In an effort to make its shares lucrative to investors, state-owned lender Bank Mandiri has secured approval from its shareholders for a stock split, the first time the bank has pursued such a measure since its establishment almost 19 years ago.

The publicly listed company’s extraordinary shareholders meeting approved on Monday to split the stocks with a ratio of 1:2, to be finalized in November this year.

Bank Mandiri – Indonesia’s largest lender by assets – is confident that this corporate action will boost the availability of its shares, the ownership of
which has long been dominated by foreign institutional investors due to the company’s large market capitalization, its top executive said.

“With the stock split, we hope our shares can become more affordable for domestic investors,” said Bank Mandiri president director Kartika “Tiko” Wirjoatmodjo in Jakarta on Monday.

Bank Mandiri’s stock split plan will be the second one conducted by a state-owned lender after Bank Rakyat Indonesia (BRI) held similar scheme in 2010.

At least 60 percent of the company’s shares are owned by the Indonesian government as of June, while 33.57 percent are owned by foreign institutional investors, the lender’s data shows.

The bank might gain positive results from the split as it could trigger retail investors to buy its shares, said Recapital Securities analyst Kiswoyo Adi Joe.

“Usually after a stock split, the shares move sideways for three to six months,” he told The Jakarta Post, refering to a trend where the stock price bounces around a given range but never really trades outside of that range.

In addition to that, Kiswoyo said a fair price for Mandiri’s shares would be Rp 14,000 each (US$1.05).

Stocks of Bank Mandiri, which are traded on the Indonesia Stock Exchange (IDX) under the code BMRI, closed Monday trading at Rp 13,200, 0.76 percent lower than the previous close.

Bank Mandiri is convinced that the split will support continuous improvement in its performance this year after it booked 33.7 percent growth in net profits to Rp 9.5 trillion in the first six months of 2017.

It also booked 11.6 percent credit growth year-on-year in the first half despite sluggish nationwide loan demand. The bank expects to grow its lending by around 12 percent to 14 percent in 2018.

Alongside the stock split plan, shareholders also approved on Monday several changes to the bank’s top management by appointing two new commissioners and a director.

Hartadi A. Sarwono was appointed as Mandiri’s new president commissioner, replacing Wimboh Santoso who was chosen to chair the Financial Services Authority (OJK) for the 2017-2022 period.

Before joining the bank, Hartadi was Bank Indonesia Senior Deputy Governor from 2003 to 2013. After this, he was appointed as a president commissioner for state-owned lender Bank Negara Indonesia (BNI).

Another new commissioner appointed on Monday is R. Widyopramono, who spent his previous career in law enforcement as a junior attorney for special crimes and monitoring at the Attorney General’s Office (AGO).

Mandiri’s newly appointed director is Darmawan Junaidi, a finance director for publicly listed cement manufacturer Semen Indonesia, replacing the bank’s previous treasury director Pahala N. Mansury.

Pahala was chosen in April to lead national flag carrier Garuda Indonesia.

Prior to his position in Semen Indonesia, Darmawan was head of the treasury group for Bank Mandiri.

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