What is Net Interest Margin (NIM)?

The difference between interest income earned and interest expense paid, as a percentage of earning assets.

Net Interest Margin (NIM) is the primary profitability metric for financial institutions, measuring the spread between interest income (from loans and investments) and interest expense (on deposits and borrowings) relative to total earning assets. NIM is expressed as an annualized percentage. Higher NIM indicates more profitable lending and investment activities. NIM is affected by the rate environment, asset mix, funding costs, and competitive dynamics.

Formula

NIM = (Interest Income - Interest Expense) / Average Earning Assets

How LoanBook Uses Net Interest Margin

LoanBook tracks NIM for credit unions and banks through the intelligence modules, using NCUA call report data (5300) and FDIC call report data. NIM is displayed in institution profiles and used in peer comparison analysis.

Frequently Asked Questions

What is a typical NIM for a credit union?

Credit union NIM typically ranges from 2.50% to 3.50%, with the median around 3.00%. Community banks tend to have slightly higher NIM (3.00-3.75%) due to different asset and funding mixes.

Related Terms

Servicing Strip

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