DOWNLOAD
Fundamental View
AS OF 02 Dec 2024Bank Mandiri (Mandiri) is the largest state-owned bank in Indonesia with 60% government ownership. We therefore expect a very high likelihood of government support in times of need.
Mandiri’s strength had been its large corporate loan portfolio, which has allowed the bank to book lower credit costs compared to its peers over the pandemic. Mandiri is well capitalised, in line with the other Indonesian banks that have relatively high CET1 ratios in the region.
Business Description
AS OF 02 Dec 2024- Bank Mandiri was established as a result of the mergers of four state-owned banks, Bank Bumi Daya, Bank Dagang Negara, Bank Ekspor Impor Indonesia, and Bank Pembangunan Indonesia, in the late 1990s. The bank was first listed in Indonesia Stock Exchange in 2003.
- The Indonesian government holds a 60% stake in the bank, foreign investors with 34.4% and domestic investors with another 5.6%, as of September 2024.
- Corporates accounted for 37% of total loans, consumer for 7%, micro for 12%, SME for 5%, commercial for 17% and subsidiaries 22% at end-September 2024.
Risk & Catalysts
AS OF 02 Dec 2024Funding cost pressure has put pressure on margins, but the general liquidity environment saw an improvement in Q3 as easing pressure on the IDR from rate cuts in the US reduced Bank Indonesia’s (BI) money market interventions. A Trump 2.0 administration however would likely constrain the path of future rate cuts and BI easing.
Indonesia’s growth is projected at a reasonable ~5% in 2024-2025, and could pickup over the medium term under the Prabowo administration which should support steady asset quality and robust loan growth. We are however cautious of higher dividend payouts under the new government to fund its more aggressive fiscal policies.
Asset quality has trended better than peers due to its loan book and growth focus being predominantly on large corporates, and capital is solid with a >19% CET1 ratio.
Key Metric
AS OF 02 Dec 2024| IDR bn | FY20 | FY21 | FY22 | FY23 | 9M24 |
|---|---|---|---|---|---|
| PPP ROA | 3.4% | 3.5% | 3.9% | 4.1% | 4.0% |
| ROA | 1.2% | 1.7% | 2.2% | 2.6% | 2.5% |
| ROE | 8.5% | 14.2% | 19.0% | 22.4% | 21.0% |
| Equity/Assets | 12.3% | 11.9% | 11.5% | 12.0% | 11.7% |
| CET1 Ratio | 18.4% | 18.4% | 18.6% | 20.8% | 19.5% |
| NPL Ratio | 3.09% | 2.72% | 1.92% | 1.19% | 1.13% |
| Provisions/Average Loans | 2.73% | 1.98% | 1.41% | 0.79% | 0.84% |
| LDR | 83% | 81% | 80% | 87% | 93% |
CreditSight View Comment
AS OF 13 Feb 2025Mandiri is the biggest bank in Indonesia by assets and is 60% government owned. It has weathered the pandemic relatively well as more than 1/3 of the bank’s loan book consists of large corporates, which is a strength in a volatile market, but it is turning to more balanced growth across segments in FY25. Funding cost pressure from the tight liquidity environment remains a headwind and loan growth will hence be a challenge this year. However, fundamentals remain sound; we like Mandiri because of its high NIM, strong CET1 ratio, better asset quality than peers thanks to its large corporates focused book, and overall strong profitability. We maintain Mandiri on M/P as it trades in a fair ballpark versus SSEA peers.
Recommendation Reviewed: February 13, 2025
Recommendation Changed: February 19, 2024
Who We Recommend
