Net Interest Income (NII)
Revenue from interest earned minus interest paid.
Definition
Net interest income is the core revenue line for traditional banks. It equals the total interest earned on loans, securities, and other interest-bearing assets minus the total interest paid on deposits and borrowings. NII typically represents 60-80% of a bank's total revenue.
Formula
NII = Interest Income - Interest Expense
Why It Matters
NII growth is a direct indicator of a bank's core business health. It is driven by both volume (loan and deposit growth) and spread (the gap between lending and deposit rates). Rising interest rates generally boost NII for asset-sensitive banks.