Net interest income

Net interest income is the difference between the interest a lender earns on its loans and investments and the interest it pays on deposits and borrowings. For banks it is usually the largest source of revenue.

The formula is:

It rises when a bank grows its loans or when the spread between what it earns and what it pays widens. Changes in interest rates move it, which is why bank results often track the direction of rates set by the central bank.

Comparing net interest income with total revenue (NII / total revenue) shows how dependent a bank is on lending versus fees from things like wealth management or card payments. A high share means earnings will follow interest rates closely, while a lower share points to a more diversified business.