What is net interest margin?
Net interest margin (NIM) is a ratio used to measure the profitability of a bank or lender. It is calculated by dividing the net interest income (difference between the interest earned and interest paid) by the average interest-earning assets including loans and bonds. For banks and financial institutions, it’s important to have a positive net interest margin. It reflects how effectively they are using the money they have borrowed in the form of deposits or any other debt instrument.
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