2022 Interest Rate Risk Management

BoA used forecasts and diversification to anticipate and manage interest rate changes impacting loan and investment income.

BoA used stress testing to gauge potential financial impacts from events like lockdowns and government checks.

BoA employed Asset-Liability Management to protect earnings from fluctuating interest rates.

BoA used financial instruments (swaps, futures) to manage risks without altering core business structures.

BoA spread its investments across various assets to reduce risks.

Gap analysis is a process to identify and address the timing mismatches between assets and liabilities, usually in the context of interest rate changes.

Net Interest Income Sensitivity measures how much a bank's net interest income will change when interest rates fluctuate.

Bank of America maintained a significant liquidity reserve and followed Basel III compliance standards to buffer against unexpected events, strengthening its resilience in the face of rate changes.

Bank of America strategically invested in high-yield assets to offset the negative impact of falling interest rates on its net interest income.

Banks use stress testing to simulate extreme scenarios, like sudden interest rate shifts, to assess their potential impact on the bank's earnings and liquidity.

BoA used derivative hedging and gap analysis in 2022 to handle rising interest rates. They also performed stress tests and used interest rate swaps to manage risk.

BoA monitored and adjusted asset and liability imbalances to maintain profitability during rising interest rates.

Bank of America adjusted their strategies in 2023 to deal with the persisting high-interest rate environment, focusing on optimizing ALM and minimizing losses from lowering-yield existing bonds.

A method to lessen the effects of interest rate fluctuations on a bank's profits and balance sheet by aligning assets and liabilities properly.

BoA analyzed customer deposit behavior to better price and manage deposits.