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Mandiri eyes more farmers, fishermen for microloans
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Fully insured: Bank Mandiri retail banking director Tardi (left to right), Bank Mandiri distribution director Hery Gunardi, Askrindo president director Budi Tjahjono and Askrindo director Mohammad Shaifie Zein talk about the business outlook after signing an agreement on multi-purpose micro loans (KSM) insurance at Plaza Mandiri in Jakarta on Friday. (JP/Seto Wardhana)
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tate-owned lender Bank Mandiri expects to see its microloan sector grow faster than its overall credit growth for 2017 as it seeks to tap into the wider microloan market.
Mandiri — which is the largest bank by assets — has set its microloan growth target at 15 to 20 percent next year, exceeding its 11 to 13 percent target band for total loans.
If realized, Mandiri will see its outstanding microloans exceed Rp 58 trillion (US$4.27 billion)
Bank Mandiri retail banking director Tardi said it would push for higher disbursement of the government-backed microloan program (KUR), which accounted for more than 20 percent of its microloan portfolio as of September.
“We will push KUR disbursement to low-income people, such as farmers and fishermen, in line with the government’s instruction,” he said on Friday.
“Risk in that segment is higher [compared to other segments], so we are preparing ourselves and are looking to mitigate the risk by using the plasma core concept.”
According to the concept, Mandiri will look for the loan customers’ off takers, who will buy the end products, to ensure the sustainability of their businesses and reduce risks.
Mandiri is tasked with disbursing Rp 13 trillion-worth of KUR this year and has channeled around Rp 10 trillion as of September.
In addition to expanding the KUR, the publicly listed lender hopes to boost its multipurpose loan segment as well.
At present, Mandiri’s microloan portfolio is still dominated by the commercial and productive loan segment at 70 percent, followed by the multipurpose segment with 30 percent.
Most of the productive loans are disbursed to farmers, small-scale retailers and fishermen, among other customers, while the multipurpose ones are channeled to civil servants and private employees.
“It [the multipurpose loan] is actually a productive loan as well because civil servants, private employees, police and military personnel who apply for the loans use them in productive activities, such as to establish kiosks or lodges, or renovate their houses instead of just wasting the money,” Tardi said. The strategy is expected to enlarge the proportion of the multipurpose segment to 40 percent.
Mandiri already disbursed Rp 46.7 trillion-worth of microloans in the first nine months of the year, more than 90 percent of its full-year target.
Meanwhile, in an effort to secure its microloan quality, Mandiri inked an agreement with state-owned loan insurer Asuransi Kredit Indonesia (Askrindo) that paves the way for Askrindo to guarantee Mandiri’s multipurpose loans should they go into default.
“Bank Mandiri wants to share the risks with other insurers and has cooperated with 15 other insurance firms so far,” Bank Mandiri distribution director Hery Gunardi said.
Askrindo president director Budi Tjahjono said his firm would prudently manage its risks for the benefit of both parties.
Data from Mandiri show that the non-performing loan (NPL) ratio, the ratio of bad debts, stood at 4 percent and the lender is seeking to maintain it at the same level in 2017, below the 5 percent benchmark set by the banking authority.
According to its financial report, its overall gross NPL ratio reached 3.8 percent as of September and the net ratio stood at 1.3 percent.
