Net interest revenue (brokers)
Interest a brokerage earns on customer margin loans and cash balances, minus the interest it pays customers on their cash.
Brokers earn interest on margin loans they extend to customers and on cash they hold or invest. They pay interest on customer cash balances, often through a sweep program. The difference between income and interest paid is net interest revenue, which is a major earnings line for many brokers.
Traders care because this line is sensitive to policy rates and to customer behavior. When rates fall, interest income usually falls faster than interest paid, and customers can move cash to higher-yield products. Compare net interest revenue with margin-loan balances and sweep balances over time.
Worked example (illustrative numbers, not real data): margin loans of 5 billion dollars at 9 percent yield 450 million dollars a year. Interest paid on 10 billion dollars of customer cash at 3 percent is 300 million dollars. The net from these two lines is 150 million dollars, before interest earned on the broker's own cash.