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Finance & Banking vocabulary · Interest & Exchange Rates

Net interest margin

Meaning in finance & banking, with examples

nounAdvanced term

In finance & banking, net interest margin means: A bank's interest income minus its interest expense, divided by its average interest-earning assets. It shows how profitably the bank lends and invests.

In Turkish: net faiz marjı

How it is used

A key figure in bank results and analyst calls, shortened to NIM. The margin widens when loan yields rise faster than funding costs, and narrows (is compressed) in the opposite case. Changes are discussed in basis points. The deposit mix and swap costs also affect it.

Example sentences

  1. Our net interest margin widened by 40 basis points as deposit costs fell.

  2. Analysts asked about the outlook for the net interest margin next year.

Common collocations

  • net interest margin
  • NIM expansion
  • margin compression
  • net interest income
  • spreadThe difference between two rates or prices, such as between a bank's lending and deposit rates, or between the buying and selling price of a currency.
  • interest rateThe price of borrowing money, shown as a percentage of the amount borrowed or saved for a period, usually one year.
  • demand depositMoney in a bank account that the customer can withdraw at any time without notice, such as the balance in a current account.
  • return on equityNet profit divided by shareholders' equity, shown as a percentage. It measures how much profit a company makes with the money its owners have invested.
  • income statementA financial statement showing a company's revenue, costs and profit or loss over a period, such as a quarter or a year.

More terms: Interest & Exchange Rates

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This page explains English vocabulary for learners. It is not financial advice.