Current Events Current Affairs Analysis
State-run lender Indian Overseas Bank (IOB) has taken various steps to offset the impact on net interest margin (NIM) from the repo rate cut effected by the Reserve Bank of India (RBI) recently.
About Net Interest Margin
oNIM is a financial metric used to measure the profitability of a bank or financial institution’s lending activities
oIt represents the difference between the interest income generated by the institution’s assets (such as loans and investments) and the interest paid on its liabilities (such as deposits and borrowed funds), expressed as a percentage of the average earning assets.
oIt indicates how effectively a bank is generating interest income from its interest-earning assets relative to the interest it pays on its interest-bearing liabilities.
oThis metric helps prospective investors determine whether or not to invest in a financial services firm by showing its interest income versus their interest expenses.
oSimply put, a positive NIM suggests that an entity operates profitably, while a negative figure implies investment inefficiency.
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