Financial instruments continued G. Allowance for impairment losses of financial assets continued

PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2011 AND 2010 Expressed in millions of Rupiah, unless otherwise stated Appendix 528 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

c. Financial instruments continued G. Allowance for impairment losses of financial assets continued

d Impairment of earning assets prior to implementation of SFAS 55 Revised 2006 on 1 January 2010 continued The classification of earning assets and the minimum amount of allowance for impairment losses on earning assets and commitments and contingencies with credit risk is calculated based on Bank Indonesia Regulation PBI No. 72PBI2005 dated 20 January 2005 regarding Asset Quality Rating for Commercial Banks, as last amended by PBI No. 112PBI2009 dated 29 January 2009. In connection with the implementation of PBI No. 72PBI2005, the Bank determined the classification of earning assets based on the evaluation of the management on each borrower’s financial performance, business prospects and ability to repay. For Bank Syariah Mandiri, the classification of earning assets is determined based on PBI No. 821PBI2006 dated 5 October 2006 regarding Earning Assets Quality of Commercial Banks Conducting Business Based on Sharia Principles as several articles has been amended by PBI No. 99PBI2007 dated 18 June 2007 and the latest amendment with PBI No. 1024PBI2008 dated 16 October 2008. In 2011, the classification of earning assets for Bank Syariah Mandiri is determined based on PBI No. 1313PBI2011 dated 24 March 2011 regarding Asset Quality Rating for Sharia Bank and Sharia Business Unit. The minimum allowance amounts in accordance with the Bank Indonesia Regulation are as follows: Percentage of minimum allowance Current 1 Special Mention 5 Substandard 15 Doubtful 50 Loss 100 The above percentages are applied to earning assets and commitments and contingencies less the collateral value, except for earning assets and commitments and contingencies categories as Current, where the rates are applied directly to the outstanding balances. No provision should be provided for earning assets in Certificates of Bank Indonesia and Government Bonds and for earning assets which are guaranteed with cash collateral such as current accounts, time deposits, savings, guarantee deposits, gold, Certificates of Bank Indonesia or Government Debenture Debt, Indonesia Government Guarantees in accordance with the applicable regulations, standby letters of credit from prime bank which are issued in accordance with Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce Publication No. 600 UCP 600 and International Standard Banking Practices ISBP. PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2011 AND 2010 Expressed in millions of Rupiah, unless otherwise stated Appendix 529 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

c. Financial instruments continued G. Allowance for impairment losses of financial assets continued