Which of the following best describes net interest margin as expressed as a percentage?

Net interest margin is a critical metric in banking, representing the difference between the income generated from interest-earning assets and the expenses associated with interest-bearing liabilities. Expressed as a percentage, it reflects how efficiently a bank utilizes its assets to generate interest income relative to the costs of financing those assets.

The correct choice indicates that the net interest margin takes into account both the interest income earned from loans and other investments and the interest expenses paid on deposits and borrowings, normalized against total earning assets. This gives a clear picture of a bank's profitability related to its core lending and borrowing activities.

Understanding net interest margin is essential for evaluating a bank's financial health, as a higher net interest margin typically suggests a bank is managing its interest income and expenses effectively, thus enhancing its overall profitability.