The Jakarta Post
State-owned Bank Mandiri has secured net profit growth in the first quarter as it strives to strengthen its digital channels amid the outbreak.
The bank saw its net profit grow 9.44 percent year-on-year (yoy) to Rp 7.92 trillion (US$5.65 million) in the first three months, with a growth rate that was much higher than its peers. State-owned Bank Rakyat Indonesia (BRI) saw its net profit contract 0.3 percent in the first quarter to Rp 8.17 trillion, while Bank Tabungan Negara (BTN) recorded a 36.79 percent contraction, while Bank Negara Indonesia (BNI) booked 4.3 percent growth.
The notable growth in Bank Mandiri’s net profit was supported by nearly 24 percent growth in its fee-based income to Rp 7.74 trillion and 9.05 percent increase in its net interest income to Rp 16.16 trillion.
“We are committed to maintaining business growth that is sustainable and consistent in giving better added value to our shareholders,” Bank Mandiri president director Royke Tumilaar said in a written statement published on Monday.
“At present, we continue to maintain the quality of our assets and business because this pandemic might have [adverse] impacts on business,” Royke added.
The COVID-19 pandemic has forced businesses and offices to close to contain the coronavirus spread, weakening people’s purchasing power and loan repayment capacity, as well as disrupting business activity.
Financial Services Authority (OJK) data show bad loan ratio or non-performing loans (NPL) stood at 2.77 percent in March, higher than 2.51 percent in the same period last year. At the same time, loan growth reached 7.95 percent yoy in the first quarter, higher than the 6.08 percent recorded at the end of last year, but no new loan demand was recorded in the period.
Bank Mandiri reported 14.20 percent growth in loan disbursement to a total of Rp 902.7 trillion as of March. Meanwhile, its NPL hovered at 2.36 percent, a 0.32 percentage point decrease from March last year.
At the same time, the bank’s third-party funds grew 13.72 percent to Rp 941.3 trillion.
“Bank Mandiri’s digital channels experienced exponential growth along with the changing of customers’ behavior in using those channels amid the pandemic,” the bank’s risk management director, Ahmad Siddik Badruddin, said during a livestreamed press conference on Monday.
The bank reported active users of its internet banking and mobile banking app, Mandiri Online, reached 3.6 million in the first quarter of the year, an increase of 62 percent from 2.2 million in the same period last year, with total transactions worth Rp 229.5 trillion, constituting a growth of 60 percent.
“Bank Mandiri will continue to focus on the development of digital banking initiatives as customers shift to digital-based services,” corporate banking director Alexandra Askandar said in the press conference.
Among several digital initiatives the bank has rolled out include Mandiri Online, an onboarding web service to facilitate the opening of bank accounts, and an open banking feature that enables third-party developers, such as e-wallet app Dana and e-commerce platform Tokopedia, to build services around the bank’s channels, Alexandra explained.
Shares of Bank Mandiri, traded on the Indonesia Stock Exchange (IDX) under the code BMRI, increased 0.48 percent as of 11:33 a.m. on Tuesday. The stocks had fallen 32 percent so far this year, versus a 19 percent drop recorded by the IDX’s main gauge, the Jakarta Composite Index (JCI).
Bank Mandiri also reported on Monday that it had restructured loans taken out by 323,000 borrowers worth around Rp 60.8 trillion as of May 29, following the OJK’s regulation to relax debt quality assessment and loan restructuring requirements for customers hit by the COVID-19 pandemic.
Approximately 72 percent of the borrowers looking for the debt relief were micro, small and medium enterprises (MSMEs), with total restructured loans reaching Rp 25.6 trillion.
“The management expects potential restructured loans amounting to more than Rp 200 trillion but Bank Mandiri might avoid the worst-case scenario if the government can limit the negative impacts of COVID-19,” Mirae Asset Sekuritas Indonesia analyst Lee Young-jun wrote in a research note on Tuesday.
Provided the impact of COVID-19, the management has revised loan guidance from 8 to 10 percent to a slight contraction in 2020, Lee said, adding that Mirae expected it to stand at 3.9 percent yoy.
“Despite solid and better-than-expected first quarter results, we remain cautious and downgrade our recommendation from ‘hold’ to ‘sell’, ’’ he added.