What is Net Interest Margin?
Net Interest Margin (NIM) is a financial metric used to evaluate the profitability and efficiency of a financial institution, such as a bank or a credit union. It represents the difference between the interest income earned from loans, investments, and other interest-earning assets, and the interest expenses incurred from deposits and other interest-bearing liabilities, relative to the total interest-earning assets.
In simpler terms, NIM measures the spread between the interest income generated by a financial institution's assets and the interest paid out on its liabilities. A higher NIM indicates that the institution is earning more interest income relative to its interest expenses, which generally reflects greater profitability and efficiency in managing its balance sheet.
How to Calculate Net Interest Margin?
Net Interest Margin calculator uses Net Interest Margin = Net Interest Income/Average Interest Earning Assets to calculate the Net Interest Margin, The Net Interest Margin formula is defined as a key financial metric used primarily in the banking and financial services industry to evaluate the profitability of lending and investment activities. Net Interest Margin is denoted by NIM symbol.
How to calculate Net Interest Margin using this online calculator? To use this online calculator for Net Interest Margin, enter Net Interest Income (NII) & Average Interest Earning Assets (AIEA) and hit the calculate button. Here is how the Net Interest Margin calculation can be explained with given input values -> 3.241895 = 1300/400.