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translateGLOSSARY · BANKING

What is Net Interest Margin (NIM)?

NIM measures the difference between the interest a bank earns on loans and pays on deposits, relative to its assets.

PrepClever Glossary · Banking

updateUpdated July 2026

Formula

NIM = (Interest Income − Interest Expense) ÷ Average Earning Assets × 100

Net Interest Margin is a core profitability measure for banks. A higher NIM means the bank is earning more spread between what it lends at and what it borrows at. It is influenced by the CASA ratio, loan mix and interest-rate cycle.

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Example

A bank earning ₹350 crore net interest on ₹10,000 crore of earning assets has a NIM of 3.5%.

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Glossary

FAQs about Net Interest Margin (NIM)

What drives a bank's NIM?add

A high share of low-cost CASA deposits, a profitable loan mix, and the interest-rate environment. Rising rates can help or hurt NIM depending on how fast loans and deposits reprice.

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Net Interest Margin (NIM) is one term in a much larger syllabus. These are the fastest routes into the rest of it.

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What is Net Interest Margin (NIM)?

Related Terms

CASA Ratio

Repo Rate

Non-Performing Asset (NPA)

FAQs about Net Interest Margin (NIM)

Where to go from here

Master every term that matters

What is Net Interest Margin (NIM)?

Related Terms

CASA Ratio

Repo Rate

Non-Performing Asset (NPA)

FAQs about Net Interest Margin (NIM)

Where to go from here

Master every term that matters