Mathematics · Banking Profitability Ratios
Based on the provided financial statement, the Net Interest Margin (NIM) is calculated as Yield on Advances minus Cost of Funds. Using the data below, compute the NIM for both divisions and identify which one is more profitable: Retail Banking: Total Advances = ‚ 22,000 Cr; Yield = 10.4%; Cost of Funds = 5.4% Corporate Banking: Total Advances = ‚ 38,000 Cr; Yield = 9.0%; Cost of Funds = 6.1%
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Retail NIM: 2.8%, Corporate NIM: 3.5% – Corporate is more profitable
- 2Retail NIM: 3.2%, Corporate NIM: 2.1% – Retail is more profitable
- 3Retail NIM: 4.0%, Corporate NIM: 3.2% – Corporate is more profitable
- 4Retail NIM: 5.0%, Corporate NIM: 2.9% – Retail is more profitable✓
Correct answer
Retail NIM: 5.0%, Corporate NIM: 2.9% – Retail is more profitable
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