Mandiri Lowers Interest Rate on Loans of Under Rp 500 million

News Release - Senin, 16 Mei, 2016

Jakarta, 16 May 2016 – Bank Mandiri has lowered its interest rate on loans of under Rp 500 million for the small and medium enterprises (non micro) sector to a single digit level from the previous rate of more than 10%. The lending rate for non-micro, non-KUR and non-credit card financing will continue to be gradually lowered until the end of the year.
"The rate cut applies to all sectors, other than micro, KUR and credit-card financing, and will be applied selectively. We hope that this rate reduction will help spur higher economic growth," said Bank Mandiri CEO, Kartika Wirjoatmodjo, during a press conference in Jakarta on Monday (16 May).
This reduction, Kartika said, was part of a move towards lower interest rates by Bank Mandiri. Through lower interest rates, he said, the Bank’s intermediation function could be further expanded. As of the end of March 2016, the Bank’s loan portfolio stood at Rp 574.7 trillion.
As of the end of March 2016 Bank Mandiri had provided loans amounting to Rp 74.6 trillion to the micro, small and medium enterprises (MSME) sector, up from Rp 72.4 trillion during the same period the previous year. Micro loans alone rose 59.1% to Rp 14.2 trillion as of the end of the first quarter.
Bank Mandiri also channels special financing under the government-guaranteed People's Business Credit (KUR) scheme. Total KUR lending during the first quarter of 2016 amounted to Rp 3.7 trillion, or 28% of the total 2016 KUR target of Rp 13 trillion.
Kartika said that the lowering of interest rates would not affect Bank Mandiri’s financial performance as the company was also working to boost the contribution of low cost funds. This was shown by the fact that Bank Mandiri’s net interest income (NIM) during the first quarter rose by 6.42%, compared to 5.61% during the previous year.
Bond Issuance
The Bank also plans to issue bonds in the second half of 2016, with the target being to raise a maximum of Rp 5 trillion, depending on market conditions.
The bond issuance will be complemented by efforts to attract more third-party funds. As of the end of March 2016, third party funds managed by Bank Mandiri amounted to Rp 655.1 trillion, up from Rp 628.7 trillion at the same time the previous year. Meanwhile, total low cost funds (checking and savings) deposited with Bank Mandiri stood at Rp 406.5 trillion, with the value of savings deposits increasing by Rp 18.2 trillion to Rp 248.8 trillion.
During the first quarter of 2016, the Bank recorded a net profit of Rp 4.1 trillion, with NPLs (gross) standing at 2.89%. “So as to strengthen our productive asset structure, we have set aside sufficient reserves. We are optimistic that based on the steps we have taken, Bank Mandiri will be able to further strengthen the foundations of its financial structure in order to continue to grow in a sustainable manner and be ready to face the challenges ahead,” said Kartika.