Net Interest Margin
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Related to Net Interest Margin: Capital adequacy ratio
Net Interest Margin
A measure of the return on a company's investments relative to its interest expenses. The net interest margin helps a company determine whether or not it has made wise investment decisions. A negative net interest margin indicates that interest expenses exceed investment returns and that the company therefore has a net negative return. A positive net interest margin indicates the opposite. It is calculated thusly:
Net interest margin = (Investment returns - interest expenses) / Average earning assets.
Net interest margin = (Investment returns - interest expenses) / Average earning assets.