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Financial education 29 Jan 2020

What is recurring income?

Recurring income (or core earnings) is the most closely linked to the traditional banking business: net interest income and commissions.

Net interest income is the difference between financial income and financial costs; that is, the difference between an asset’s profitability (the credit lines and loans that the institution has on its balance sheet, mainly) and the interest it pays for the resources it needs to finance that asset (such as customer deposits and wholesale financing).

The other component of recurring income, commissions, refers to the amounts charged by banks for the provision of services (sale of investment funds, account maintenance, use of cards, structuring of operations, etc.). They are shown in the net income account of the commissions that the bank in turn pays for other services it receives.

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