Net Interest Income Vs Revenue
Net interest income nii is the difference between the interest income a bank earns from its lending activities and the interest it pays to depositors.
Net interest income vs revenue. Revenue for a bank comprises of net interest income and net non interest income. Interest revenue is the earnings that an entity receives from any investments it makes or on debt it owns. Net interest income is a financial performance measure that reflects the difference between the revenue generated from a bank s interest bearing assets and expenses associated with paying on its. And the net interest income total interest minus total interest expense was 44 6 billion.
Let s assume xyz bank earns 1 000 000 for the month on its mortgage loans commercial loans and personal loans. Using the formula above. The net revenue is what a company earns as a whole and the net income that the company is left with after bearing all the expenses and adding other sources of income. It also pays 975 000 in interest to its depositors for their cds checking accounts and savings vehicles.
The formula for net interest income is. Your management department may make decisions on whether to continue selling a product based on the gross margin of the good. Revenue is the sales amount a company earns from providing services or selling products the top line. Net interest income interest received interest paid.
Income can sometimes be used to mean revenue or net income. Income example apple inc. Aapl posted a top line revenue. Example let s say that we have the gross revenue of 110 000 with a sales discount of 10 000.
For bank of america the total interest earned for the period was 57 5 billion. What remains after expenses and taxes are subtracted from revenue revenue is the total amount of money the business receives from its customers for its products and services. Just as revenue is the top line net income is the bottom line or the bottom figure on a company s income statement. For individuals however income generally refers to the total wages salaries tips rents interest or dividend received for a specific time period.
Although net revenue and gross margin are useful internal figures external parties care most about net income. This guide provides an overview of the main differences between revenue vs income. This is done with an accrual journal entry under the cash basis of accounting interest revenue is only.