low income countries, non-interest income activities increased profits and decreased risks Other researches did not examine sole impacts of shifting to fee-based income activities to returns and risks but they accessed the trade-off between returns and risks Results from these researches are also mix findings Some empirical researches find feebased income activities have negative impacts to the trade-off between returns and risks while other studies get opposite results DeYoung and Rice (2004) proved that increasing noninterest income activities lead to higher volatilities in returns They researched 4,712 commercial banks in United State from 1989 to 2001 with 37,175 observations about the relationships of non-interest income, business strategies, market conditions, technological changes and financial performance The results stated that increasing in non-interest income made the trade-off between risks and returns poorer In addition, study of Stiroh and Rumble (2006) for Financial Holding Companies – FHCs in United 722 | ICUEH2017 State also got the same results They researched 1800 FHCs from 1997 to 2002 and found evidences about the benefits of diversification However, these benefits were offset by increasing companies’ investments in non-interest income activities which were volatility and “not necessarily more profitable than traditional activities” Stiroh and Rumble (2006) With some typical companies, shift to fee-based income decreased risk-adjusted returns This confirmed that these FHCs must accept more risks to get non-interest incomes Besides studies stated that non-interest income had negative impacts to the trade-off between risks and returns, some studies found opposite results Williams and Prather (2010) stated there was a positive impact to the trade-off between risks and returns when banks shift from traditional activities to fee-based income activities Williams and Prather (2010) researched on 49 commercial banks which included big banks accounted for 65% total assets of commercial banks in Australia and issued most of financial products, the second group was domestic banks specialized in retail finance and the third group was foreign banks They concluded that non-traditional activities were riskier than traditional activities However, combining these two activities was benefit for shareholders in diversification their portfolio and reduced risks for banks Data description and methodologies 3.1 Data description Our research uses data of 27 commercial banks in Vietnam from 2006-2015 Foreign bank, foreign bank branches, joint-venture banks aren’t included in the sample because data of these banks aren’t updated in Bankscope As statistic of State Bank of Vietnam, there are 33 commercial banks This research excludes commercial banks: Global Petro Bank, National Citizen Bank, BacA Bank, KienLongBank, HDBank and Vietbank because data of these banks aren’t updated in years consecutive from 2006-2015 When studying the differences between state-owned banks and other joint stock commercial banks, we use the classification of State Bank of Vietnam However, group of state-owned banks just includes banks: Bank for Foreign Trade of Vietnam, Bank for Investment and Development of Vietnam, Vietnam Bank for Agriculture and Rural Development, Vietnam Joint-Stock Commercial Bank for Industry and Trade The other state-owned banks were acquired by State Bank of Vietnam during the restructuring Vu Thi Le Giang & Hoang Hai Yen | 723 banking systems Therefore, if we include the data of these banks in the data of stateowned banks, the data will be biased 3.2 Methodologies We use two indexes to measure the trade-off between risks and returns in research of Williams and Prather (2010) First, descriptive statistic is conducted to compare non-interest income and net interest income for all banks in the sample and in groups of banks (state-owned banks and other joint stock commercial banks) Results from descriptive statistic reveal the stable of these income sources and which source is the main income source of banks After that, the percentage of each income source is calculated to know the trend of shifting to non-interest income activities in Vietnam banking system Second, in order to understand whether diversification into non-interest income activities is benefit for banks, the authors undertake three steps Calculate correlation of five elements: net interest income against total assets, noninterest income against total assets, net interest income against total equity, non-interest income against total equity and ROE before tax Results reveal whether the combination of both traditional and non-traditional activities can reduce bank risks or not Besides, results also state if non-interest income activities is benefit for shareholders Calculate Vi (Williams & Prather, 2010) This index state how much risk banks have to tradeoff for one unit of return Vi = бi µi бi is the annual standard deviation of returns for income source i µi is the average annual return for the income source i Calculate RAP (Williams & Prather, 2010) which is the return premium for each unit of risk Comparison RAP of net interest income, RAP of non-interest income and RAP of total income will give the conclusion whether shift to non-interest income bring benefit for banks or not ri - rf RAPi = бi 724 | ICUEH2017 Where: ri : the average annual return for the income source i over the study period rf : the average annual return for the risk-free asset over the study period бi : the annual standard deviation of returns for the income source i for the study period Results getting from the above three steps will be discussed and summarized to find the final results for the research Results 4.1 Descriptive statistic Table Indicators related to net interest income and non-interest income Net interest income Non-interest income/Total assets Net interest income /Total assets Interest income /Total income Mean 3.43% 0.67% 2.68% 92.1% Standard deviation 1.23% 0.54% 0.98% 6.2% Max 9.75% 3.10% 6.51% 116.0% Min 0.53% -1.60% 0.46% 69.6% 226 226 226 227 Mean 3.46% 0.78% 2.92%* 91.0% Standard deviation 0.73% 0.29% 0.64% 3.6% Max 5.27% 1.45% 4.73% 96.3% Min 2.51% 0.26% 2.08% 83.5% 39 39 39 39 All banks N State owned bank N Other joint stock commercial bank Mean 3.42% 0.64% 2.63%* 92.3% Standard deviation 1.31% 0.58% 1.03% 6.6% Max 9.75% 3.10% 6.51% 116.0% Min 0.53% -1.60% 0.46% 69.6% 187 187 187 188 N Vu Thi Le Giang & Hoang Hai Yen | 725 Source: Calculated from Bankscope by authors Means of net interest income aren’t different for banks in two groups However, standard deviation of net interest income for state owned banks is smaller than that value for other joint stock commercial banks About non-interest income against total assets, mean of state-owned banks is higher than the value of joint stock commercial banks but the volatility of non-interest income against total assets for second group of banks is much higher than the first group The results from table also state traditional activities are main source of income for banks with the proportion of interest income in total income is above 90% During the 80s, non-interest incomes in United State accounted for 19% total income while in 2001 this rate was 43% (Stiroh, 2004) The same trend also happened in Europe with increasing from 26% in 1989 to 41% in 1998 (ECB2000) In Vietnam, shift to noninterest income activities is not as strength as the above regions Statistic in research period from 2006-2015, the percentage of non-interest income only accounts for 8% of total income and this proportion has been reducing since 2010 until now Before 2011, the percentage of non-interest income was about 11% of total income but in 2011-2015, it was only 5-6% These number state that there was a strong reducing in the proportion of non-interest income We don’t investigate the reasons of this reducing However, the time starting for the down trend was the same with the time the State Bank of Vietnam started to restructure the banking systems Therefore, we question whether the restructuring banking systems had impacts to the proportion of non-interest income From the above analysis, we divide the research period into two parts: first period is from 2006 to 2010 and the second period is from 2011-2015 Figure 1: The proportion of interest income and non-interest income over total income 726 | ICUEH2017 100.0% 80.0% The proportion of non- interest income against total income 60.0% 40.0% 20.0% The proportion of non- interest … 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 0.0% Source: calculated from Bankscope data Figure 2: The percentage of net interest income and non-interest income against total assets 3.50% 3.00% 2.50% Noninterest income against total assets 2.00% 1.50% 1.00% 0.50% 0.00% 2004 2006 2008 2010 2012 2014 2016 Source: calculated from Bankscope data The above figures state that during the research period from 2006 to 2015, net interest income was still the main source of income for banks and two sources of income had opposite trend Therefore, we expect that these two sources of income may have negative correlation and combination these two sources of income in the investment portfolio of banks may reduce total risk Vu Thi Le Giang & Hoang Hai Yen | 727 4.2 The risks and returns trade-off when banks invest in both traditional activities and fee income activities To determine whether investing in non-traditional activities reduces risks or not, we calculate the correlation between traditional income and non-interest income The results state that the correlation of these two sources of income for the group of all banks or for the group of join stock commercial banks are negative These results confirm that combining interest income activities and non-interest income activities can reduce total risk for banks In addition, the correlations between pre-tax ROE and non-interest income against equities for these two groups of banks are positive It means that increase noninterest income will have positive impact to pre-tax ROE The correlation between net interest income and non-interest income of state-owned bank group is small and the signs of correlation are both negative and positive The correlation between non-interest income against total assets and net interest income against total assets is -0.05 while the correlation between non-interest income against total equity and net interest income against total assets is +0.04 Therefore, from the above information, it’s hard to conclude whether the combination of interest income activities and non-interest income activities is good or not for state-owned banks Table Correlation of elements Net interest income/tot al assets Noninterest income/tot al assets Net interest income/tot al equity Noninterest income/tot al equity Pretax ROE ALL BANKS Net interest income/total assets 1.00 Non-interest income/total assets (0.09) 1.00 Net interest income/total equity 0.46 (0.10) 1.00 Non-interest income/total equity (0.11) 0.78 0.35 1.00 Pretax ROE 0.19 0.40 0.36 0.57 STATE-OWNED BANKS 1.00 728 | ICUEH2017 Net interest income/tot al assets Noninterest income/tot al assets Net interest income/tot al equity Noninterest income/tot al equity Net interest income/total assets 1.00 Non-interest income/total assets (0.05) 1.00 Net interest income/total equity 0.78 0.08 1.00 Non-interest income/total equity 0.04 0.88 0.41 1.00 Pretax ROE 0.01 0.12 (0.10) (0.01) Pretax ROE 1.00 OTHER JOINT STOCK COMMERCIAL BANKS Net interest income/total assets 1.00 Non-interest income/total assets (0.10) 1.00 Net interest income/total equity 0.46 (0.24) 1.00 Non-interest income/total equity (0.20) 0.83 0.07 1.00 Pretax ROE 0.18 0.41 0.38 0.62 1.00 Source: calculated from Bankscope data To determine the risks and returns trade-off, we use two indexes presented in research of Williams and Prather (2010) The first index Vi measures level of risks against one unit of return The results for Vi are presented in the following table Table Vi index for indicators in each bank group Net interest margin Non-interest income/total assets Net interest income/total assets Non-interest income/total equity Net interest income/total equity Total net interest income and noninterest income/total equity ALL BANKS Mean 3.43% 0.67% 2.68% 7.39% 29.76% 37.16% SD 1.23% 0.54% 0.98% 6.62% 15.79% 19.13% Vu Thi Le Giang & Hoang Hai Yen | 729 n 226 226 226 226 226 226 Vi 35.89% 80.53% 36.68% 89.62% 53.0% 51.49% STATE-OWNED BANKS Mean 3.46% 0.78% 2.92% 13.39% 49.75% 63.14% SD 0.73% 0.29% 0.64% 6.35% 16.11% 19.59% n 39 39 39 39 39 39 Vi 21.01% 37.47% 21.89% 47.43% 32.4% 31.02% OTHER JOINT STOCK COMMERCIAL BANKS Mean 3.47% 0.67% 2.67% 6.34% 25.71% 32.05% SD 1.31% 0.58% 1.03% 5.98% 12.16% 14.01% n 179 179 179 179 179 179 Vi 37.75% 86.00% 38.65% 94.39% 47.31% 43.71% Source: calculated from Bankscope data Vi index measures level of risk against one unit of income which banks have to suffer The results from the above table show that fee-based income is much riskier than traditional incomes This result is consistent with researches in the literature review When we compare two groups: state-owned banks and joint stock commercial banks, Vi indexes of state-owned banks group are much smaller than these indexes in joint stock commercial banks group and the differences between Vi of interest income and noninterest income of state-owned banks group are also smaller than the differences of joint stock commercial banks group This confirms that state-owned banks suffer less risk than joint stock commercial banks Although risks from non-interest income activities are much higher than risks from traditional activities, Vi of total net interest income and non-interest income/total equity is smaller than net interest income/total equity This result states that shifting to feebased income will reduce risks which shareholders have to suffer Consider risks and returns tradeoff at another angle, we use RAPi which is an index measuring excess return per unit of risk Results of RAPi of each bank group are presented in the following table 730 | ICUEH2017 Table RAPi for indicators in each bank group ALL BANKS Total net interest income Net interest income Non-interest income RAP n RAP n RAP N RAP n 2015 1.78 18 0.14 18 1.80 18 0.65 18 2014 1.96 22 0.50 22 2.31 22 0.64 22 2013 1.76 24 (0.23) 24 1.88 24 0.33 24 2012 1.66 25 (0.67) 25 1.85 25 0.27 25 2011 1.42 24 (1.13) 24 1.33 24 0.05 24 2010 1.13 24 (0.68) 24 1.37 24 0.67 24 2009 1.42 26 0.21 26 1.53 26 1.24 26 2008 0.81 24 (0.28) 24 1.03 24 0.27 24 2007 1.23 20 0.93 20 1.42 20 2.02 20 2006 1.26 19 0.86 19 1.40 19 1.39 19 20062015 1.40 27 (0.05) 27 1.54 27 0.53 27 20062010 1.19 27 0.27 27 1.37 27 1.12 27 20102015 1.67 27 (0.48) 27 1.76 27 0.20 27 Year Pretax ROE and non-interest income STATE-OWNED BANKS Year Net interest income RAP n Non-interest income RAP n Total net interest income and noninterest income RAP N Pretax ROE RAP n 2015 4.78 0.71 5.66 3.97 2014 2.88 0.71 3.16 1.52 2013 2.64 0.64 3.30 1.41 2012 2.42 1.19 2.85 0.93 2011 2.45 (0.40) 2.82 1.29 2010 2.90 0.72 3.28 0.99 2009 3.37 1.03 4.17 2.12 2008 3.07 0.63 2.86 1.75 2007 2.20 3.65 2.78 3.25 2006 2.25 4.55 2.75 1.38 Vu Thi Le Giang & Hoang Hai Yen | 731 20062015 2.61 0.89 2.83 1.52 20062010 2.82 1.61 3.30 1.78 20102015 2.44 0.43 2.72 1.36 JOINT STOCK COMMERCIAL BANKS Total net interest income Net interest income Non-interest income RAP n RAP n RAP N RAP n 2015 1.60 15 0.07 15 1.61 15 0.46 15 2014 1.91 18 0.45 18 2.27 18 0.50 18 2013 1.66 19 (0.45) 19 1.80 19 0.20 19 2012 1.63 20 (0.85) 20 2.12 20 0.15 20 2011 1.54 19 (1.32) 19 1.40 19 (0.02) 19 2010 1.23 19 (0.99) 19 1.78 19 0.56 19 2009 1.78 21 0.04 21 1.78 21 1.14 21 2008 0.87 19 (0.50) 19 1.16 19 0.18 19 2007 1.97 15 0.80 15 2.18 15 1.83 15 2006 1.62 14 0.73 14 1.70 14 1.43 14 20062015 1.48 22 (0.23) 22 1.74 22 0.42 22 20062010 1.49 22 0.08 22 1.71 22 1.04 22 20102015 1.64 22 (0.62) 22 1.79 22 0.10 22 Year and non-interest income Pretax ROE Source: calculated from Bankscope data During the research period, RAP of total net interest income and non-interest income are higher than RAP of net interest income, except in 2011 (all bank group and joint stock commercial banks group) and in 2008 (state-owned banks group) These results prove that when diversification to non-interest income activities, return per unit of risk will be higher than return per unit of risk if banks just invest in interest income activities RAP in the whole research period 2006-2015 or RAP in each period 2006-2010 and 2011-2015 for all banks or for each group of banks also get the same result This one more time confirms that the combination of non-interest income activities and interest income 732 | ICUEH2017 activities gets higher return per unit of risk than just investing in net interest income Therefore, shifting to fee-based income is reasonable The above results also reveal that at a certain time, RAP of non-interest income is negative At that time, although RAP of total net interest income and non-interest income is higher RAP of net interest income, instead of investing in non-interest income, investing in risk free rates will produce better return Another issue we find from the above result is that during 2006-2010 when the proportion of non-interest income is about 11% of total income, RAP of all banks and RAP of joint stock commercial banks are lower than these values in 2011-2015 when the proportion of non-interest income is only about 5-6% of total income This result reveals that although diversification to non-interest income activities increases return per unit of risk, the more invests in non-interest income activities, the less benefit derive from diversification because return per unit of risk will reduce Conclusions Using Vi and RAPi, we find that although risks to shareholders reduce when banks diversification to non-interest income activities, returns from these non-traditional activities are riskier than returns from traditional activities Besides, when banks diversify their activities, return per unit of risk increase However, the more invests in fee-based income activities, the less benefit derive from diversification because return per unit of risk will reduce In summary, diversification to non-interest income activities is right track but increasing the proportion of non-interest income activities, return per unit of risk will decrease Therefore, bank managers should control their shifting to non-interest income activities to exploit the benefit of diversification and avoid disadvantages Testing the difference of risk and return trade-off between two bank groups (stateowned banks and joint stock commercial banks) we find that there is a difference in risk suffered by two groups Risk per unit of return of state-owned banks is much smaller than this value of other joint stock commercial banks Although diversification to non-interest income activities is expanding in many countries in the world and the proportion of these non-traditional activities account for 20%-40% of total income, the opposite trend is happening in Vietnam The proportion of non-interest income activities reduces from 11% in the period 2006-2010 to about 5% Vu Thi Le Giang & Hoang Hai Yen | 733 in the period 2011-2015 Our results confirm that commercial banks should diversify their activities to non-interest income activities However, they also should notice that the benefit from diversification will reduce when they increase their investment in noninterest income activities In addition, interest income activities are still main source of income and they are less risk than non-interest income activities Facing with difficulties in expanding credit, banks may shift to fee-based income activities to increase returns, reduce risks for shareholders but if banks have opportunities to expand lending, they should focus their resources in this activity Besides the above results, our research has some limitations First, data was collected only in 10 years (2006-2015) Therefore, this limitation is also influence to the findings Second, we exclude foreign banks, foreign bank branches and joint-venture banks from our data because of insufficient data It’s better if we can include these banks in the data because they are different from domestic banks and they may have different strategies in developing non-interest income activities Comparing foreign bank group and domestic bank group may give a deeper understanding about diversification to fee-based income activities Third, our research has not suggested an optimal proportion which bank managers should invest in non-interest income activities From the above limitations, we suggest future researches should include data of foreign banks, foreign bank branches and joint-venture banks to get better findings In addition, a research about level of investment in non-interest activities will be benefit for bank managers References Alhassan, A L (2015) Income diversification and bank efficiency in an emerging market Managerial Finance, 41(12), 1318-1335 doi:doi:10.1108/MF-12-2014-0304 DeYoung, R., & Rice, T (2004) Noninterest income and financial performance at US commercial banks Financial Review, 39(1), 101-127 DeYoung, R., & Roland, K P (2001) Product mix and earnings volatility at commercial banks: Evidence from a degree of total leverage model Journal of financial intermediation, 10(1), 54-84 Ho, M T H., & Nguyen, C T (2015) Đa dạng hóa thu nhập yếu tố tác động đến khả sinh lời ngân hàng thương mại Việt Nam Công nghệ Ngân hàng, 106 & 107 Lee, C.-C., Hsieh, M.-F., & Yang, S.-J (2014) The relationship between revenue diversification and bank performance: Do financial structures and financial reforms matter? Japan and the World Economy, 29, 18-35 734 | ICUEH2017 Lee, C.-C., Yang, S.-J., & Chang, C.-H (2014) Non-interest income, profitability, and risk in banking industry: A cross-country analysis The North American Journal of Economics and Finance, 27, 48-67 Lepetit, L., Nys, E., Rous, P., & Tarazi, A (2008) Bank income structure and risk: An empirical analysis of European banks Journal of Banking & Finance, 32(8), 1452-1467 Smith, R., Staikouras, C., & Wood, G (2003) Non-interest income and total income stability Stiroh, K J (2004) Diversification in banking: Is noninterest income the answer? Journal of Money, Credit, and Banking, 36(5), 853-882 Stiroh, K J., & Rumble, A (2006) The dark side of diversification: The case of US financial holding companies Journal of Banking & Finance, 30(8), 2131-2161 Vo, V X., & Tran, M T P (2015) Lợi nhuận rủi ro từ đa dạng hóa thu nhập Ngân hàng thương mại Việt Nam Tạp chí Phát triển kinh tế, 26(8), 54-70 Williams, B., & Prather, L (2010) Bank risk and return: the impact of bank non-interest income International journal of managerial finance, 6(3), 220-244  ... calculate the correlation between traditional income and non -interest income The results state that the correlation of these two sources of income for the group of all banks or for the group of join... net interest income and non -interest income Net interest income Non -interest income/ Total assets Net interest income /Total assets Interest income /Total income Mean 3.43% 0.67% 2.68% 92.1% Standard... each unit of risk Comparison RAP of net interest income, RAP of non -interest income and RAP of total income will give the conclusion whether shift to non -interest income bring benefit for banks or