A bank has total assets of $100 million including loans of $50 million that pay an interest rate of 10% financed by $40 million of deposits paying an interest rate of 5% and $10 million in equity. What is the bank's Net Interest Margin (NIM)?

Question

Quizplus · Accepted Answer

NIM = (Interest Revenues - Interest Expenses) / Total Assets 
= [($50 mil. x .10) - ($40 mil. x .04)] / $100 mil. 
= ($5 mil. - $2 mil.)/$100 mil. = .03 or 3%

A Bank Has Total Assets of $100 Million Including Loans