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The tabel below contains financial statement information from the CBA 2013 annual report.
I am asked to find the Net interest income and net interest margain:
My answers are as follows:
Net interest income = interest income-interest expense =35-21=14
Net income margin = (673-632)/673.
I'm not sure how to calculate net income margin, but would anyone be able to verify whether my answers are correct or not.
You are a bank (or a bank like institution) that makes money from a portfolio of assets (such as loans) which are financed by liabilities (such as deposits or interbank loans).
The Net Interest Income is how much you make on your assets after subtracting your cost of financing those assets, so we have 35-21 = 14.
Your Net [Interest] Income Margin is how much money you make through this process expressed as a percentage of assets. How to measure the assets? A simple approach is the assets at the beginning of the period, i.e. 645. However I believe the professional standard is the average assets during the year which would be (645+673)/2. We would then have NIM = 14/659 = 2.12%
