Neftaly Holding Companies and Asset-Liability Management (ALM)

Overview
Neftaly Holding Companies operates within diverse financial and operational markets, managing a wide portfolio of assets and liabilities across subsidiaries. Effective Asset-Liability Management (ALM) is critical to safeguarding financial stability, optimizing returns, and ensuring regulatory compliance throughout the group. ALM is not merely a risk control function—it is a strategic tool that aligns Neftaly’s asset portfolio with liability obligations, liquidity requirements, and market dynamics.

Strategic Objectives of ALM at Neftaly

1. Liquidity Management:
   Ensure that subsidiaries maintain adequate liquidity to meet short-term obligations without compromising investment opportunities. ALM strategies focus on cash flow forecasting, liquidity buffers, and contingency funding plans.
2. Interest Rate Risk Management:
   Monitor and manage exposure to fluctuations in interest rates that could affect the net interest margin of Neftaly’s financial holdings. Techniques include gap analysis, duration management, and hedging strategies using derivatives.
3. Currency and FX Risk Mitigation:
   For multinational subsidiaries, ALM addresses foreign exchange exposure by aligning foreign currency assets and liabilities, applying natural hedges, and executing selective FX hedging instruments.
4. Capital Optimization:
   Maintain an efficient capital structure to maximize returns while complying with regulatory capital requirements. This includes evaluating the cost of capital, leveraging opportunities, and balancing equity and debt across holdings.
5. Regulatory Compliance:
   Implement ALM practices that satisfy local and international regulatory standards (e.g., Basel III for banking subsidiaries, IFRS for financial reporting). Ensure consistent reporting and risk metrics across the holding group.

ALM Governance and Process at Neftaly

• Centralized Oversight:
  The holding company maintains an ALM committee that oversees risk policies, investment strategies, and cross-subsidiary alignment.
• Risk Measurement and Reporting:
  Advanced modeling tools are used to simulate scenarios such as interest rate shocks, liquidity stress, and macroeconomic changes. Metrics such as Net Interest Income (NII) sensitivity, liquidity coverage ratio (LCR), and economic value of equity (EVE) are closely monitored.
• Policy Framework:
  ALM policies define acceptable risk limits, asset allocation rules, and contingency procedures. Subsidiaries are required to report exposures and deviations regularly to the holding company.
• Dynamic Balance Sheet Management:
  Neftaly actively manages the duration, structure, and quality of assets and liabilities to optimize returns while maintaining resilience against market volatility.

Benefits of ALM to Neftaly Holding Companies

• Enhanced financial stability and predictability of cash flows.
• Optimized funding costs and improved profitability.
• Early identification and mitigation of interest rate, liquidity, and currency risks.
• Alignment of subsidiary operations with the strategic objectives of the holding group.
• Regulatory compliance and transparent reporting across jurisdictions.

Conclusion
For Neftaly Holding Companies, Asset-Liability Management is a cornerstone of financial strategy. By integrating ALM into its corporate governance and operational planning, Neftaly ensures that the holding group is resilient, well-capitalized, and positioned to maximize shareholder value while managing risks prudently.