Asset liability management

 Asset liability management or what is commonly called ALMA is an organized fund management process by going through a series of analysis processes, reports, and strategies that are used to reduce liquidity risk, interest rates, exchange rates and operating costs to achieve maximum profit. Alma is a strategy that is always used by banks in managing their funds. Banks have a function to seek funds and then distribute them to the people who apply for loans. This aims to boost economic activity so that it continues to run well. The task of banks is to seek funds and then distribute them to the public, so that their liquidity must be maintained in order to meet the demand for the proposed loan. However, the operational costs of obtaining funds must be balanced by the interest rates charged on the loan.

The components that need to be considered by banks in running Alma are:

1. Liquidity must be maintained .
   
   Especially for cash flow. With the availability of liquidity, you can fulfill your obligations to complete the provision of loan funds. indirectly, this step will optimize the income obtained from loan interest. In addition, a bank will be deemed unfit to operate if it is unable to regulate the excess and lack of funds (cash flow) for its operational activities. Where the task of the bank is to find funds to lend to the public.
   
   
2. Interest rate (interest rate)
   
   The movement of interest rates is also a risk to a bank's cash flows. The problem that often arises when there is a mismatch between the deposit interest rate and the loan interest rate. So that the bank must calculate the loan interest rate precisely based on the amount of the deposit interest rate. This means that there must be a difference between the deposit interest rate and the loan interest rate as net interest income. In practice, banks often charge fluctuating interest rates to borrowers, this is an adjustment step to deposit interest rates so that the bank can still earn optimal income.
   
   
3. Asset management in the capital market.
   
   Equity movements should also be considered as this has the potential to present a large risk. Minimizing the risk of a forex exchange position is the right step to keep assets from losing. This includes foreign exchange management. So it is better for banks to focus on optimizing income from net interest income. That is the difference in interest rates.

So asset liability management is a series of asset management processes that aim to minimize risks and implement strategies that are useful for optimizing profits. Management that focuses on the prudential component of risks that may occur.