So we're gonna calculate HSBC's net interest margin.

And before we do that calculation, let's just have a look at the information that we've got.

So at the top of the question, it looks like we're given information on HSBC's income statement, and if we scroll a little bit further down, it looks like we've got some balance sheet information.

So if you just look at the line items there, in fact, what we've been given are the assets section of the balance sheet.

So in order to calculate the net interest margin for HSBC, the first thing we want to pick up is the net interest income, and that would be the interest income, less the interest expense.

So let's scroll a little bit further down the question and do that calculation.

So I'm gonna go and pick up the net interest income by picking up the interest income and the interest expense.

Let's just copy that out to the right. Now.

If you think about what we are being asked to calculate the net interest margin, if you think about the word margin, we've generated net interest income and we've sold something.

So what have HSBC sold? Well, they've sold loans and they've sold advances and generated net interest income on them.

So we're gonna look at the net interest income relative to the loans and advances they've sold to arrive at the margin.

So let's go and look at the asset section of the balance sheet and immediately jumping out at me, I've got the loans and advances to banks and the loans and advances to customers.

But actually little below that, we've also got financial investments and it strikes me that we're gonna generate interest on that.

Also, if we look at the rest of the balance sheet, the rest of the asset section of the balance sheet, then I also notice that we've got some Hong Kong government debt certificates, which will be earning interest income on, and we would also include the cash and balances at central banks, which will also be, uh, achieving interest on.

So let's take all of those numbers off the balance sheet, copy those across.

Now when we look at the net interest margin, typically we would look at the average interest earning assets.

So I'm gonna go and grab the average interest earning assets from the balance sheet.

And then all we need do next is grab the net interest income and divide it by the average interest earning assets to give us our net interest margin.