Asset-Liability Management (ALM)

Asset-Liability Management (ALM) is a strategic process that financial institutions use to coordinate their assets (things they own, like loans and investments) and liabilities (their obligations, like deposits and borrowings). The goal is to balance risks related to interest rates, liquidity, and market changes, ensuring the institution remains stable and profitable over time. By carefully managing the timing and value of assets and liabilities, ALM helps prevent losses from unforeseen financial fluctuations, maintaining the institution’s financial health and ability to meet its commitments.