BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Margin of Interest earned on Trading in Govt Securities
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Difference between the Base Interest Rate and the Average Lending Rate
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Difference between the interest income and the amount of interest paid out
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Difference between Interest on Term Loans and Interest on Cash Credits
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Detailed explanation-1: -Net interest margin (NIM) is a measurement comparing the net interest income a financial firm generates from credit products like loans and mortgages, with the outgoing interest it pays holders of savings accounts and certificates of deposit (CDs).
Detailed explanation-2: -NII or net interest income is the difference between the income a bank earns from its lending activities and the interest it pays to depositors whereas NIM or net interest margin is calculated by dividing NII by the average earning assets.
Detailed explanation-3: -Net interest margin is the difference between the interest income generated and the amount of interest paid out to lenders. It is an industry-specific profitability ratio for banks and other financial institutions that lend out interest-earning assets.
Detailed explanation-4: -Net Interest Margin = (Investment Income – Interest Expenses) / Average Earning Assets. As a matter of fact, the net interest margin formula can be used for both companies and countries.
Detailed explanation-5: -BoI said its net interest income (NII) was up 64 per cent YoY to Rs 5, 596 crore in Q3Fy23. Sequentially, NII rose from Rs 5, 083 crore in Q2FY23. Its Net Interest Margin (NIM) improved to 3.28 per cent in Q3 from 2.27 per cent in Q3FY22.