Economics · Banking Sector
Consider the following statements regarding Net Interest Margin (NIM): Statement I: Net Interest Margin measures the profitability of a bank's lending operations by comparing interest income and expenses relative to average earning assets. Statement II: A high NIM always indicates a financially healthy institution, regardless of credit risk and operational inefficiencies. Statement III: NIM is more informative than Gross Interest Margin because it accounts for the size of average earning assets. Which one of the following is correct in respect of the above statements?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Only Statement I is correct✓
- 2Statement I and Statement III are correct
- 3Statement I and Statement II are correct
- 4Both Statement II and Statement III are correct
Correct answer
Only Statement I is correct
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