Outline the objectives of alm, Financial Management

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You are a member of the ALM Committee (ALCO) of ANZ Bank. A visiting member has some queries relating to the general framework of the ALM and interest rate risk impact on the income statement of the bank. You have been assigned the task of drafting a response to each of them. The queries are as follows:

(a) Briefly define Asset and Liability Management (ALM) concept for a commercial bank.

(b) Briefly outline the objectives of ALM.

(c) Explain what are the main issues considered by an ALM committee within a bank.

(d) What are the different sources of risks faced by a commercial bank?

(e) In view of the forthcoming Monetary Policy Committee of the Central Bank, there is a speculation of a possible decrease in the repo rate by 75 basis points. Exhibit 1 provides a snap shot of the breakdown of loans to customers and deposit from customers per product category.


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