In the face of many levels of uncertainty such as credit growth, the financial markets, the banking environment, and the continuation (and eventual reversal) of unorthodox monetary policies, interest rate risk (IRR) management presents challenges for financial institutions of all sizes. In particular, institutions face the challenge of generating higher net interest income (NII) while maintaining IRR levels within acceptable limits.
Oliver Wyman recently performed an industry survey on interest rate risk management across a group of eighteen North American banks. The survey set out to examine how banks are responding to uncertainty through their IRR management and measurement practices. In this report, The State of Interest Rate Risk Management, we present salient conclusions from our observations and experiences, point out avenues that will shape the evolution of industry practices, and provide a summary checklist for financial institutions. We also discuss implications for balance sheet management in an era characterized by a myriad of market and regulatory constraints pressuring banks.
The interest rate environment has been nothing but extraordinary during and after the crisis. Many countries are still at historically low levels of interest rates with a steep yield curve as a result of the crisis and unorthodox monetary policy responses.
-
Insights Applying The Urgency Of Solving COVID To Climate Change As we emerge from COVID-19, let’s harness the necessary spirit of collective endeavor in our fight for a cleaner, greener and more prosperous future. -
Insights Implementation Of Sustainable Development Goals Recommendations for potential mitigation actions to achieve access to third-party data sources. -
Insights Navigating the Present and Transforming for the Future Interview with Rui Barbas, Chief Strategy Officer at Nestlé USA -
Insights Retail’s Revolution - How To Navigate It?