Program Description:
Increased profitability correlates directly to a financial institution's management of its assets and liabilities. Users will learn how to establish financial goals, determine fundamental trade-offs between risks and returns, understand the link between GAP and net interest margin, determine conditions that affect market value of stockholders' equity, factors that make assets and liabilities price sensitive, and managing capital and liquidity risk.
After successfully completing this course, the student will be able to:
- Define asset and liability management (ALM)
- Describe the financial goals of a bank
- Identify the key responsibilities of the asset and liability management committee (ALCO)
- Determine the fundamental trade-off between banking risks and returns
- Explain the linkage between managing assets and liabilities and balancing risks versus returns
- Identify the determinants of net interest margin (NIM)
- Describe factors that make assets and liabilities rate sensitive
- Identify GAP as a measure of interest rate risk
- Identify key components of a GAP report
- Explain the linkage between GAP and NIM
- Identify the strengths and weaknesses of GAP analysis
- Demonstrate the importance and implementation of earnings sensitivity analysis
- Identify the determinants of the market value of a bank's stockholders' equity
- Describe factors that make assets and liabilities price sensitive
- Provide an intuitive understanding of duration
- Identify duration gap as a measure of interest rate risk
- Identify the strengths and weaknesses of duration gap analysis and compare with GAP analysis
- Describe the nature of capital risk at banks
- Describe the functions of capital
- Evaluate the sources and uses of capital
- Compare market value versus book value of capital
- Define risk-based capital standards for banks
- Evaluate how capital requirements affect bank operating strategies
- Identify capital management strategies for handling an excess or deficiency of capital
- Describe the sources of liquidity risk
- Evaluate financial ratios that measure bank liquidity
- Distinguish between asset sources and liability sources of liquidity
- Use liquidity planning model that compares expected cash inflows
Who Should Attend:
All personnel involved in the funds management process. A great employee development course for current and future bank management.
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