What it measures
Net interest margin (NIM) is the spread between the interest a bank earns and the interest it pays to depositors, relative to the assets that earn interest.
In one line: NIM = (interest income - interest expense) / average earning assets. It is a percentage, usually annualised.
How to read it
A higher NIM means the bank keeps more of each unit of lending. It rises when loans reprice up faster than deposits, or when a bank has a large base of cheap deposits (see CASA Ratio). A falling NIM squeezes profit unless loan volume makes up for it. In the latest posts, Indonesian banks such as BCA run at about 5% to 6%, while ICICI Bank reported 4.18%.
Where it misleads
NIM is not computed the same way everywhere. Banks differ on which assets count as earning, whether the figure is bank-only or consolidated, and whether it is a quarter annualised or a year to date. The bank's filing and its investor deck can also differ by a few basis points. NIM also ignores credit losses: a high margin earned by lending to risky borrowers can be wiped out by bad loans. Compare it with Cost of Credit before calling it good.
Worked example
In BCA's Q3 2026 post, bank-only NIM was 5.6% in September 2026, against 5.8% in September 2025 (down 0.2 percentage points) and 5.3% in Q2 2026 (up 0.3 points). The post links this recovery to profit growth: standalone profit rose 9.0% year-over-year to Rp15,681,381 million in Q3. It also gives a risk-adjusted NIM (NIM less cost of credit) of 5.3%, against 5.4% a year earlier.
Where to find it
Income statement for interest income and expense, balance sheet for earning assets. Many banks publish NIM directly in the ratio table.
See also: NII (Net Interest Income), NIMAL, CASA Ratio.