Bank Mandiri Profit Jumps 49% as Bad Loan Provisions Drop
Jakarta. Bank Mandiri, Indonesia's largest bank by assets, posted a 49 percent jump in net profit last year, helped by a fall in provisions for soured loans as well as a rapid growth in fee-based income.
For 2018, Mandiri expects a loan growth of around 11-12 percent. That is in line with the financial services regulator's estimate of 10-12 percent growth for the sector as growth picks up from sluggish levels that followed a sharp downturn in commodities.
The state-controlled bank said net income came in at Rp 20.6 trillion ($1.52 billion) in 2017, rebounding strongly after booking its worst profit in five years in 2016.
That was slightly above the average estimate of Rp 20.3 trillion drawn from 17 analysts polled by Thomson Reuters I/B/E/S.
"A significant decline in provisioning cost had resulted in a significant profit growth," chief executive Kartika Wirjoatmodjo told reporters on Tuesday (06/02).
He said the bank had managed to cut its provisions for bad loans by 35 percent to around Rp 15.95 trillion, in line with its goal of Rp 16 trillion-18 trillion.
The bank lowered its gross non-performing loan ratio to 3.46 percent, from 4 percent a year earlier.
Mandiri has been under pressure to tackle bad debt after provisions doubled to Rp 24.6 trillion in 2016 as non-performing loans spread beyond the commodities sector to consumer-related businesses.
Fee-based income grew by 16.4 percent in 2017, more than double its growth rate in the previous year, it said.
The bank also said it extended Rp 729.5 trillion in loans as of the end of 2017, an annual increase of 10.2 percent, helped by robust demand from the corporate and consumer segments.
Mandiri's net interest income rose 1 percent while its net interest margin stood at 5.87 percent vs 6.44 percent in 2016.
Reuters
Tags: Keywords: