difinition of net interest? long answer One page
Answers
Answer:
Definition: Net interest income (NII) is the difference between the interest income a bank earns from its lending activities and the interest it pays to depositors.
Net interest income = Interest earned - interest paid
Assuming ABC Bank earned an interest income of Rs 15,000 crore on its assets comprising all kinds of loans, mortgages and securities for the year ended March 31, 2015 and paid Rs 13,750 crore in interest to depositors, the net interest income would be: Net interest income = Rs 15,000 crore - Rs 13,750 crore = Rs 1,250 crore
Description: Net interest income can differ from bank to bank due to variations in the composition and quality of assets and interest-bearing funds, change in yields of interest-earning assets and in interest rates paid on liabilities. NIIs of lenders with assets and liabilities bearing variable rates are more vulnerable to change in interest rates. If the spread between rate-sensitive assets (RSAs) and rate-sensitive liabilities (RSLs) increases, a rise in interest rate can make interest income rise more than interest expenses. In such a case, NII also goes up. On the other hand, when the spread between RSAs and RSLs falls, a rise in interest rate can make interest expenses rise more than interest income, leading to a drop in NII. NII, meanwhile, can also get impacted by any rise or fall in non-performing assets (NPAs). According to the Reserve Bank of India's June edition of financial stability report, NII growth of scheduled commercial banks has been falling over the past couple of years. It stood at 9.3 per cent for FY15 compared with 11.7 per cent for FY14 and 34.6 per cent for FY11.
hope it's helpful!ʕ•ᴥ•ʔ
Explanation:
Get APP
HomeQuickReadsETPrimeMarketsNewsIndustryRISEPoliticsWealthMFTechJobsOpinionNRIPanacheET NOWPortfolio
Definition
Definition of 'Net interest income (NII)'
Definition: Net interest income (NII) is the difference between the interest income a bank earns from its lending activities and the interest it pays to depositors.
Net interest income = Interest earned - interest paid
Assuming ABC Bank earned an interest income of Rs 15,000 crore on its assets comprising all kinds of loans, mortgages and securities for the year ended March 31, 2015 and paid Rs 13,750 crore in interest to depositors, the net interest income would be: Net interest income = Rs 15,000 crore - Rs 13,750 crore = Rs 1,250 crore
correct answer