Benefits of ALMAN for the Finance Department

ALMAN is an effective management decision support system that will provide the Finance Department with the capability to do inter alia the following:

Accrued Interest
Accrued Profit on FRA Contracts
Accrued Swap/Premium Costs
Amortisation
Capital
Capital Inflow
Capital Outflow
Capital + Accrued Interest
Converted Accrued Interest (notice given)
Converted Capital (notice given)
Deferred Profit on FRA Contracts
Dividend Payments
Forex Profit or Loss
How many Shares Held
Inflow (Capital + Interest)
Interest Capitalised
Interest Inflow
Interest Outflow
Interest Received/Paid
Nominal
Notional Amount
Outflow (Capital + Interest)
Profit on FRA Contracts
Swapped Capital
Swap/Premium Costs

•	Budgets
•	Support Management Decisions
•	Model “What-if” scenarios
•	Produce User Defined Reports
•	Create Management Information
•	Perform Fair value calculations

How ALMAN assists the Bank in doing Budgets
ALMAN allows its user to simulate an indefinite number of Balance Sheets, Income Statements, Cash flow statements and User Defined Reports into the future.

•	The time frame used may vary from situation to situation, depending on the purpose of the simulation. For example, a five year time frame might be used if the simulation is done to calculate the future need for capital, whereas a six to twelve month time frame could be used to measure the impact of interest rate changes in the current financial year or eighteen months to be able to produce a budget for the next financial year.
•	ALMAN is an effective budgeting tool giving the user unlimited access to define various scenarios.
•	Scenarios (comprising of a strategy, interest and exchange rate view) can be set as a budget, called the original budget in the system. An additional revised budget can be created, which can be reset from any future month for a defined planning horison.
•	Variance analysis ALMAN has the capability to do variance analysis based on interest bearing products comparing actual to an original budget, revised budget and any of the (unlimited number of) scenarios the user has defined. To be able to do variance analysis ALMAN accepts historical data for average balances, interest earned or paid per product defined. ALMAN provides variances in terms of volume and price (rate).
•	Consolidations, business unit and portfolios ALMAN has a unique feature to merge simulations from different models, allowing consolidated models to use projections generated by source models. Consolidations can be very useful when budgets are created for various business units (branches) and portfolios. Due to the unique funding and investment algorithm of ALMAN, models can also be created to determine short or long (open) positions per currency. Money can be transferred between models to fund short falls or the investment of surpluses. All financial and risk reports are available per consolidated and sub models. Consolidated models contain the same level of details as their source (sub) models.
•	Fixed Assets & Non-interest linked Liabilities All projected Capital Expenditure can be captured in ALMAN. ALMAN has the capability to define fixed asset classes, calculate depreciation and measure the impact of acquisitions and disposal as well as the timing thereof on the need for cash.
•	Non-interest income ALMAN caters for setting up rules for the calculation of fee and other income items as well as operational expenditure items. Rules can be set up to calculate provisions and reserves.
•	Year to date figures Income statement items can be presented on a monthly and year to date basis, incorporating the actual figures for the current financial year. The YTD figures can be used for the following:

O	to proportion operational expenses,
O	to provide the base for growth in other income lines and
O	to do YTD reporting

How ALMAN assists in Management Decisions

•	Funding of cash shortfall
•	Investment of surplus cash
•	Limit risk exposure
•	Strategies/budgets into the future

A major feature of ALMAN is the quantification of management decisions, for example, the volume of time (fixed) deposits by tenure required on a monthly basis or the new business (production) to be written on mortgages on a monthly basis.

How ALMAN performs “What-if” scenario analysis

•	ALMAN allows management to analyse the impact of any defined (internal) or external (interest and currency rates) factors on funding requirements, debt management and cash flow.
•	Every “what-if” scenario can be defined be compared with a base case (or any number of other scenarios).

ALMAN’s User Defined Reports
ALMAN is an integrated system complying with general acceptable accounting principles. This allows the user to refer to any of the financial report lines and specific variables as defined in the model and use these in user-defined reports:

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