Financial research concept

Net Interest Income: Bank Spread Revenue From Earning Assets and Funding

Net interest income is the interest a bank earns on loans, securities, and other earning assets minus the interest it pays on deposits and other funding.

By Lee BaileyPublished Sep 21, 2026
Research context

See what supports this page, how current it is, and where comparable or historical context is available.

Research date
Sep 21, 2026Use the dated article and cited sources for the definition, examples, and stated limitations.
Operating-model context
12 connected conceptsPart of the reviewed Banking Operating Model; issuer definitions remain distinct where disclosed.
Company examples
1 reviewed companyRelationships reflect supported examples, not a normalized cross-company KPI ranking.
  1. NII and net interest margin answer different questions
  2. What moves net interest income
  3. Example
  4. Current filing example
  5. Part of the Banking Operating Model
  6. See It in Company Research
  7. Continue Research

Net interest income (NII) is the interest revenue a bank earns on loans, securities, cash placements, and other interest-earning assets minus the interest expense it pays on deposits, borrowings, and other interest-bearing liabilities.

It is a spread-revenue measure, not a margin percentage.

A simplified relationship is:

text
1Net interest income
2= Interest income
3- Interest expense

NII and net interest margin answer different questions

Net interest income is measured in dollars. Net interest margin scales spread revenue to average interest-earning assets.

A bank can therefore grow NII while NIM falls if the earning-asset base expands enough. The reverse can also occur when the balance sheet shrinks but spreads improve.

What moves net interest income

Key drivers include:

  • average loan and securities balances;
  • asset yields and repricing speed;
  • deposit mix and cost of deposits;
  • wholesale funding costs;
  • deposit pricing sensitivity;
  • fixed-rate versus floating-rate exposure;
  • hedging; and
  • day-count and tax-equivalent presentation differences.

Example

Suppose a bank earns $8.0 billion of interest income and incurs $3.0 billion of interest expense:

text
1$8.0B interest income
2- $3.0B interest expense
3= $5.0B net interest income

If average earning assets change materially, investors should pair that dollar result with NIM rather than treating NII growth as a pure pricing signal.

Current filing example

Bank of America reported second-quarter 2026 net interest income separately from its broader revenue base and showed the metric alongside efficiency, loans, deposits, and other balance-sheet measures.

Sources:

Net interest income is most useful as a spread-revenue measure. Read it with NIM, earning-asset growth, deposit costs, and funding mix.

Part of the Banking Operating Model

Connect deposit pricing, spread revenue, revenue mix, credit quality, liquidity, and regulatory capital to understand bank earnings and balance-sheet resilience.

How the model fits together
  • Funding and spread economics: Deposit beta and deposit costs describe how funding reprices, while net interest income and net interest margin show the resulting spread revenue in dollars and relative to the earning-asset base.
  • Revenue mix and operating efficiency: Net interest income and noninterest income form the core bank revenue base used to assess revenue mix, while the efficiency ratio relates that operating revenue to noninterest expense.
  • Credit, liquidity, and capital resilience: Loan-to-deposit and uninsured-deposit measures frame funding and liquidity pressure, while nonperforming loans, net charge-offs, and the allowance for credit losses trace credit deterioration from problem assets to realized losses and reserves. The CET1 ratio connects those risks to regulatory capital capacity.

See It in Company Research

These companies are examples of how the concept is reported or discussed in public filings. Definitions can differ by issuer; these links open company research rather than a normalized metric comparison.

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