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Banque du Langenberg holds $575 million interest producing assets earning a net interest margin (NIM) of 2.50%. The iniital net interest income is thus $14.375

Banque du Langenberg holds $575 million interest producing assets earning a net interest margin (NIM)
of 2.50%. The iniital net interest income is thus $14.375 million.
The bank's President pursues a strategy of holding longer dated, higher risk assets while also increasing
leverage and as a result the net interest margin expands by 25 basis points (or 10% on 2.50%) and the
total asset base increases by 20%. What is the new net interest income?
Original scenario
Net interest margin
Total assets (millions)
Rise in nim
Rise in total assets
Original scenario New Scenario
Net interest margin 0.00% 0.00%
Total assets $0 $0
Rise in nim 0.0%
Rise in total assets 0.0%
Net interest income $0.000 $0.000

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