Net Interest Margin

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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.
References in periodicals archive ?
"For the second half of 2019, we anticipate our net interest margins to recover as the liquidity situation improves and interest rates to normalize" he added.
Following the enactment of the Tax Cuts and Jobs Act, beginning in the first quarter of 2018, net interest margin is computed using net interest income adjusted to a fully taxable equivalent (FTE) basis assuming a statutory federal income tax rate of 21 percent and, where applicable, state income taxes; prior period net interest margins are computed using the then-statutory federal income tax rate of 35 percent and, where applicable, state income taxes.
The firm said it expects to lift its net interest margins this year after reporting a 33 percent rise in quarterly profit.
Gates Little, president and chief executive officer of the company said that the company's net interest margins improved during the quarter as compared to the same period in 2013.
Strong net interest income generation (+22 per cent) supported by better net interest margins (NIMs) and contribution from Egyptian operations, impressive non-funded income (+37 per cent) driven by robust fee income and gains from property sales portfolio, boosted the performance of ENBD in the second quarter of this year, according to Shu Capital's analysts.
Chief financial officer and group president (financial markets), Rajat Monga, said : 'We may see an uptick in net interest margins if the current economic environment prevails'.
" Our net interest margins on both domestic and international business have improved, and our reliance on wholesale deposits is very less," Chanda Kochhar, managing director ( MD) and chief executive officer ( CEO), ICICI Bank, said in a conference call.
Sharp declines in short-term interest rates and a steepening of the yield curve helped boost income, as net interest margins widened and banks realized hefty gains on securities, which helped offset adverse effects on profitability of higher loss provisioning (table 4).
The bank also posted its slowest quarterly profit growth in a decade due to a drop in net interest margins and losses in its investment portfolio.
According to Reuters, private-sector lenders in India are expecting an easing of pressure on net interest margins in the second half of this fiscal.
This development will help support net interest margins in 1990.
The improvement resulted from higher net interest margins, continued low provisions for loan losses, and slow growth of expenses.