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