Net Interest Margin
NIM
Credit & DebtInterest a bank earns on its loans and investments minus the interest it pays on deposits and borrowings, expressed as a percentage of its interest-earning assets. It accounts for funds the bank could not lend out.
Formula
NIM (%) = (Interest Earned - Interest Paid) / Average Interest-Earning Assets x 100
Why it matters
NIM is the core profitability measure of a lender. The simple spread between lending and deposit rates overstates it, because some deposits must sit as reserves with the RBI and never earn.
Indian example
Related terms
Learn the concept
Bond Pricing and Yields →From the research
How The Valuation Node Approaches Research
The research method behind The Valuation Node, how assumptions are stated, how sources are chosen, and how uncertainty is disclosed in every published analysis.
ValuationWhat Three Years of a Cash Flow Statement Reveals That One Year Hides
A single year of cash flow is a snapshot. Three years is a story. Learn what the trend reveals about earnings quality, funding, and sustainability.
ValuationComparing Two Companies on ROE, and Why the Higher One Is Not Always Better
Two companies can report the same ROE for very different reasons. DuPont analysis shows why an ROE built on leverage is not the same as one built on quality.