Institutional portfolio mgt - Banks?

[BMiller12]

The text discusses one approach to managing a bank portfolio that entails forecasting interest rates and adjusting the portfolio duration below the liability duration. This is to realize an economic gain if rates indeed increase (ie assets decrease less than liability value).
My question: how do they recognize an economic gain? It’s not like rising rates decrease the liability (deposit) amount owed. Guess I could see from an accounting standpoint if you mark the balance sheet to FMV, but that’s not a real gain per se, is it? What am I missing?
Thanks in advance for any help!

 

[SWhip]

Someone correct me if i’m wrong, but:
From a discount perspective, a higher interest rate means higher discount rate which means lower present value of the liabilities. You thus need a lower asset base to fund the payout of future liabilities, thanks to the benefit of rising interest rates. Since the assets have a lower duration, their value will decline less than that of the liabilities, resulting in a larger surplus.