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Bank Mandiri books 25% profit contraction, 20% asset expansion in Q1
The country's second largest lender by assets saw its profit dip due to higher loan loss provisioning and operational costs, the latter attributed to the recent three-way merger to form Bank Syariah Indonesia that also led to a 20 percent boost in Q1 assets.
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The twin towers of Bank Mandiri reflect the skies above South Jakarta in this stock photograph, taken on July 7, 2019. (Courtesy of Bank Mandiri)
B
ank Mandiri saw a double-digit contraction in its net profit in the first quarter of the year, led by higher loan loss provisions and operational costs.
The bank’s latest financial report shows that its net profit declined 25.28 percent year-on-year (yoy) to Rp 5.92 trillion (US$357 million) in the first quarter of 2021 from Rp 7.92 trillion in 2020.
Read also: Top state-owned banks post record-low profits
Its profit margin also contracted as loan provisions jumped 55.4 percent yoy to Rp 5.4 trillion, while operational costs increased 14.55 percent yoy to Rp 11.48 trillion.
“In anticipation of deteriorating credit quality and higher provision requirements once the regulatory relaxation period ends, we have prepared higher provision standards than required by regulators,” Bank Mandiri finance and strategy director Sigit Prastowo said on Tuesday.
He added that the increase in the state-owned lender’s operational costs were mainly related to the three-way merger of Bank Syariah Mandiri (BSM), BNI Syariah and BRI Syariah in February to create state-owned Bank Syariah Indonesia (BSI). Bank Mandiri owns 51 percent of BSI.
Sigit added, however, that the merger had also increased Bank Mandiri’s first-quarter assets to Rp 1.58 quadrillion, up 20 percent yoy from last year.
