This study aims to investigate the impact of loan portfolio diversification and income diversification in ASEAN-4 banking markets. Loan portfolio diversification consists of credit to different sectors and different types of credit offered to customers. This study applied a model of bank as a dealer, initiated by Ho and Saunders (1981), and the latest developed by Maudos and Solis (2009). We employed static and also dynamic panel data using System Generalised Method of Moment (System GMM) to estimate the model. The results show a decreasing trend in banks' net interest margins, which is consistent with the increase in selling of bank non-traditional products in this market that indicates the existence of cross-subsidy in revenue from non-traditional to traditional banking products. In addition, less diversification in credit sectors positively and significantly affects net interest margin. Furthermore, we also found that lesser competition, increases interest margin. However, foreign bank penetration will end up with a significant decrease in NIM.