State-owned lender Bank Mandiri '€” the country'€™s largest lender in terms of assets '€” is looking to balance its business portfolio in the next five years, in an effort to mitigate risk.

Mandiri president director Budi Gunadi Sadikin said on Monday that the bank hoped to balance its retail and wholesale segments between now and 2020, as already laid out in its banking business plan.

Mandiri hopes to see its retail segment make up 40 to 45 percent of its total business, with wholesale segment accounts constituting the remaining 55 to 60 percent.

'€œOur long-term goal is to see balance by 2020, but we hope to begin achieving it this year. At present, our retail business contributes around 35 to 40 percent our total lending,'€ he revealed after the bank'€™s shareholders meeting, which was held to refresh the board of directors.

In the meeting, shareholders approved the appointment of five new directors and the reappointment of one director. Budi still holds his current position, with his term to end next year.

Budi went on that by setting these targets, Mandiri expected to reduce the credit risks that tended to occur during economic downturns.

'€œA flagging economy, like what we can see now, may impact our major corporate clients. We need to compensate for that by growing our retail business. That is our buffer,'€ Budi said, adding that it would be '€œvery costly'€ for a bank as large as Mandiri to fail as a result of increasing credit risks.

Data from Mandiri show that its retail lending is now composed of three segments, namely micro credit, business banking and consumer finance.

Last year, outstanding loans distributed to the three segments reached around Rp 157.97 trillion (US$11.93 billion), equal to 33.2 percent of the bank'€™s total loans.

Budi acknowledged that it would not be easy to jack up its retail lending, since given the bank'€™s size, it would mean disbursing trillions of rupiah. Part of the strategy, he said, was to expand its micro credit coverage.

As reported before, the publicly listed lender is joining the Laku Pandai program initiated by the Financial Services Authority (OJK). The program is expected to provide millions of unbanked and underbanked Indonesians with basic saving and lending products.

Mandiri is looking to launch the program in Makassar, South Sulawesi, at the end of the month. However, Budi claimed that the bank was not looking to be the biggest player in micro lending, insisting that its involvement in the micro sector was intended to help boost the lower end of the economy.

On the board of directors, Sulaiman Arif Arianto, the commercial business director of Bank Rakyat Indonesia (BRI), was appointed vice president director, replacing Riswinandi, who had ended his term.

Sulaiman was the only fresh face on the board. The others had previously served in the bank, including Kartika '€œTiko'€ Wirjoatmodjo, who until recently worked as executive director of Deposit Insurance Corporation (LPS).

Prior to his appointment at LPS, Tiko worked as CEO at state-owned financing firm Indonesia Infrastructure Finance, managing director at securities firm Mandiri Sekuritas and strategy and performance group head at Mandiri.

The bank'€™s shareholders also approved the appointment of a new president commissioner and other members of the board of commissioners.

Darmin Nasution, former Bank Indonesia governor, is now in charge of the board. Another new commissioner is Cahaya Dwi Rembulan Sinaga, known for volunteering on the campaign team of now President Joko '€œJokowi'€ Widodo.

The meeting saw the shareholders give their consent on the dividends to be paid this year, reaching a total of Rp 4.97 trillion, or 25 percent of Mandiri'€™s 2014 net profit. The dividend/payout ratio fell from 30 percent last year and the dividend is slated to be paid on April 17.

Popular

Volcano erupts in North Sulawesi, hundreds evacuated

Dubai roads, airport reel from floods after record rains

Ramadan boosts consumer confidence, retail sales