Yield on Earning Assets
Average interest rate earned on loans, securities, and other earning assets.
Definition
Yield on earning assets measures the average return a bank earns on its portfolio of interest-bearing assets including loans, investment securities, and deposits at other banks. Combined with the cost of funds, it determines the net interest margin.
Formula
Yield = Interest Income / Average Earning Assets × 100
Why It Matters
The asset yield reflects the pricing power of a bank's lending franchise and the composition of its investment portfolio. Higher yields can come from riskier loans, longer-duration securities, or simply better pricing discipline.