MORS 2023 ALM Survey Results published
MORS today published the results of its 2023 ALM Survey.
The report has been compiled from the results of the MORS Software 2023 ALM Survey and has therefore essentially been written collaboratively by the banks that took part.
The contributors represent a diverse array of banks varying greatly in the nature of their business, and the geographical spread of the contributors represents a global view of the banking business in 2023.
Initially, MORS Software launched the ALM survey during Spring 2021 as a means of gaining an understanding of financial institutions globally, at a time when ALM, Balance Sheet Management, Financial Planning, and integrated Stress Testing alike had been experiencing exceptional challenges.
In 2022, the markets experienced significant volatility and uncertainty due to a number of factors. Having barely recovered from the consequences of the COVID-19 pandemic, which had already caused disruptions in financial markets in previous years, the Russian invasion of Ukraine, significantly shaped the year.
The geo-political conflict in Eastern Europe triggered an energy supply crisis, driving up the price of wholesale gas, petroleum, and in turn electricity. The knock-on effect of this sudden rise in energy costs triggered inflationary pressure in almost all aspects of daily life causing what most countries referred to as a ‘cost-of-living crisis’. As governments scrambled to counter inflation, most central banks embarked on a monetary policy of increasing bank base rates and continued to do so throughout 2022.
Set against a backdrop of decades of extremely low (and in many cases, negative) interest rates, rapidly rising interest rates put an emphasis on asset and liability management in most banks. In markets that had experienced excess liquidity for the foreseeable past, liquidity began to dry up and interest rate risk became a strong feature of balance sheet management.
In September 2022, a ‘mini-budget’ set by the newly appointed UK Prime Minister, Liz Truss, sent shock waves through the global financial system as one the world’s most significant financial centres went into freefall. The mini-budget had announced tax cuts to be funded by increased government borrowing, fiscal loosening at a time when the Bank of England was applying monetary tightening. The stability of the global financial system was threatened, and the events drew criticism from all corners of the globe, including the IMF.
At the time of publication interest rates are still rising and the cost-of-living crisis shows no sign of abating. Combined with the structural aftereffects of the pandemic a number of significant financial intuitions have collapsed and required intervention, notably Silicon Valley Bank and Credit Suisse.
The following report charts the respondent’s key areas of focus and concern in 2022, together with their outlook for focus in 2023.
MORS would like to thank all banks that participated in the survey and this report’s creation.