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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 0.00% $0 0.0% 0.0% $0.000 New Scenario 0.00% $0 Net interest margin Total assets Rise in nim Rise in total assets Net interest income $0.000
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