Mandiri explains bond profit

JAKARTA (JP): State-owned Bank Mandiri said profits from its recapitalization bonds in the first half of this year made up 75 percent of the bank's interest income of Rp 15.54 trillion (about US$1.7 billion), and not 75 percent of its Rp 1.53 trillion in net profit as previously reported.

The bank said in a statement on Wednesday that the profit from government bonds was about the same size as its interest expenses.

"The interest earned from government bonds is roughly equal to the interest paid on time deposit," Bank Mandiri president E.C.W Neloe said. Seventy five percent of the Rp 15.54 trillion in interest income equals Rp 11.65 trillion.

Neloe was responding to media reports, including one in The Jakarta Post on Aug. 22, which quoted him as saying that interest from recapitalization bonds made up 75 percent of the bank's first half net earnings.

"Whilst interest from recapitalization bonds represents 75 percent of total interest income, it does not mean 75 percent of net profit is from government bonds," he said in the statement.

Besides interest earnings, the bank has other income sources, which at most banks would be from fee-based services.(bkm)