ARC – ALCO

Reduce Interest Rate Risk at the Source

Long-term fixed-rate loans are one of the biggest sources of IRR pressure.

ARC changes that dynamic:

• Convert fixed-rate loan production into floating-rate exposure for the bank

• Significantly reduce duration risk from new production

• Limit exposure to rising funding costs compressing asset yields

Result: Lower structural interest rate risk—without constraining lending.

Stabilize Net Interest Margin (NIM)

NIM volatility often comes down to one imbalance: fixed-rate assets vs. floating-rate liabilities.

ARC helps realign both sides:

• Asset yields move with rates, tracking closer to cost of funds

• Reduce margin compression in rising rate environments

• Create more consistent spread performance across cycles

Result: A more stable, predictable NIM profile.

Improve Asset-Liability Alignment

ALCO spends significant time managing repricing mismatches after the fact.

ARC simplifies that process:

• Shortens the effective duration of fixed-rate loan production

• Improves repricing alignment across assets and liabilities

• Reduces the need for portfolio-level fixes or derivatives

Result: A cleaner balance sheet that behaves the way you expect it to.

Retain Long-Term Loans Without Taking Long-Term Risk

ALCO is often forced into a tradeoff:

• Support long-term fixed-rate lending

• or protect the bank from duration risk

ARC eliminates that tension:

• Borrowers get long-term fixed-rate certainty

• Loans tend to stay on the books longer

• The bank avoids taking on the full interest rate risk

Result: Stronger customer relationships—without compromising your IRR posture.