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  • Net Interest Income

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    Net interest income is the difference between the revenue a bank earns from interest on loans and securities and the interest it pays out to depositors. It is generated from the spread between higher interest rates on a bank's assets like loans and mortgages and lower interest rates paid on liabilities such as customer deposits. A bank's net interest income can be more sensitive to interest rate changes depending on factors such as whether its assets and liabilities are fixed or variable rate and how quickly each reprices.

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    Net interest income is the difference between the revenue a bank earns from interest on loans and securities and the interest it pays out to depositors. It is generated from the spread between higher interest rates on a bank's assets like loans and mortgages and lower interest rates paid on liabilities such as customer deposits. A bank's net interest income can be more sensitive to interest rate changes depending on factors such as whether its assets and liabilities are fixed or variable rate and how quickly each reprices.

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    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
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    15 views1 page

    Net Interest Income

    Uploaded by

    Gaurav
    Net interest income is the difference between the revenue a bank earns from interest on loans and securities and the interest it pays out to depositors. It is generated from the spread between higher interest rates on a bank's assets like loans and mortgages and lower interest rates paid on liabilities such as customer deposits. A bank's net interest income can be more sensitive to interest rate changes depending on factors such as whether its assets and liabilities are fixed or variable rate and how quickly each reprices.

    Copyright:

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    Net Interest Income

    What Does Net Interest Income Mean?


    The difference between the revenue that is generated from a bank's
    assets and the expenses associated with paying out its liabilities. A
    typical bank's assets consist of all forms of personal and commercial
    loans, mortgages and securities. The liabilities are, of course, the
    customer deposits. The excess revenue that is generated from the spread
    between interest paid out on deposits and interest earned on assets is
    the net interest income.
    The net interest income of some banks is more sensitive to changes in
    interest rates than others. This can vary according to several factors,
    such as the type of assets and liabilities that are held. Banks with
    variable rate assets and liabilities will obviously be more vulnerable to
    changes in interest rates than those with fixed-rate assets. Banks with
    liabilities that reprice more often or quicker than its assets will also be
    affected by interest rate changes.

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