Income & Expense
Total Interest Income
Also known as Interest Income
Total interest income is all the interest and fees a bank earns on its earning assets (loans, leases, and securities) before subtracting funding costs. It is the gross top line of the spread business.
How is Total Interest Income calculated?
Schedule RI sums interest and fee income from each earning-asset category. Dividing total interest income by average earning assets gives the yield on earning assets; subtracting total interest expense gives net interest income.
Why does Total Interest Income matter?
Interest income is the larger half of the spread equation and the most rate-sensitive revenue line. How quickly it reprices when rates change (relative to funding costs) determines whether a bank is asset- or liability-sensitive.
How do you interpret Total Interest Income?
Track interest income with the yield on earning assets and the rate cycle. Rising interest income is only good if it outpaces rising interest expense; a bank whose asset yields lag its deposit costs sees net interest income compress even as gross interest income climbs.
What do Total Interest Income levels indicate?
| Range | Label | Interpretation |
|---|---|---|
| Repricing with rates | Strong | Asset yields keeping pace with or beating funding costs. |
| Stable | Adequate | Interest income steady through the cycle. |
| Lagging funding costs | Watch | Yields slow to reprice while deposit costs rise. |
| Falling | Concern | Declining asset yields squeezing the spread. |
Worked example
Frequently asked
Does interest income include loan fees?
Yes. Interest and fees on loans are reported together on Schedule RI. Origination and certain other fees that are part of the loan's yield are included in interest income.
What is the difference between interest income and net interest income?
Interest income is the gross amount earned on assets. Net interest income subtracts the interest paid on deposits and borrowings, leaving the spread the bank actually keeps.
Sources
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