Interest Income Minus Interest Expense

Net interest income is what the bank makes from interest revenue and subtracting its interest expenses.

Interest income minus interest expense. Also in 2013 the net interest expense was negative interest. If a bank has a portfolio of 10 billion earning an average of 8 interest the bank s interest revenue will be 80 million. In other words if a company paid 20 in interest on its debts and earned 5 in interest from its savings account the income statement would only show interest expense net of 15. Interest income and interest expense which do not contribute to the company s primary business appear next and impact the final net income.

To put in an easy example. Earnings before interest and taxes ebit is an indicator of a company s profitability. In the latter case ebit represents the profit deriving from the ordinary business operations of the company as it does not take into account revenue and costs pertaining to non typical activities. Interest expense refers to the costs of borrowing money and includes a company s interest payable on any bonds loans convertible debt and lines of credit.

Net refers to the fact that management has simply subtracted interest income from interest expense to come up with one figure. Also please note that the interest expense is the net amount in the income statement interest expense interest income as we can note the interest coverage of colgate is very healthy. It does not include other fixed. The income statement includes the revenues and expenses relevant to the business first.

In addition to interest expense and tax non operating income expense and interest income are excluded as well. Revenue for a bank is different from the revenue of a non financial company. Your investment interest expense is not more than your investment income from interest and ordinary dividends minus any qualified dividends. The company subtracts the relevant expense from the relevant revenues to calculate ebit.

For bank of america the total interest earned for the period was 57 5 billion. Ebit is also referred to as. The main difference between interest income and interest expense is outlined below. And the net interest income total interest minus total interest expense was 44 6 billion.

You have no carryover of investment interest expense from the previous year. Revenue for a bank comprises of net interest income and net non interest income. You can deduct all your investment interest if you qualify. You do not have any other deductible investment expenses.