In addition to new financial ratios that have been introduced, the Microfinance Financial Reporting Standards introduce four key asset-liability management (ALM) tables (ALM1, ALM2, ALM3, and ALM4). These tables are important components of microfinance financial risk management strategy and monitoring. They provide visual, useful presentation to assess risks inherent in asset and liability structure. The first three tables are required as audited financial statement disclosures of market risk for institutions that are IFRS compliant.

Each of the ALM tables is divided up into vertical time horizon columns called tenor buckets. The time frames may be modified depending on the MFI. MFIs that experiences short-term changes in the values of their assets and liabilities, such as MFIs that do agricultural lending prone to seasonality and cyclical variation, may need to shorten the smallest tenor bucket to a period of one week, and the duration for each tenor bucket may be shorter. Each of these tables measures the mismatch (excess or deficit) of assets over liabilities, as a percentage of an MFIs total equity. An MFI that measures total capital rather than equity (such as for use in Capital Adequacy ratio (R8) and Uncovered Capital ratio (R9) may compute the asset-liability mismatch as a percentage of total capital.

• ALM1 details liquidity risk measuring, disclosing mismatches in maturities of MFI assets and liabilities.
• ALM2 quantifies repricing risk through analysis of the time horizons in which interest rates on assets and liabilities reset and reprice. This table includes a sensitivity analysis of the impact of a one percent increase or decrease in interest rates.
• ALM3 breaks out MFI foreign exchange risk exposure for an institution that holds assets or liabilities in a foreign currency or currencies. It also measures the aggregate net foreign exchange open position of all of the MFIs foreign currency holdings as a percentage of equity. This table includes a sensitivity analysis of the impact of a 10 percent currency depreciation or appreciation.
• ALM4 measures foreign exchange risk liquidity, combining foreign exchange risk exposure in tenor buckets to get a view of the entire balance sheet. It discloses the maturation of assets and liabilities per foreign currency.

Please see Appendix 2 for further information on how to create the four ALM tables, and a pro forma example of each table. They are in complete form in the Excel file, available online www.reportingstandards.org .