Mandiri records 70.2% drop in profits<\/p>\n
Primastuti Handayani, The Jakarta Post, Jakarta<\/p>\n
Troubled Bank Mandiri, which has been the center of probes into
\nalleged massive lending scandals, recorded a 70.2 percent fall in
\nthis year's first-quarter profit due to the rising cost of bad
\nloans as well as a decline in government bond sales.<\/p>\n
The bank's new management said on Monday that the company's
\nnet profit dropped to Rp 519 billion (US$54.8 million) compared
\nto Rp 1.7 trillion in the corresponding period last year.<\/p>\n
The profit slump was attributable to its high level of net
\nnon-performing loans (NPLs) at 10.3 percent, far higher than Bank
\nIndonesia's minimum requirement of 5 percent, Mandiri said.<\/p>\n
In total, bad loans surged to a gross 17.8 percent in 2005's
\nfirst quarter compared from 7.1 percent in 2004's last quarter
\nand 8.4 percent in last year's first quarter.<\/p>\n
The NPL, both in corporate and commercial loans, totaled Rp
\n11.16 billion in the first quarter ending March 31, or 12 percent
\nof the total loans.<\/p>\n
\"The high NPL has prompted Mandiri's new management to
\nconsolidate and review what has been wrong with our policies.
\nSomething has to be fixed,\" the bank newly elected president
\ndirector Agus Martowardojo said.<\/p>\n
\"Therefore, we have to be more transparent, more accountable,
\nmore independent and fairer. We should also improve the bank's
\nworking culture and values such as employee integrity,
\nprofessionalism, trust and avoid conflicts of interest,\" said
\nAgus, who will undergo a due diligence test at Bank Indonesia on
\nTuesday.<\/p>\n
Agus was named the bank's new president director in a
\nshareholders meeting on May 16 but his appointment has irked some
\nlawmakers, who say it is yet to be official, pending the
\ncompletion of the test.<\/p>\n
He replaced ECW Neloe, who along with two other directors has
\nbeen detained suspects by the Attorney General's Office for their
\nalleged roles in a bank lending scam worth up to Rp 1 trillion.<\/p>\n
The AGO has also focused its inquiry on a series of companies,
\nincluding PT Cipta Graha Nusantara\/Tahta Medan (CGN\/TM), PT Siak
\nZamrud Pusaka (SZP), PT Lativi Media Karya (LMK) and PT Artha
\nBhama Texindo\/Artha Tri Mustika Texindo (ABM\/ATM), and has
\ndetained officers from PT CGN\/TM and PT SZP.<\/p>\n
According to the quarterly report, the bank's net interest
\nincome dropped 8.1 percent from Rp 2.58 trillion in last year's
\nfirst quarter to Rp 2.37 trillion this year's first quarter.<\/p>\n
The bank also recorded a 90 percent drop in the sale of
\ngovernment bonds to Rp 78 billion in this year's first quarter,
\nfrom Rp 777 billion in the corresponding period last year.<\/p>\n
Apart from its disappointing performance, the bank still
\nrecorded 26.6 percent in Capital Adequacy Ratio (CAR), slightly
\nbetter than last year's fourth quarter of 25.3 percent but still
\nbelow 2004's first quarter 29.8 percent.<\/p>\n
The figures are far higher than the 8 percent minimum
\nrequirement set out by the central bank. CAR measures a
\ncomparison between a bank's capital and its risk-weighted assets,
\nincluding loans.<\/p>\n
\"Despite striving to improve our performance regarding
\ncorporate loans, the bank will still expand (loans) for small and
\nmedium enterprises, commercial users and consumers,\" Agus said.<\/p>",
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