Consider the following statements regarding Net Interest Margin (NIM):
NIM is calculated as the difference between a bank’s total interest income and total interest expenses, divided by its total assets.
A higher NIM generally indicates higher profitability but may also signify higher risk exposure in the asset portfolio.
NIM is unaffected by changes in the central bank’s policy rates, as it depends solely on bank-level operational efficiency.
Which of the above statements is/are correct?
July 22, 2025
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