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Definition

Also known as the "Net Interest Margin", this is the gross profit margin which banks make on lending money to the commercial sector. It is the difference between the prime overdraft rate and the repo rate which the Reserve Bank charges commercial banks for money lent to them. Usually it is maintained at roughly 3,5% - so if the repo rate is at 6% the prime overdraft rate will be at 9,5% and so on. At the end of April 2025, Moodys said that it expected the net interest margin would be narrowed as the Reserve Bank reduced the target range for inflation in South Africa.

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