DEFINITION of 'Net Interest Margin'
A performance metric that examines how successful a firm's investment decisions are compared to its debt situations. A negative value denotes that the firm did not make an optimal decision, because interest expenses were greater than the amount of returns generated by investments.
Calculated as:
INVESTOPEDIA EXPLAINS 'Net Interest Margin'
For example, ABC Corp has a return on investment of $1,000,000, an interest expense of $2,000,000 and average earning assets of $10,000,000. ABC Corp's net interest margin would be 10%. This would mean that ABC Corp has lost more money due to interest expenses than was earned from investments. In this case, ABC Corp would have been better off if it had used the investment funds to pay off debts instead to making an investment.

Interest Expense
The cost incurred by an entity for borrowed funds. Interest expense ... 
Debt
An amount of money borrowed by one party from another. Many corporations/individuals ... 
Earning Assets
An incomeproducing investment that is owned by a business, institution ... 
Return
The gain or loss of a security in a particular period. The return ... 
Interest
1. The charge for the privilege of borrowing money, typically ... 
Investment
An asset or item that is purchased with the hope that it will ...

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