Bank Mandiri Persero Tbk PT : Plots Out Inorganic Growth in Southeast Asia

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News Release- Jum'at, 26 Agustus, 2016

Jakarta, 26 July 2016 - Bank Mandiri continues to sustainably expand its business by focusing on the development of prospective sectors, both domestically and in the Southeast Asian region. To support this strategy, the company is currently preparing a platform for inorganic growth overseas.
Bank Mandiri Corporate Secretary, Rohan Hafas, said that Bank Mandiri currently has offices in Hong Kong, Singapore, Shanghai, London, Cayman Islands and Dili, as well as a representative office in Malaysia. 'We are presently reviewing the possibilities for expanding our business to three other ASEAN countries -- the Philippines, Vietnam and Myanmar,' said Rohan.
Bank Mandiri, continued Rohan, believes that the prospects in these three countries are excellent and consequently various business opportunities in the three countries will be explored. As part of its expansion drive, Bank Mandiri will work with local partners who know the market conditions in the relevant countries. 'We will form a team to assess the prospects and opportunities in the Philippines, Vietnam and Myanmar,' he said.
Managing Risk
Bank Mandiri is also currently focusing on enhancing the management of various risks so as to continuously safeguard the company's financial performance. This is essential as Indonesia's domestic banks are still being adversely affected by the economic slowdown. As of the end of June 2016 , the company's net profit stood at Rp 7.1 trillion, down 28.7% compared to the same time last year. The decline in operating profit was mainly due to the setting aside of increased non-performing loan provisions, up from Rp 4.0 trillion in the second quarter of 2015 to Rp 9.9 trillion in the second quarter of 2016. However, pre-provision operating profit (PPOP), which excludes the cost of provisioning, amounted to Rp 19.3 trillion, representing annual growth of 13.3%. This highlights the fact that the Company's operations continue to be sound. During the same period, Bank Mandiri successfully reduced interest expenses by 9.3% on an annualized basis by increasing the contribution of low-cost funds.
'We are thankful for these achievements, despite the challenging domestic and international economic conditions and the company's initiative to gradually bring interest rates down to single-digit levels,' Rohan said.
In addition, he said, Bank Mandiri has taken anticipatory measures to ensure that the company will continue to grow in a sound and sustainable manner going ahead, and be able to optimally manage problem loans. These measures include strengthening the risk function, tightening risk acceptance criteria (RAC), and optimizing restructuring and recovery measures for the resolution of non-performing loans in a more focused, quicker and more comprehensive manner.
'So as to strengthen the structure of productive assets, we have also set aside sufficient reserves and apply quite conservative loan loss coverage policies. We are optimistic that based on the steps we have taken, Bank Mandiri will be able to further strengthen the foundations of its financial structure in order to continue to grow in a sustainable manner and be ready to face the challenges ahead,' said Rohan.
At the same time, public trust in Bank Mandiri continues to grow, as shown by an increase in third-party funds to Rp 691.4 trillion as of the end of June 2016, up from Rp 654.9 trillion at the same time last year. Of the said Rp 691.4 trillion in third-party funds, total low cost funds (checking and savings) amounted to Rp 439.4 trillion, primarily driven by an increase in savings deposits of Rp 37.1 trillion to Rp 273.6 trillion.
As part of its efforts to increase deposits through enhanced transaction convenience, Bank Mandiri continues to develop its branch, electronic, and other networks. As of the end of June 2016, Bank Mandiri had added 145 branches to bring the total to 2,472, 236 new micro outlets to bring the total to 2,159 and 429 new ATMs to bring the total to 17,461.
Lending
Bank Mandiri successfully maintained its intermediation function to various business segments in Indonesia amid volatile economic conditions, including lending to the micro segment, which displayed the highest annual growth rate of all segments, up 15.9% from Rp 39.7 trillion in the second quarter of 2015 to Rp 46 trillion during the same period this year.
During the past year, Bank Mandiri has provided gross additional loans (bank only) of Rp 96.0 trillion. This figure is derived from loan disbursements of Rp 231.9 trillion, less installments of Rp 135.9 trillion. Of the total of Rp 547.0 trillion provided by Bank Mandiri in loans (bank only), 86.1% consisted of productive loans, including financing for the infrastructure sector and micro, small and medium enterprises (MSMEs).
In tandem with the realization of the government's infrastructure development program, as of the end of June 2016 Bank Mandiri had committed to a lending limit of Rp 89.9 trillion for the infrastructure sector. Despite difficult domestic and regional economic conditions, this figure was higher than that for the same period the previous year, which amounted to Rp 75 trillion.
Bank Mandiri also participates in the distribution of special financing under the government's People's Business Loan (KUR) guarantee scheme. As of the end of June 2016, the number of Bank Mandiri KUR customers stood at more than 630.5 thousand based on a total lending limit of Rp 29.0 trillion.
'This achievement reflects our commitment to helping accelerate national economic development and improve people's welfare,' said Rohan.