Repricing Opportunity


DEFINITION of 'Repricing Opportunity'

The change in interest rate of an interest-sensitive asset or liability. Banks earn income from interest, so their income fluctuates with changes in interest rates. A bank can minimize its interest-rate risk and maximize its net interest income by minimizing the differences in repricing opportunities between its assets, such as adjustable-rate mortgages, and its liabilities, such as the rate of interest it pays on customer deposits or certificates of deposit.

BREAKING DOWN 'Repricing Opportunity'

Depending on the mix of assets and liabilities it holds, repricing opportunities can make a bank either asset-sensitive or liability-sensitive. Banks also experience other types of risk, including: foreign currency exchange rate risk, commodity price risk and trading investment portfolio risk.

  1. Interest Sensitive Liabilities

    Any type of short-term deposit held by a bank that pays a variable ...
  2. Interest Rate Sensitivity

    A measure of how much the price of a fixed-income asset will ...
  3. Interest Sensitive Assets

    Assets held by a bank that are vulnerable to changes in interest ...
  4. Interest Rate

    The amount charged, expressed as a percentage of principal, by ...
  5. Finance

    The science that describes the management, creation and study ...
  6. Variable Interest Rate

    An interest rate on a loan or security that fluctuates over time, ...
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