In the latest Credit rating by ICRA, they mentioned the following
Going forward, the NIMs are likely to be under some pressure on account of the higher gearing.
Can someone please explain why NIMs is related to gearing?
From my understanding, gearing is the debt that the company can take, which implies that they can take more debt (according to the statement), which means that either the ROA reduces or they can give out more loans as they’ve more leverage.
How does NIMs come into the picture? Is it because of the ROI at which the new gearing have been given to the company?
Thanks