Net interest income (NII)[1] is the difference between revenues generated by interest-bearing assets and the cost of servicing (interest-burdened) liabilities.
NII is the difference between (a) interest payments the bank receives on outstanding loans and (b) interest payments the bank makes to customers on their deposits.
If the bank's liabilities reprice faster than its assets, then it is said to be "liability-sensitive."
Further, the bank is asset-sensitive if its liabilities reprice more slowly than its assets in a changing interest-rate environment.
The exposure of NII to changes in interest rates can be measured by the dollar maturity gap (DMG), which is the difference between the dollar amount of assets that reprice and the dollar amount of liabilities that reprice within a given time period.