Assets and Liability Management

Intense competition for business involving both the assets and liabilities, together with increasing volatility in the domestic interest rates as well as foreign exchange rates, has brought pressure on the banks to maintain a good balance among spreads, profitability and long-term viability. Imprudent Asset & Liability Management can put the earnings and reputation at great risk. Bank Muscat through its Asset Liability Management Committee (ALCO) measures and monitors Liquidity Risk, Interest rate risk and Value at risk which the bank is exposed to and enters into various derivative structures like IRS, FRA etc to manage the same.

The bank uses simulation reports as an effective tool for understanding risk exposure under variety of interest rate scenario. These reports help ALCO to understand the direction of interest rate risk in the bank and decide on the appropriate strategy and hedging mechanism for managing it.

 



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