Mandiri projects lending to grow 15% in 2004

Mandiri projects lending to grow 15% in 2004

Rendi A. Witular, The Jakarta Post, Jakarta

State-controlled Bank Mandiri, the country's largest bank in
terms of assets, said on Thursday that its lending volume was
projected to grow by 15 percent next year.

Mandiri president E.C.W Neloe said that demand for fresh money
among corporations would likely surge in the year, as most of
them had undergone business restructuring after being hammered by
the financial crisis that hit the country in late 1997.

"Next year is an expansion year for most businesses in the
corporate sector because they have concluded their business
restructuring programs this year, and they will need capital to
expand their businesses," said Neloe.

Neloe even played down fears of political unrest during the
2004 general election, saying that businesses were now relatively
immune to such conditions.

However, he said that Mandiri would remain prudent in
channeling loans to the corporate sector, as it had listed
several sectors considered risky in 2004, including textiles,
plywood, tourism and the hotel industry.

Mandiri's loan exposure this year is estimated to increase by
about Rp 8 trillion from last year, to Rp 73.4 trillion. As of
September, the bank had channeled Rp 72.6 trillion in loans, with
41.8 percent of them injected in the corporate sector, 25 percent
in the commercial sector and 3.1 percent in the consumer sector.

The bank forecasts that by 2007, the corporate sector would
receive 50 percent of the bank's entire lending.

Analysts fear that the high exposure to the corporate sector
could harm Mandiri's profitability in the future, as the sector
is still considered volatile and prone to default.

As of September, due to the bank's aggressive lending to the
corporate sector, its non-performing loans (NPLs) remained high
at 7.3 percent -- higher than the 5 percent maximum requirement
set by Bank Indonesia.

Neloe said that next year, the bank's interest margin was
likely to decline because of stiffer competition in the banking
industry, and that it would try to compensate for this by
boosting fee-based income activities.

Mandiri announced that, by September, the bank's net profit
had increased by 35.2 percent to Rp 3.77 trillion, mostly on
higher income from lending interest and fees.

In the first nine months, the bank booked a net interest
income of Rp 5.8 trillion, up by 12.4 percent compared to the
same period of last year. Its income from fees increased to Rp
3.1 trillion from Rp 3 trillion.

The bank will pay out an interim dividend in December
amounting to a total of Rp 1 trillion, or Rp 50 per share.

The bank's net profit this year is expected to reach about Rp
4 trillion, up from Rp 3.5 trillion in 2002.