PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended June 30, 2006 Unaudited and 2005 Audited Expressed in millions of Rupiah, unless otherwise stated
44
10. DERIVATIVE RECEIVABLES AND PAYABLES continued
As of June 30, 2006, a summary of derivative transactions is as follows: continued
Notional Amount Fair Value
Derivative Derivative
Transactions Contract
Note 2k
Receivables Payables
Foreign Exchange Related continued 5. Option - buy
US Dolar -
- 28
17 Others
- -
85 -
6. Option - sell US Dolar
- -
40 18
Others -
- 2
58 Interest Rate Related
1. Swap - interest rate US
Dolar -
22,514 Other
- 2,344
2. Forward Rate Agreement US
Dolar 8,666
- Total
404,154 50,968
Less: Allowance for possible losses 4,079
- 400,075
50,968
Interest Rate Swaps On April 17, 2003 Bank Mandiri entered into interest rate swap agreements with counterparty banks with
nominal values amounting to US125,000,000 full amount and US175,000,000 full amount, respectively. The underlying transaction is the Bank’s US300,000,000 full amount fixed interest rate
Medium-Term Note MTN issued in April 2003 Note 24. Under this transaction, the Bank receives semi- annual fixed interest at the rate of 7.00 per annum and pays semi-annual floating interest at the rate of
six-month Libor + 3.37 per annum until the maturity of the Note on April 22, 2008. The six-month Libor interest is stated in arrears. These transactions qualify as hedging for accounting purposes.
The background and purpose of the issuance of the hedging instruments are related to interest rate risk management, whereby the Bank’s positive foreign currency interest rate gap position is exposed to
downward trends in interest rates in the following five years. The Bank decided to convert its MTN’s fixed interest rate into floating interest rates in order to mitigate the risks of a decrease in net interest margin.
Bank Mandiri entered into an interest rate swap agreement with nominal amount of US125,000,000 full amount with counterparty bank in August 2002. The underlying transaction is the Bank’s
US125,000,000 full amount fixed interest rate Subordinated Note issued in 2002 Note 29. Under the transaction, the Bank receives semi-annual fixed interest at the rate of 10.625 per annum and pays
semi-annual floating interest at the rate of six-month LIBOR + 6.19 per annum for a 5-year period. The six-month Libor interest is stated in arrears. While the transaction is for the purpose of hedging the fixed
rate coupon payments of the Subordinated Note with floating coupon payments, it does not qualify as a hedging transaction for accounting purposes.
Cross Currency Swaps Bank Mandiri has entered into cross currency swap contracts, which are associated with the securities
sale and repurchase agreements with several counterparty banks. The contract were initiated when Bank Mandiri sold its Government Recapitalization Bonds to the counterparty banks and received Rupiah funds.
These funds were used to settle the spot leg of the cross currency swaps and Bank Mandiri will then receive US Dollar funds. On the settlement date, the Bank will receive Rupiah funds and pay US Dollar
funds to the counterparty banks. Bank Mandiri is then obliged to use the Rupiah funds to repurchase the Government Recapitalization Bonds it previously sold to counterparty banks Notes 7 and 22.
PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended June 30, 2006 Unaudited and 2005 Audited Expressed in millions of Rupiah, unless otherwise stated
45
10. DERIVATIVE RECEIVABLES AND PAYABLES continued
