In­done­sia’s Bank Mandiri to raise 2016 pro­vi­sions

The Sun (Malaysia) - - MEDIA & MARKETING -

JAKARTA: In­done­sia’s PT Bank Mandiri Tbk will raise its pro­vi­sions to 18-20 tril­lion ru­piah (RM5.8-RM6.4 bil­lion) for 2016 from 11 tril­lion ru­piah a year ear­lier, as bad loans spread be­yond the com­modi­ties sec­tor, its CEO told Reuters yes­ter­day.

Non-per­form­ing loans rose to 3.86% of to­tal lend­ing at the end of the sec­ond quar­ter, from 2.43% a year ago, and will likely start re­cov­er­ing sig­nif­i­cantly only to­wards the end of 2017, said Kar­tika Wir­joat­modjo, CEO of In­done­sia’s big­gest bank by as­sets.

“In the next two, three, four quar­ters, our pro­vi­sions would in­deed be quite big,” Wir­joat­modjo said on the side­lines of a Mandiri event. “For ex­ist­ing cred­i­tors who have a high level of debt, their cash flow is not enough yet to re­pay it.”

Mandiri is “proac­tively” re­struc­tur­ing loans that it con­sid­ers to be at the risk of de­fault, and ex­pects pro­vi­sions to dip to 14-16 tril­lion ru­piah next year, said Wir­joat­modjo.

Bad loans in In­done­sia’s min­ing sec­tor nearly dou­bled in July from a year ear­lier, data from the fi­nan­cial reg­u­la­tor showed, as slug­gish de­mand and over­sup­ply hurt the abil­ity of min­ers of com­modi­ties rang­ing from coal to cop­per to ser­vice their debt.

Debt woes have ex­tended to other sec­tors, in­clud­ing con­sumer and prop­erty, Wir­joat­modjo said, adding that mid-sized busi­nesses now ap­pear more vul­ner­a­ble even as big cor­po­ra­tions are show­ing an im­prove­ment in their risk man­age­ment.

State-con­trolled Mandiri is also set­ting its sights on re­gional growth, with plans to in­vest at least RM300 mil­lion to open 10 to 12 branches in Malaysia over the next three years, Wir­joat­modjo said.

Mandiri is also ex­plor­ing ac­qui­si­tion op­por­tu­ni­ties in the Philip­pines and Myan­mar, he said. – Reuters

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