Asset Liability Management I (CS225-Accelerated)

 

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Course 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. A great employee development course for current and future bank management. A complete list of included lessons appears below.

Overview of Asset Liability Management

This lesson gives an overview of asset liability management.

Topics include:

  • Goals of ALM
  • Responsibilities of ALCO
  • Banking risk and returns
  • Risk managed under ALCO supervision
  • The ALM policy statement

 

Lesson objectives:

  • 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

Gap & Sensitivity Analysis

This lesson gives the student an overview of the GAP & Sensitivity Analysis.

Topics include:

  • Determinants of net interest margin
  • Rate sensitive assets/liabilities
  • The link between GAP and NIM
  • The static GAP report
  • Factors that alter rate sensitivity
  • Earnings sensitivity analysis
  • Strengths and weaknesses of GAP

Lesson objectives:

  • Definition of key terminology
  • 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

Duration Analysis

This lesson covers duration analysis.

Topics include:

  • The market value of stockholders' equity
  • Duration as an elasticity measure
  • Measuring duration of an asset or liability
  • Duration gap analysis
  • Factors that affect duration
  • Sample application

Lesson objectives:

  • 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

Managing Capital Risk

This lesson covers managing capital risk.

Topics include:

  • Why worry about capital?
  • What qualifies as bank capital?
  • Functions of capital
  • Regulatory capital ratios
  • Risk-based capital standards and FDICIA
  • Capital management strategies

Lesson objectives:

  • 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

Managing Liquidity Risk

This lesson covers managing capital risk.

Topics include:

  • What is liquidity risk?
  • Potential sources of liquidity needs
  • Factors affecting deposit outflows
  • Balance sheet measures of liquidity risks
  • Liquidity gap models
  • Selecting liquidity sources

Lesson objectives:

  • 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

 

Enrollment Form

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