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State-owned lender Bank Mandiri appears to have made progress
in resolving its recent bad-loan problems, claiming to have pushed down
the level of such loans to less than 8 percent.
The bank's net non-performing-loan (NPL) level as of December 2006
improved to 7.88 percent from 16.14 percent a year ago,
Mandiri president Agus D. Martowardojo said in a statement released
Sunday, while its gross NPLs fell to 17.8 percent from 26.6 percent a
year ago.
The figures are still being audited, however, with the final audited
results to be published in the bank's 2006 accounts.
Mandiri, Indonesia's largest lender in terms of assets, also expects to
book net profits of between Rp 1.8 trillion and Rp 2.4 trillion (US$266
million) -- up from Rp 603 billion in 2005 -- on loan growth of 9.1
percent to Rp 109.4 trillion, and the improvement in its NPL position.
As of September last year, Mandiri was still reporting outstanding NPLs
amounting to Rp 51.7 trillion. The bank has written off Rp 25.4
trillion of the total, with the remain being owed by 30 major debtors.
Gross NPLs refer to loans whose principal and interest payments have
stalled for at least six months, while net NPLs are those loans that
the bank has to make provisions to cover.
Agus said that the improvement in Mandiri's latest NPL figures were the
result of progress made with its 30 major debtors, particularly Argo
Pantes and Raja Garuda Mas (RGM).
On Oct. 18, Mandiri signed a debt restructuring agreement with Argo
Pantes covering the latter's total debt of Rp 2.28 trillion. The
debt-resolution scheme includes the sale of company property and other
assets, which has so far been going well, Agus said.
RGM, meanwhile, had also signed a similar agreement in respect of a
syndicated loan to three of its subsidiaries. The loan was worth $1.43
billion, of which $589 million was lent by Mandiri. The group had
complied with the debt repayment agreement during the three months to
Dec. 2006, Agus said.
On Jan. 10, Mandiri's other major debtor, Kiani Kertas, settled $37
million in principal and interest payments, with a further $180.9
million to be settled soon.
Mandiri's improving NPL levels should support the lender's efforts to
become a so-called "anchor bank" in leading mergers and acquisitions
under the central bank's consolidation road map for Indonesia's banking
industry up until 2010.
Bank Indonesia has set an NPL level of 5 percent for such anchor banks.
Agus said he expected Mandiri's net NPLs to improve to this level by
the end of 2007.
Mandiri had recently announced a new debt settlement program that
includes asset sales and haircuts on already written-off debts
following an amendment of a government regulation restricting state
banks from taking such actions. It hopes to resolve Rp 3 trillion in
such debts by the end of this year.
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