How Are Banks’ Net Interest Margins Affected By Changes In Interest Rates?

December 11th, 2015 by Trefis Team
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An increase in the Federal Funds Rate by 100 basis points should raise net interest margins (NIM) by roughly 12 basis points for the largest U.S. banks, based on historical trends.

Fed_QA_NIMSens

1 Effective Federal Funds Rate (FRED Economic Data)
2 Net interest margin for Large Banks (Federal Reserve Data)

Note: The calculation above assumes that the NIM figure for large banks had stabilized at indicated levels for the corresponding Fed funds rate

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