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Asset Liability Management

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shailesh kediya
shailesh kediya

1) Asset-liability management (ALM) is the process of managing a bank's assets and liabilities to minimize risk from interest rates and liquidity. 2) ALM involves measuring and managing risks like liquidity risk, interest rate risk, and currency risk to protect a bank's net interest margin. 3) The key objectives of ALM are liquidity risk management, interest rate risk management, currency risk management, and profit planning.

Education
1 of 34
ASSET-LIABILITY MANAGEMENT SYSTEM Presented by c.s.balakrishnan ALM
WHY ALM? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
ALM ,[object Object]
ASSET LIABILITY MANAGEMENT ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
 
[object Object],[object Object],[object Object],Concept of ALM
WHAT IS ALM ,[object Object],[object Object]
ALM Objectives ,[object Object],[object Object],[object Object],[object Object]
LIQUIDITY RISK ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
LIQUIDITY RISK ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
LIQUIDITY RISK ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
LIQUIDITY RISK ,[object Object],[object Object],[object Object],[object Object],[object Object]
LIQUIDITY RISK ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
ALM SYSTEM ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
MATURITY PROFILE-LIQUIDITY ,[object Object],[object Object],[object Object],[object Object],[object Object]
MATURITY PROFILE-LIQUIDITY ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
IRR - Relevance in India ,[object Object],[object Object],[object Object],[object Object]
RSA, RSL ,[object Object],[object Object]
Gap/Mismatch Risk ,[object Object],[object Object]
IMPACT ON NII Gap Interest rate Change Impact on NII Positive Increases Positive Positive Decreases Negative Negative Increases Negative Negative Decreases Positive
[object Object],[object Object],[object Object],[object Object],[object Object],ALM ORGANISATION
ASSET-LIABILITY MANAGEMENT COMMITTEE (ALCO) ,[object Object],[object Object],[object Object],[object Object]
FUNCTIONS OF ALCO ,[object Object],[object Object],[object Object],[object Object],[object Object]
ALM STATEMENTS TO BE SUBMITTED TO RBI ,[object Object],[object Object],[object Object],[object Object],[object Object]
[object Object],[object Object],[object Object],[object Object],[object Object],Tools for ALM System
LIQUIDITY RISKS ,[object Object],[object Object],[object Object],[object Object],[object Object]
STATEMENT OF STRUCTURAL LIQUIDITY ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
ADDRESSING TO MISMATCHES ,[object Object],[object Object],[object Object],[object Object]
DYNAMIC LIQUIDITY ,[object Object],[object Object],[object Object]
STATEMENT OF INTEREST RATE SENSITIVITY ,[object Object],[object Object],[object Object]
CALCULATION OF NII/NIM ,[object Object],[object Object],[object Object],[object Object]
ALM & BALANACE SHEET LIABILITY (OUTFLOWS) ASSET (INFLOWS) 1 Capital 1 Cash & Balances with RBI 2 Reserves & Surplus 2 Balances with Banks & Money at call/Short-notice lendings. 3 Deposits 3 Investments. 4 Borrowings 4 Advances 5 Other Liabilities & Provisions 5 Fixed Assets. 6 Contingent Liabilities 6 Other Assets.
SUCCESS OF ALM IN BANKS : PRE - CONDITIONS ,[object Object],[object Object],[object Object],[object Object],[object Object]
THANK YOU

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Asset Liability Management

  • 1. ASSET-LIABILITY MANAGEMENT SYSTEM Presented by c.s.balakrishnan ALM
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  • 20. IMPACT ON NII Gap Interest rate Change Impact on NII Positive Increases Positive Positive Decreases Negative Negative Increases Negative Negative Decreases Positive
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  • 32. ALM & BALANACE SHEET LIABILITY (OUTFLOWS) ASSET (INFLOWS) 1 Capital 1 Cash & Balances with RBI 2 Reserves & Surplus 2 Balances with Banks & Money at call/Short-notice lendings. 3 Deposits 3 Investments. 4 Borrowings 4 Advances 5 Other Liabilities & Provisions 5 Fixed Assets. 6 Contingent Liabilities 6 Other Assets.
  • 33.

Editor's Notes

  1. The concept of ALM is concerned with the strategic management of Balance Sheet giving due weightage to all types of market risks viz. Liquidity Risk, Interest Rate Risk and Currency Risk. The objectives of ALM are as below :          Define and formulate the ALM Policy of the bank in respect of Liquidity Management, Interest Rate Risk Management and Currency Risk Management.          Propose the organizational set-up for implementing the ALM System in the Bank.          Adhere to RBI ALM guidelines of February 10, 1999 and implement the Guidelines in phases as required by RBI.          Create comprehensive MIS and take data based decisions using modern statistical tools such as Gap Analysis, Duration Gap Analysis, Value at Risk (VaR), Simulation etc.