Net profit jump of 40% for Indonesia’s largest bank
(6 February 2018 – Indonesia) Indonesia's largest bank by assets reported a marked increase in net profit last year, spurred by a rebound in commodity prices and lower bad loan provisions. However, the bank said earnings growth will be slower this year due to heated competition.
Bank Mandiri’s net profit for 2017 rose 49 percent year-on-year to 20.64 trillion rupiah (A$1.96 billion), marking a return to growth after a rare profit decline in 2016.
Net a provisions fell 35 percent to 15.9 trillion rupiah as its nonperforming loan ratio fell to 3.5 percent from 4.0 percent.
The bank also said growth was also supported by a 16 percent rise in fee-based income, supported by foreign exchange gains and a strong performance at its bond trading division.
Net interest and premium income increased by just 0.6 percent to 54.8 trillion rupiah. Outstanding loans grew 10 percent to 729.5 trillion rupiah, but its net interest margin fell 0.57 percentage points to 5.87 percent.
"In 2015-16, there was a lot of restructuring at corporations, particularly due to the impact of falling commodity [prices]. Now, we can see coal companies expanding again," Mandiri President Kartika Wirjoatmodjo said.
"But consumer goods and property [industries] are somewhat lagging."
Wirjoatmodjo said its nonperforming loan ratio is expected to fall further to below three percent by the middle of this year. On the other hand, profit growth will fall to around 10-20 percent as interest margins remain stagnant.