Mandiri Confident to Recover Financial Performance in 2017

TEMPO.CO, Jakarta - Publicly traded state-owned lender PT. Bank Mandiri said it was confident to chalk up larger profit in 2017 as a result of its program to scale back non performing loan (NPL).

In the first nine month of 2016 , the countrys largest bank in assets recorded Rp12.01 trillion in net profit down 17.6 percent year on year (yoy).

In the first six months of this year the banks net profit shrank 28.7 percent (yoy) on larger need for reserve against non performing loans (NPL).

The banks performance is expected to improve the last quarter of this year . The decline in profit would be less than 17 percent, the banks President Director Kartika Wirjaatmodjo (Tiko) said on Tuesday.

Tiko attributed the decline in profit to larger allocation for provision to mitigate NPL risk.

Mandiri`s NPL rose 1 percentage point to 3.8 percent gross yoy in the third quarter of 2016.

Tiko said the bank has to raise coverage ratio to 126 percent to mitigate NPL risk in the third quarter and the ratio would be increased to 130 percent in last quarter of this year.

He said the provision against NPL is set aside from income and operating profit reaching Rp15.9 trillion in the third quarter of this year or an increase of 87 percent in the same period last year.

He estimated that the provision set aside against NPL risk would come close to Rp20 trillion by the end of the year.

In 2017, Tiko predicted an increase in net profit as NPL is also expected to scale back.

He said credit expansion would be more selective with priority given to corporations, consumer sector and micro and small enterprises having low NPL.

"NPL could not be cut immediately as in the next three quarters , there are still a lot of NPL that have to be handled," he said.

However, despite the NPL problem, Mandiri is still optimistic that credits could still grow by 12 percent. In 2017, Mandiri predicted credits would grow 12-14 percent.

ANTARA