Mandiri's profit increases by 26%<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
State-controlled Bank Mandiri, the country's largest bank in
\nterms of assets, announced a 26 percent increase in first
\nsemester net profit compared to the same period last year,
\nattributed mostly to a decline in the cost of funds and gains
\nfrom the sale of government recapitalization bonds.<\/p>\n
In an audited financial report presented to reporters on
\nThursday, the bank posted a net profit of Rp 2.24 trillion
\n(US$263 million) or Rp 112 per share, up from Rp 1.77 trillion or
\nRp 89 per share from the same period last year.<\/p>\n
Mandiri's interest rate revenue dropped by 15 percent to Rp 14
\ntrillion from Rp 16.6 trillion.<\/p>\n
Nevertheless, the bank managed to book a 13 percent increase
\nin income from lending to Rp 3.64 trillion from Rp 3.22 trillion,
\nthanks to a decline in its interest rate burden to Rp 10 trillion
\nfrom Rp 13.3 trillion.<\/p>\n
The lower interest revenue was mainly caused by the falling
\ninterest rate of Bank Indonesia SBI promissory notes, as the
\ninterest was linked to the interest rate of government bonds the
\nbank kept. Bank Mandiri holds mostly variable-rate bonds. This
\nmeans that when the SBI rate decreases, the bank's interest
\nrevenue from the bonds also drops.<\/p>\n
Around 57 percent of Mandiri's revenue is derived from the
\nthese bonds.<\/p>\n
Realizing this negative effect, Mandiri director I Wayan Pugeg
\nsaid that the bank had been trying to unload the bonds.<\/p>\n
He said that in the first semester the bank had unloaded Rp
\n13.3 trillion worth of bonds, providing a gain of Rp 1.16
\ntrillion. The sale of the bonds helped the company boost its
\nprofit.<\/p>\n
The bank also announced that at the end of June, gross
\nnonperforming loans stood at 7.3 percent of total outstanding
\nborrowing, down from 9.1 percent a year ago.<\/p>\n
Mandiri extended Rp 66.80 trillion in new loans during the
\nperiod, up from Rp 50.4 trillion.<\/p>\n
Lending to the corporate sector made up 65 percent of the
\nbank's lending portfolio. In the first half, the bank channeled
\nRp 40.4 trillion to the sector, up from Rp 40.2 trillion in the
\nsame period last year.<\/p>\n
Analysts feared that such a strategy could harm Mandiri's
\nprofit in the future, since the sector was still considered prone
\nto default.<\/p>\n
However, Mandiri's chief financial officer, Keat Lee, played
\ndown the concern, saying that some companies considered risky by
\nanalysts had been able to pay off their debts.<\/p>\n
"I don't think its risky, because it (lending) goes through a
\ncareful risk management process and obviously depends on the cash
\nflow and collateral that we are able to get," said Lee.<\/p>\n
Lee said that Mandiri's focus for the long term would not be
\non the corporate sector but on the consumer and the small and
\nmedium enterprise sectors.<\/p>\n
The government, which still holds an 80 percent stake in the
\npublicly listed bank, plans to sell a further 10 percent in the
\nbank next year, after successfully selling a 20 percent stake in
\nJuly through an initial public offering.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/mandiris-profit-increases-by-26-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
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