Enter the total investment returns, interest paid, and average assets. The calculator will evaluate and display the net interest margin.
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Net Interest Margin Formula
The following formula can be used to calculate the net interest margin.
NIM = (IR – IP) / AA
- Where NIM is the net interest margin
- IR is the investment return
- IP is the interest paid
- AA is the average assets
Net Interest Margin Definition
A net interest margin is a ratio of the return of an investment (minus interest) to the total average assets of the investment. The greater the ratio the smaller the assets or larger the return.
Net Interest Margin Example
How to calculate net interest margin?
- First, determine the investment return.
Calculate the total return on the investment.
- Next, determine the interest paid.
Calculate the total interest paid.
- Next, determine the average assets.
Calculate the total average asset value.
- Finally, calculate the net interest margin.
Calculate the net interest margin using the formula above.
Net interest margin is a ratio of the real return on an investment to the to average assets of the investment.