The Best Human Resource Development

2007 Annual Report PT Bank Mandiri Tbk. 117 Strategic Business Unit Micro and Retail Banking In 2007, the Micro Retail Banking Directorate delivered a Contribution Margin of Rp2.2 trillion, or an increased of 47 from the previous year’s Rp1.5 trillion, due to the increase in our high- margin loan volume and the rapid improvement in our low-cost funds structure generated through our Branches and Micro Business Units. ACHIEVEMENT 2007 Distribution of Micro and Small Business During 2007, the Micro Retail Banking Directorate financed more than 100,000 Micro and SME customers. Our loan volume grew to Rp15.8 trillion from Rp9.3 trillion, an increase of 70 compared with last year. We still maintained our NPL ratio, however, at just 2.7. Our Micro loan portfolio loans limited to Rp100 million and loans to rural banks increased by 42 to Rp2.7 trillion, primarily distributed to the retail and services sectors, as well as home industry. In order to maintain the quality of our micro loan portfolio, which we currently distributed through 300 Micro Mandiri Units, we have developed our products into unique loan packages, with specific target of customers such as oil gas agents, Indonesian Overseas Labor TKI, and retailers, for example. We also coordinated with 740 Rural Banks BPRs, representing 38 of the total BPRs in Indonesia, to maintain a linkage program in order to support our loan expansion. Bank Mandiri, for the second time, was awarded the Kriya Pranala Award by Bank Indonesia as The Best National Bank Participant of Linkage Program in 2007. In support of New Young Micro Entrepreneurs, in 2007 Bank Mandiri collaborated with UKM YEAR END 2007 Loan Volume Rp 15,758 billion Deposit Volume Demand Deposit Rp 9,347 billion Savings Rp 79,031 billion Deposits Rp 50,604 billion of Cash Loan Debtors 164,842 of ATM Card Holders 7,629,384 NPL Ratio – Gross 2.66 Profitability Net Interest Income Rp 4,424 billion Contribution Margin pre Provision Rp 2,551 billion Contribution Margin Rp 2,204 billion Fee based income Rp 1,553 billion Yield YoL – Rp 14.72 YoL - Fx 6.52 CoF-Rp Savings 3.82 Demand Deposit 2.41 Time Deposit 6.77 CoF - Fx Demand Deposit 3.24 Time Deposit 3.51 Center, University of Indonesia and 20 other Indonesian universities in launching Program Wirausaha Muda Mandiri, through which we offered loans of up to Rp20 million to promising young student entrepreneurs. This was one of our Corporate Social Responsibility Programs implemented through our micro business. For small business loans between Rp100 million and Rp5 billion, as well as loans to Cooperatives, our loan portfolio grew by 79 to Rp13.1 trillion, primarily distributed to the retail and wholesale trades. Bank Mandiri also distributes channeling loans such as KPEN-RP Loans for Bio-fuels Plantation Revitalization, KKP-E Loans for Sustainable Food Energy, and KUR Small Business Loans. In order to maintain the quality of these channeling loans, Bank Mandiri implemented the alliances concept among SBUs through which program loans were distributed to plasma units or sub-units supplying existing customers within our corporate or commercial banking business. Bank Mandiri distributed KPEN-RP loan totaling Rp1.35 trillion to more than 52,000 palm oil planters. We also distributed Kredit Usaha Rakyat KUR in the amount of Rp67.2 billion, even though the product had just been launched at the end of 2007. Fund Raising The Micro and Retail Banking Directorate MRB has moved to the vanguard in accessing low cost funds. Our saving deposits grew by 42, from Rp55.8 trillion to Rp79.2 trillion in 2007, raising our national market share in savings to 19.2. This growth has been enabled by service quality improvements, better marketing management, the continuing development of our electronic transaction capabilities, and the continuing success of our Mandiri Fiesta Program. Our loan volume grew to Rp 15.8 billion from Rp 9.3 billion, an increase of 70 compared with last year. We still maintained our NPL ratio, however, at just 2.7. 118 2007 Annual Report PT Bank Mandiri Tbk. Strategic Business Unit Micro and Retail Banking We currently provide 27 Mandiri Prioritas Branches and 30 Priority Lounges within regular branches to gain access to funding from high-end customers. In the coming year, we will provide an additional 6 Mandiri Prioritas Branches and 12 Priority Lounges to further penetrate this vital customer segment. The number of customer transactions exceeded 565 million in 2007, putting Bank Mandiri in the forefront of transactional banking in Indonesia. Network expansion in 2008, through an additional 70 branches, 300 Micro Units, 6 SBDCs , 75 SBBs, 6 Mandiri Prioritas Branches and 12 Priority Lounge will encourage the growth of our micro and retail business in both loans and deposits. In 2007, Bank Mandiri was awarded the 1st rank in Customer Service Excellence from the annual MRI Infobank survey, moving up from 2nd place in 2006, registering significant improvements across the range of services delivered in all branches. Bank Mandiri has also become the best transactional bank in Indonesia, with our volume of transactions exceeded 565 million in 2007. Of these transactions, 400 million were conducted through our electronic channels ATMs, EDCs, SMS and Internet banking, while an additional 165 million transactions were complete in- branch. The success of our Debit Mandiri program, launched in early 2007, has resulted in Bank Mandiri becoming the largest VISA Debit Bank by both value and volume in Indonesia. Our improvement was spurred, in part, by the growth in our retail customer base from 5.2 million in 2006 to 6.4 million by the end of 2007. It also resulted in an increase in our Fee Based Income of 20.3 to a total Rp1.54 trillion. Bank Mandiri also received an award from Indonesia’s Minister of Finance as the Largest and the Best ORI Distributor in 2007. During the year, Bank Mandiri distributed Rp2.23 trillion in ORI Obligasi Retail Indonesia through 618 branches. Network Infrastructure Development To support our efforts in loan distribution and fund raising, we serve our customers through 10 Regional Offices with 956 branches an increase from 924 in 2006. Our planning for 2008 calls for the opening of 70 additional branches. This physical distribution network has allowed us to achieve a funding base of Rp139 trillion and fee based income of Rp1.54 trillion. Our shift to low cost transaction channels has entailed a multi-year investment in new ATMs, which now total 3,186 machines handling more than 30 million transactions per month. We also provide a number of other facilities to enhance the convenience of our customers’ transactions, including Non-cash ATMs, Cash Deposit Machines CDMs Self Service Passbook Printers. We will continue to add to these facilities in the coming year with 1,000 new ATMs, CDMs, drive-thru and mobile ATMs. Retail transactions through our 7 million Debit Mandiri cards have become easier as well, as the number of installed EDCs Electronic Data Capture has increased from 17,661 units last year to 23,690 units in 2007. Our of micro and retail loan expansion will be facilitated in 2008 as we expect to add 300 new MBUs, bringing our year-end 2008 total to 600 MBUs, while also adding 6 SBDC Small Business District Centers and establishing 75 SBB Small Business Branches in areas with high potential for developing retail loans.