REPUBLIKA.CO.ID, JAKARTA -- Publicly traded state-owned lender PT. Bank Mandiri said it will issue bonds valued at Rp5 trillion in the third quarter of this year to strengthen its financing capacity.
The country's largest bank in asset also wants to take advantage of large inflow of funds repatriated from abroad if the country's parliament approves the tax amnesty bill.
The parliament is expected to give its decision on the bill proposed by the government later this month. The bill is aimed at repatriation of funds of rich Indonesians deposited abroad.
The Rp5 trillion bond in rupiah denomination is the first part of Rp14 trillion bonds to be issued by the bank by phases until 2018, the bank's marketing and treasury director Pahala Mansury said here on Monday.
"The first phase would be around September, book building after Idul Fitri," Pahala said.
He said the bank needs more fund to back op its expansion program including program to accelerate credit disbursement such as infrastructure credits.
He said the bank has large third party funds but are dominated by short term 1-3 months deposits , whereas the bank needs large fund for long term investment especially in infrastructure projects.
He said 1-6 months deposits make up the bulk or 88.9 percent of the third party funds held by the bank with 6-12 months deposit making up 9 percent and longer time deposits making up the rest.
The plan is in 2017, the bank would issue another Rp5 trillion bond and in 2018 Rp4 trillion to be repayable in 5-10 years.
The bank also plans to cut its lending rate to less than 10 percent a year on the average.
Bank Mandiri reported Rp3.8 trillion in net profit in the first quarter of 2016 thanks to increases in net interest income and fee-based income.
The country's largest bank in asset recorded a 19.1 percent in increase in net premium and net interest income to Rp13. trillion and 8 percent rise in fee-based income to Rp4.2 trillion.
The bank held Rp655.1 trillion in third party fund by the end of March this year dominated by cheap funds of giro and savings as against outstanding credits of Rp574.7 trillion.
Infrastructure credits totaled Rp46.42 trillion and credits for micro, small and medium enterprises (UMKM) reached Rp74.6 trillion.
In 2015, the bank reported a better-than-expected net profit but its bad loans crept up partly due to its exposure to the commodities sector.
The bank posted a net profit of Rp20.3 trillion in 2015, or about 2 percent higher than in 2014.
Its gross non-performing loans (NPL) rose to 2.60 percent of total loans by the end of 2015, from 2.15 percent in the previous year.
Gross NPL is predicted to be around 2.5 percent to 3 percent in 2016.
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