Net Interest Margin

The gap between what a bank earns on loans and what it pays on deposits, relative to its assets.

Net interest margin is the core profitability measure for a traditional bank: interest income minus interest expense, divided by earning assets. It widens when rates rise quickly, because loan rates tend to reprice faster than deposit rates, and compresses when depositors start demanding a share. It is the number analysts watch first through a rate cycle.

The bank's net interest margin widened as loan rates repriced faster than it raised deposit rates.