Net interest margin
BankingDefinition
A bank's key profitability metric. Difference between interest earned on loans/securities and interest paid on deposits/borrowings, divided by interest-earning assets.
Healthy NIM: 3-4% for community banks, 2-3% for mega-banks. Compressed in zero-rate environments (2009-2022). Rising rates initially expand NIM as floating loans reprice faster than CDs, but eventually deposit costs catch up.
Healthy NIM: 3-4% for community banks, 2-3% for mega-banks. Compressed in zero-rate environments (2009-2022). Rising rates initially expand NIM as floating loans reprice faster than CDs, but eventually deposit costs catch up.
Formula
NIM = (Interest income − Interest expense) / Interest-earning assets