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Featured Insights

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Interest Rate Hedging in a Volatile Market

The Bank of Canada left its key interest rate unchanged at 5% for the third consecutive timesince July 2023 and as Canada’s inflation rate seems to have reached a plateau, economists consider that a lower rate cycle is about to begin.

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4th Quarter 2023: Featured Insights

Interest Rate Risk (IRR) analysis and measurements are commonly obtained from traditional in-house asset liability management (ALM) models, outsourced services or vended models. Thereare three general ALM model levels: entry, intermediate and advanced.

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Part 1/5: Testing and Validating Asset Liability Management Model Beyond Checking the Compliance Box

Given risks in the current banking environment, regulators are more aggressively supervising the interest rate risk models. There are two approaches to ALM models validations: i) A full replication of the model being used; and ii) A rigorous testing of the assumptions, calculations and methodology of the subject models.

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Wake up call for Robust Liquidity Planning

As central banks continue to struggle with taming the stubborn inflation, there are two plausible near term scenarios for banks, credit unions and other institutions holding interest bearing assets and liabilities

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Business Case for ALM Diagnostic

The uncertainty caused by global macroeconomic headwinds, combined with on-going pressure triggered by the failure of Silicon Valley Bank require lenders to be more cautious and strategic about how they safeguard and grow their balance sheets.

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Exposing the severity of tenor mismatch: From repricing to basis risk

Most banks collect money in the short term and use the resulting funds to make loans in thelong term. But managing the ‘tenor mismatch’ between these assets and liabilities can be achallenge for the treasury...

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Deposit Mobilization: A Race to the Bottom of Margins

In this environment where retail deposits are more valuable and more expensive, thecompetition for deposits continues to heat up. Banks with liquidity challenges turn topromotional pricing to raise rate-sensitive deposits – a race to the bottom of margins.

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Facing interest rate risk in the Ghanaian banking system head on

When interest rates change the present value of assets and liabilities also change exposing the banks to interest rate risk. Changes in interest rates do not have the same impact on the discounted value of assets and liabilities since they are not invested to the same terms.

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1st Quarter 2023: Loan Book Watchlist

Financial institutions are faced with several common challenges. Many of these challenges are preventable or controllable, but often result in a lasting value impact.

ARTICLE

Strategic Performance Optimization using IFRS 9 Analytics: A Nigerian Case Study

The main objective of IFRS 9 is to identify significant increases in credit risk (SICR) on a timely basis. The standard assumes that the reserves derived using forward-looking Expected Credit Loss (ECL) parameters would adequately offset the loan losses.