Net interest margin (NIM) reveals the amount of money that a bank is earning in interest on loans compared to the amount it is paying in interest on deposits.PersonalFinanceBankingBankingBankReviewsPersonalLoanGuidePrepaidDebitCardsGuidetoCheckingAccountsCheckingAccountsSavingsAccountsCertificateofDeposits(CDs)MoneyMarketAccountTheaveragenetinterestmargin(NIM)forAmericanbankswas3.5%in2019.Thatfigureshowsaslightreboundfroma30-yearlowof2.98%in2015.Butthelong-termtrendhasbeenmoreorlessdownwardsince1996whentheaveragefigurewas4.3%.ExplainingNetInterestMarginInfinance,netinterestmarginisameasureofthedifferencebetweeninterestpaidandinterestreceived,adjustedforthetotalamountofinterest-generatingassetsheldbythebank.KeyTakeawaysNetinterestmargin(NIM)revealstheamountofmoneythatabankisearningininterestonloanscomparedtotheamountitispayingininterestondeposits.NIMisoneindicatorofabank'sprofitabilityandgrowth.TheaverageNIMforU.S.bankswas3.3%in2018.Thelong-termtrendhasbeendownwardsince1996whentheaveragewas4.3%.Inshort,netinterestmarginisoneindicatorofabank'sprofitabilityandgrowth.Itrevealshowmuchthebankisearningininterestonitsloanscomparedtohowmuchitispayingoutininterestondeposits.Forexample,sayabankmadeloansequalto$100millioninayear,whichgenerated$5.5millionininterestincome.Inthesameyear,thebankpaid$2.5millionininteresttoitsdepositors.Thebank'snetinterestmargincanbecalculatedusingthefollowingformula:netinterestmargin=($5.5million-$2.5million)/$100million=0.03,or3%.Netinterestmarginisnotthesameasnetinterestincome.Netinterestincomeisthenumeratorintheequationfornetinterestmargin,butthedenominatoristhebank'stotalassets,andthatcanchangeinproportionsthatarenotreflectedinthenumerator.Netinterestmarginisnotthesameasprofitability,either.Mostbanksalsoearnsignificantincomefromfeesandservicechargesofvariouskinds,andthosearenotreflectedinnetinterestmargin.TypicalandRelativeNetInterestMarginAnumberoffactorsaffectabank'snetinterestmargin.Forexample,supplyanddemandforloanshelpestablishmarketintere