interest-rate margin

Quick Reference

1 The difference between the interest rate at which banks lend and the rate they pay on deposits. It is likely to be a major indicator of a bank's profitability.

2 The amount charged to borrowers over and above the base rate. This margin is the bank's profit on the transaction but has to take account of risk of loss or default by the borrower.

3 The difference between a transfer-price interest rate and the interest cost of funds.

4 The difference between the rate on a debt security and a reference rate.

Subjects: Financial Institutions and Services.

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