PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2014 AND 2013
Expressed in millions of Rupiah, unless otherwise stated
Appendix 5163 59. CUSTODIAL SERVICES AND TRUST OPERATIONS continued
Trust Operations continued As at 31 December 2014, Bank Mandiri as Trustee has 63 unaudited trustee customers with the
total value of bonds and MTN issued amounting to Rp41,227,000 and USD9,900,000 full amount unaudited and as at 31 December 2013 has 55 unaudited trustee customers with the total value of
bonds and MTN issued amounting to Rp31,633,000 unaudited.
Both Bank Mandiri’s Trust operations and Custodial Services have received Quality Certification ISO 9001:2008.
Trust A trustee services including managing customer’s assets portfolio the settlor based on a written
agreement between the Bank as the Trustee and customer’s for the benefits of beneficiary. Bank Mandiri has obtained the license principle and confirmation letter for the Trustee services based
on Bank Indonesia’s Letter No.1530DPB1PB1-1 dated 26 April 2013 and No.1532DPB1PB1-1 date 28 August 2013.
Functions of independent trust service are: a.
Paying Agent which receive and transfer money and or funds, and record cash in and cash out for and on behalf of the clients the settlor.
b. Investment Agency involve in placing, converting, and administering the placement of funds for
and on behalf of the clients the settlor. The service trust provided by the Bank is also include managing customers from various segments,
including Oil Gas Company, Corporate and Commercial, Non-Profit Organization customers for activities among others Distribution of gas sales results, Sale and purchase acquisition of
companies, and pooling of funds for foreign aid.
60. CHANNELING LOANS
Channeling loans based on sources of funds and economic sectors are as follows unaudited:
2014 2013
Government: Electricity, gas and water
6,970,950 9,018,350
Transportation and communications 1,371,414
1,609,404 Agriculture
518,548 590,105
Manufacturing 91,200
91,200 Construction
32,149 32,149
Others 52,848
68,221 9,037,109
11,409,429
Bank Mandiri has been appointed to administer the loans received by the Government of the Republic of Indonesia in various currencies from several bilateral and multilateral financial institutions
to finance the Government’s projects through State Owned Enterprises, Region Owned Enterprises and Regional Governments, such as: Asian Development Bank, Banque Français Credit National,
Barclays, BNP Paribas, BNP Paribas CAI Belgium, Calyon BNP Paribas, CDC NES, Export Finance and Insurance Corporation EFIC Australia, IDA, International Bank for Reconstruction and
Development, Japan Bank for International Cooperation, Kreditanstalt Fur Wiederaufbau, Nederland Urban Sector Loan De Nederlanse Inveseringsbank voor Ontwikkelingslanden NV, Switzerland
Government, RDI - KI, Spain, U.B Denmark, US Export Import Bank and Overseas Economic Cooperation Fund.
Channeling loans are not included in the consolidated statements of financial position as the credit risk is not borne by the Bank and its Subsidiaries. Bank Mandiri’s responsibilities under the above
arrangements include, among others, collections from borrowers and payments to the Government of principal, interest and other charges and the maintenance of loan documentation. As compensation,
Bank Mandiri receives banking fee which varies from 0.05 - 0.50 from the average of outstanding loan balance in one year.
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2014 AND 2013
Expressed in millions of Rupiah, unless otherwise stated
Appendix 5164 61. RISK MANAGEMENT
Bank Mandiri clearly segregates risk management functions from the business units functions in line with the requirement of Bank Indonesia’s Regulations and international best practices, which are
applied in banking industry. Bank Mandiri also adopts the Enterprise Risk Management ERM concept as one of the comprehensive and integrated risk management strategies in line to the Bank’s
business process and operations. The ERM implementation gives an added value to the Bank and stakeholders, especially in respect of the implementation of Strategic Business Unit SBU and Risk
Based Performance.
ERM is a risk management process embedded in the business strategies and operations that are integrated into daily decision making processes. It is a holistic approach that establishes a systematic
and comprehensive risk management framework credit risk, market risk and operational risk by connecting the capital management and business processes to risks. In addition, ERM also applies
consolidated risk management to the subsidiaries, which will be implemented gradually to maximise the effectiveness of bank’s supervision and value creation to the bank based on Bank Indonesia
Regulation No. 86PBI2006 dated 30 January 2006.
The Bank’s risk management framework is based on Bank Indonesia’s Regulation No. 58PBI2003 dated 19 May 2003 regarding Risk Management Implementation for Commercial Banks as amended
by Bank Indonesia’s Regulation No. 1125PBI2009 dated 1 July 2009 regarding The Amendment of Bank Indonesia’s Regulations No. 58PBI2003 regarding the Implementation of Risk Management
for Commercial Bank. The Bank’s risk management framework is stated in the Bank Mandiri Risk Management Policy KMRBM, which is in line with the implementation plan of Basel II Accord in
Indonesia. Risk management framework consists of several policies as the guideline to the business growth and as a business enabler to ensure the Bank conduct prudential principle by examining the
risk management performance process identification - measurement - mitigation - monitoring at all organisation levels.
Active supervision by the Board of Directors and the Board of Commissioners on the Banks risk management activities, directly and indirectly, are implemented through the establishment of
committees at the level of the Board of Commissioners which are Risk Monitoring Good Corporate Governance KPR GCG Committee and Audit Committee. The Executive Committee under the
supervision of the Board of Directors consists of Assets Liabilities Committee ALCO, Risk Management Committee RMC, Capital Subsidiaries Committee CSC, Business Committee
BC, Information Technology Committee ITC, Human Capital Policy Committee HCPC, and Credit Committee.
Risk Management Committee RMC is the committee directly responsible for managing the risks management, which discusses and recommends policies and procedures as well as monitoring risk
profile and managing the entire risks of the Bank. Moreover, Asset Liability Committee ALCO are also involve in risk management activities in determining the assets and liabilities management
strategy, to determine interest rate and liquidity, along with other aspects related to the managing the Bank’s assets and liabilities.
Risk Monitoring and GCG Committee and Audit Committee are responsible for assessing and evaluating the policies and the implementation of Bank’s risk management and also responsible for
providing recommendations to Board of Commissioners in implementing monitoring function.
The Risk Management Directorate is lead by a Director who reports to the Board of Directors and member with voting right in the Risk and Capital Committee RCC. The Bank also established a risk
management working unit which is under the Risk Management Directorate.
Operationally, the Risk Management Directorate is divided into 2 two main functions: 1 Credit Approval as part of four-eye principle, and 2 Independent Risk Management Unit which is divided
into two groups: Credit Risk and Portfolio Management Group which manages credit risk and portfolio risk and integrated risk management through ERM, and Market and Operational Risk Group which
manages market risk, liquidity risk and operational risk.
The Risk Management Directorate and each strategic business unit are responsible for maintainingcoordinating 8 eight types of risk faced by the Bank, discussing and proposing risk
management policies and guidelines.
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2014 AND 2013
Expressed in millions of Rupiah, unless otherwise stated
Appendix 5165 61. RISK MANAGEMENT continued
All risks will be reported in quarterly risk profile report and semi-annually Bank’s soundness report in order to describe all risks embedded in the Bank’s business activities, including consolidation with
subsidiaries’s risks. A. Credit Risk
The Bank’s credit risk management is mainly focused to improve the balance between prudent loan expansion and loan maintenance in order to prevent quality deterioration downgrading to
Non Performing Loan NPL category and to optimise capital utilisation to achieve optimum Return On Risk Adjusted Capital RORAC.
To support this objective, the Bank periodically reviews and updates its policies and procedures for credit in general and credit by business segment. These policies and procedures are intended to
provide a comprehensive credit risk management guideline for identification, measurement and mitigation of credit risks in the end-to-end loan acceptance process, from market targeting, loan
analysis, approval, documentation, disbursement, monitoring and settlement process for troubledrestructured loans.
To improve the Bank’s social role and concern to the environmental risk and as an implementation of Good Corporate Governance GCG, the Bank has set up a Guideline for Technical Analysis of
Environmental and Social in Lending which is used as a reference in analysing environmental risk in a credit analysis. This Guideline is in line with Bank Indonesia regulation regarding Assessing
the Quality of Asset on Commercial Bank regulating that the assessment on debtor business process should also consider the debtor’s effort to maintain its environment.
In principle, credit risk management is implemented at both the transactional and portfolio levels. At the transactional level, the Bank has implemented the four-eye principle concept, whereby each
loan approval involves Business Unit and Credit Risk Management Unit which work independently to make an objective credit decision. The four-eye principle is executed by Credit Committee
according to the authority limit and the loan approval process is conducted through Credit Committee Meeting mechanism. Executive Credit Officer as Credit Committee members, must be
highly competent as well as having strong capacity and integrity so that the loan granting process can be conducted objectively, comprehensively and prudently. To monitor the performance of the
credit authority holders in approving and maintaining loans, the Bank has developed a database for authority-holder monitoring. By using this system, the Bank can monitor the amount and quality of
the loans approved by the credit authority holders, so that the performance of the Executive Credit Officer can be monitored from time to time.
To identify and measure risk of each credit application processed in the transactional level, as part of implementation of prudential banking, the Bank utilises Credit Risk Tools, which among other include
Credit Rating and Credit Scoring Tools, financial spread sheet, comprehensive Credit Analysis Memorandum and loan monitoring system in the form of watch list tools that already integrated to the
Integrated Processing System IPSLoan Origination System LOS on end to end process, the Bank uses Rating and Scoring systems. The Rating and Scoring systems consist of Bank Mandiri Rating
System BMRS, Small Medium Enterprise Scoring System SMESS, Micro Banking Scoring System MBSS and Consumer Scoring System application, behaviour, collection and anti-attrition.
The Bank has also developed a Rating System for Financial InstitutionsBanks, called Bank Mandiri Financial Institution Rating BMFIR, so that the Bank, in granting Credit Line facilities, can identify
and measure the risk level of Counterparty Bank which can be tolerated. The Bank is also developing a rating system for Financial Institution - Non Bank, i.e. Multifinance Companies.
To improve the measurement of transactional risk in the overseas branches, the Bank has implemented BMRS. The Bank has also developed a rating system tailored for Bank Perkreditan
Rakyat BPR, to enable the Bank in measuring the risk for each individual debtor based on the respective risk rating. Furthermore the Bank has also conducted a calibration on the scoring model
for Small Medium Enterprise SME therefore the Bank currently has 4 four risk measurement models for SME segment.
In quarter IV of 2014, in order to maintain consistency of the estimation model, the Bank performed calibration or model development. For the Consumer Card segment, pre approved credit card
applications model has been developed.
