Net Interest Margin (NIM)

Net Interest Margin (NIM) is a profitability metric specific to banks and financial institutions that measures the difference between the interest income earned on loans and investments and the interest paid on deposits and borrowings, expressed as a percentage of average earning assets. It is calculated as: NIM = (Interest Income – Interest Expense) ÷ Average Earning Assets × 100. A higher NIM indicates that a bank is earning significantly more on its assets than it pays on its liabilities — a sign of strong pricing power and efficient asset-liability management. In India, NIM is one of the most closely tracked metrics for banking sector stocks, with changes in RBI policy rates, loan mix (retail vs corporate), and deposit costs directly influencing NIM trajectory.