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Mandiri eyes 18 percent lending growth next year

State-owned lender Bank Mandiri expects lending growth to remain between 17 percent and 18 percent next year in spite of Bank Indonesia’s (BI) recent interest-rate increase, which could also trigger a rise in lending rates

Grace D. Amianti (The Jakarta Post)
Jakarta
Thu, November 27, 2014

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Mandiri eyes 18 percent lending growth next year

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tate-owned lender Bank Mandiri expects lending growth to remain between 17 percent and 18 percent next year in spite of Bank Indonesia'€™s (BI) recent interest-rate increase, which could also trigger a rise in lending rates.

Economists are worried that the global economic outlook, coupled with the rise in interest rates as the result of higher inflation, will slow lending growth in the country.

Bank Mandiri'€™s finance and strategy director, Pahala N. Mansury, however, said that despite the unfavorable economic conditions, lending growth would be higher than this year'€™s target of between 15 percent and 17 percent.

'€œThe target was mentioned in our business plan [RBB], which will be submitted to the Financial Services Authority [OJK] next week,'€ Pahala said.

Pahala said Bank Mandiri'€™s higher lending growth next year would be largely contributed by micro lending, which is expected to rise by between 28 percent and 30 percent, and those channeled to small business, which is projected to grow by between 23 percent and 25 percent.

Pahala said the manufacturing sector would continue to be the highest contributor with 30 percent of the bank'€™s total loans.

'€œWe think the manufacturing sector will account for at least 30 percent of our loans until six years ahead,'€ he said.

Infrastructure was another Bank Mandiri loan sector that was predicted to increase to above 30 percent next year due to its large portfolio in various public and private development projects, Pahala added.

The bank expects to see high loan disbursement for infrastructure projects next year as President Joko '€œJokowi'€ Widodo envisions more infrastructure project development to boost Indonesia'€™s economy.

During the nine-month period of this year, Bank Mandiri booked a 12.4 percent increase in loans to Rp 506.5 trillion (US$41.54 billion) compared to Rp 450.8 trillion as of September last year.

The bank'€™s nine-month lending growth was mainly contributed by micro loans, which grew more than 31 percent, according to its financial statement. The second- and third-largest growth contributors were loans to the construction as well as electricity, gas and water sectors, which grew 23.9 percent and 23.3 percent, respectively.

Pahala said that as part of its business plan, Mandiri expected 15-16 percent growth in third-party funds (DPK) next year to support loan growth.

As of September this year, the bank'€™s total third-party funds grew 14.9 percent to Rp 590.9 trillion as per September from Rp 514.2 trillion in the same period last year

Andry Asmoro, an analyst at Bank Mandiri'€™s Office of Chief Economist, said recently that despite the slowing growth, Indonesia'€™s bank loans would grow between 16 percent and 18 percent next year, slightly higher than this year-end'€™s prediction of around 15-17 percent.

'€œThe deceleration may persist until next year when the global interest rate rises as a result of the [US] Fed'€™s move to raise its benchmark rate,'€ he said.

Meanwhile, the OJK has projected loan growth of between 15 percent and 17 percent next year as predicted previously by BI. In the third quarter, Indonesia'€™s gross domestic product (GDP) growth slowed to a five-year low of 5.01 percent, with investment and consumption '€” two major domestic growth drivers '€” decelerating to the lowest level since 2009.

Shares of Bank Mandiri rose 0.72 percent to Rp 10,525 at Wednesday'€™s close on the Indonesia'€™s Stock Exchange (IDX) from Rp 10,450 a day earlier.

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