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Jakarta Post

Mandiri strengthens commercial banking division to boost growth

Norman Harsono (The Jakarta Post)
Jakarta
Fri, January 18, 2019

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Mandiri strengthens commercial banking division to boost growth Bank Mandiri president director Kartika Wirjoatmodjo (JP/win)

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tate-lender Bank Mandiri announced recently that it had split its commercial banking division, previously managed under the corporate banking directorate, into an independent directorate as one of its strategies to boost growth.

Mandiri president director Kartika Wirjoatmodjo told reporters during a press briefing in Jakarta that the commercial banking directorate would be headed by director Riduan Ahmad who was previously Mandiri’s senior vice president of middle corporate.

The new division would serve companies larger than medium enterprises, defined as having over Rp10 billion (US$709,000) in assets but were non publicly-listed and non state-owned entities.

Mandiri itself, the second largest bank in Indonesia, held assets worth Rp 1.03 quadrillion as of November. “We expect that the appointment of a new specialized director will help grow our commercial banking sector,” said Kartika, adding that middle corporations would be its main focus this year.

He added that the split would improve the efficiency of the corporate banking directorate, which is headed by director Royke Tilumaar, by reducing its loan-handling responsibility from 60 to 42 percent of the bank’s total loan disbursements.

A case in point, wholesale banking handled around Rp 412 trillion of the Rp 688 trillion disbursed by the bank as of November last year.

Aside from improving efficiency, Mandiri also plans to raise at least Rp 40 trillion in funds this year through non-conventional financing methods such as medium term notes, bilateral loans and negotiable certificate of deposits (NCDs).

Mandiri financing director Panji Irawan said the raised funds would comprise one-fourth in rupiah worth Rp 10 trillion and three-fourths in US dollars worth $2 million. “The US dollars are also in anticipation of higher demand for foreign currency,” added Panji.

Mandiri is, notably, avoiding more third party funding because interest rates have become costly after Bank Indonesia raised its benchmark rate six times last year to 6 percent last year.

Mandiri’s own current account savings account (CASA) ratio stood at 64.5 percent of all deposits as of September last year.

“Liquidity will be the banking industry’s most pressing challenge this year,” said Kartika who is also the chairman of the Indonesian Banks Association (Perbarnas).

A case in point, he said industry-wide credit growth was last recorded at between 12 and 13 percent while third party funding growth was only 8 percent.

He also followed up Mandiri’s plan to acquire an undisclosed finance-related company, saying that the bank could make Rp35 trillion available by reducing its capital adequacy ratio from 21 to 16.5 percent, to purchase such a company.

Lastly, he said the bank would expand its financial technology (fintech) sector by increasing its micro loan penetration, defined as loans of between Rp 2 trillion and Rp 3 million, and by launching a new e-payment platform in cooperation with other state-owned enterprises. (bbn)

 

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