Net Interest Income

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Net Interest Income is the difference between interest earned and interest paid, and is commonly tracked by banks and other institutions that lend money. As banks both pay interest (to other banks or to individuals with deposits at the bank) and earn it (from loans), interest is both an expense and a revenue stream. Net interest income is the difference interest earned from borrowers and interest paid to lenders.

Net Interest Income = Interest Payments on Assets - Interest Payments on Liabilities


Each bank's net interest income will be more or less sensitive to changes in interest rates depending on the composition of their assets and liabilities. Factors like what types of interest rates they charge borrowers (i.e. fixed, or floating) and the extent of their exposure to interest rate changes on the liability side will affect their net interest income as rates fluctuate.

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