Net Interest Margin Calculator

How to Use the NIM Calculator

• Enter Interest Income: total interest earned from loans, advances, investments, and other earning assets.
• Enter Interest Expense: total interest paid on deposits, borrowings, bonds, and other funding sources.
• Enter Average Earning Assets: average of total loans + investments over the measurement period. Use beginning + ending balance divided by 2.

Tip: NIM should be tracked monthly for operational management and quarterly for board reporting. Sudden NIM compression often signals a pricing problem or funding cost spike that needs immediate attention.

NIM Formula

NIM = (Interest Income – Interest Expense) / Average Earning Assets x 100

Example: Interest income Rs 15 Crore, interest expense Rs 8 Crore, average earning assets Rs 200 Crore. NIM = (15 – 8) / 200 x 100 = 3.5%

NIM Benchmarks (India 2026)

Banks:

• SBI: ~3.1%
• HDFC Bank: ~4.1%
• ICICI Bank: ~4.4%
• Kotak Mahindra: ~5.2%
• Bandhan Bank: ~7.5%
• AU Small Finance: ~5.8%

Lending Fintechs & NBFCs:

• Digital personal loans (unsecured): 10-18% NIM
• NBFC (secured, home/LAP): 3-6% NIM
• NBFC (unsecured, consumer): 8-15% NIM
• Microfinance institutions: 8-12% NIM
• Gold loan companies (Muthoot, Manappuram): 10-14% NIM
• Vehicle financing: 5-9% NIM

Sources: RBI Financial Stability Report 2024-25, company quarterly results, NBFC sectoral data.

Factors That Affect NIM

Interest Rate Environment: When RBI raises the repo rate, both lending and borrowing costs increase. But they don’t move at the same speed. If your assets reprice faster than liabilities (floating rate loans, short-tenure book), NIM expands in rising rate environments. If liabilities reprice faster (short-term wholesale borrowings), NIM compresses.

Asset Mix: Unsecured personal loans yield 18-36% interest but carry higher defaults. Secured home loans yield 8-10% with lower risk. Your NIM reflects your risk appetite. Higher NIM from unsecured lending must be evaluated against credit costs to determine true profitability.

Funding Mix: CASA (Current Account, Savings Account) deposits cost 3-4%. Term deposits cost 6-7.5%. Market borrowings cost 7-9%. The cheaper your funding base, the higher your NIM. This is why banks with strong CASA franchises (HDFC Bank at 40%+ CASA) consistently outperform on NIM.

Competition: Aggressive pricing by competitors compresses lending yields. The Indian lending market has seen significant NIM pressure as fintechs, banks, and NBFCs compete for the same borrower segments. Differentiation through speed, digital experience, or niche segments is essential to maintain pricing power.

Watch how to measure bank profitability instantly with net interest margin