PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2008 and 2007 Expressed in millions of Rupiah, unless otherwise stated
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued k. Derivative Receivables and Derivative Payables
All derivative instruments including foreign currency transactions for funding and trading are recognized in the consolidated balance sheet at their fair values. Fair value is determined based on
market value, Reuters spot rate at reporting date, discounted cash flow or quoted price by broker of other instrument with similar characteristic. Derivative assets and liabilities are presented at the
amount of unrealized gains or losses on derivative contracts, net after provision for possible losses. Gains or losses on derivative contracts are accounted for based on the purpose the Bank has
designated upon acquisition as 1 fair value hedge, 2 cash flow hedge, 3 a hedge of a net investment in a foreign operation, and 4 trading instruments, as follows:
1. Gain or loss on a derivative contract designated and qualifying as a fair value hedging instrument, and the gain or loss on the revaluation of hedged assets or liabilities is recognized currently in
profit and loss in the same accounting period. Gains or losses arising from such revaluations may be offset. Any difference that arises representing the effect of hedge ineffectiveness is recognized
currently in consolidated statement of profit and loss.
2. The effective portion of the gain or loss on a derivative contract designated and qualifying as a cash flow hedging instrument is reported as a component of other comprehensive income under
shareholders’ equity. The effect of the hedge ineffectiveness is recognized currently in consolidated statement of profit and loss.
3. Gain or loss on a hedging derivative instrument in a hedge of a net investment in a foreign operation is reported in other comprehensive income as part of the cumulative translation
adjustment under shareholders’ equity to the extent it is effective as a hedge. 4. Gain or loss on a derivative contract not designated as a hedging instrument or derivative contract
that does not qualify as a hedging instrument is recognized in current year’s consolidated statement of profit and loss.
l. Loans
Loans represent receivables under contracts with borrowers, where borrowers are required to repay their debts with interest after a specified period, and matured trade finance facilities which have not
been settled within 15 days. Loans are stated at their outstanding balance less an allowance for possible losses.
Syndicated, direct financing and joint financing, and channeling loans are stated at their balances in proportion to the risks borne by the Bank and its Subsidiaries.
Included in loans are financing by Bank Syariah Mandiri, a subsidiary, in the form of syariah financing which are making funds available or receivables which have the similar forms such as:
a profit sharing transaction in the form of mudharabah and musyarakah b lease transactions in the form of ijarah or lease purchase based on ijarah muntahiya bittamlik
c sale and purchase transaction in the form of murabahah, salam and istishna’ d loanborrowing transaction in the form of receivables qardh and
e lease transactions in the form of ijarah for multiservice transaction
PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2008 and 2007 Expressed in millions of Rupiah, unless otherwise stated
24
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued l.
Loans continued
based on the agreement or approval between Bank Syariah and other party obliging the other party given the funds facility to return the fund over a period of time with reward of ujrah, without reward, or
profit sharing.
Brief explanation for each type of financing is as follows: Mudharabah is fund placement of lenders maal shahibul to fund managers mudharib to do certain
business activity by using profit sharing or net revenue sharing between both parties based on the ratio which has been agreed upfront.
Musyarakah is a placement of funds by fund owners to jointly combine these funds for certain business activity with profit sharing scheme based on nisbah which is agreed upfront, while loss is
borne by the fund owners based on the proportion of each funds. Ijarah is a leasing arrangement of goods andor services between the owner of lease object including
ownership of right to use of the lease object with the lessor for the purpose of obtaining profit for the lease object. Ijarah muntahiya bittamlik is a leasing arrangement between the lessee and the lessor to
obtain profit on the lease object being leased with option to transfer ownership of the lease object through purchasesale or giving hibah at certain time according to the lease agreement akad.
Murabahah
is a financing in the form of salepurchase transaction at cost of the goods plus agreed profit margin. Murabahah receivables are stated at amount of receivables less deferred margin which
can be realized. Murabahah receivables are presented net of allowance for losses. Istishna’ is a financing in the form of salepurchase of ordered goods with certain agreed criteria and
conditions with payment terms in accordance with the agreement.
Qardh is a loanborrowing funds without profit wherein the borrower return the principal of the loan at lump sum or on installment over certain period.
Loans Purchased from IBRA Bank Indonesia issued Regulation No. 47PBI2002 regarding “Prudential Principles for Credits
Purchased by Banks from IBRA” dated September 27, 2002, which applies for all loans purchased from IBRA starting January 1, 2002.
The difference between the outstanding loan principal and purchase price is booked as deferred income if the Bank enters into a new credit agreement with the borrower, and as an allowance for
possible losses if the Bank does not enter into a new credit agreement with the borrower. The allowance for loan losses or deferred income is only adjusted once the Bank has recovered the original
purchase price. Income arising from the loans purchased from IBRA is recognized on a cash basis. If the Bank enters
into a new credit agreement with the borrower, any receipts from a borrower are recognized as a deduction of the outstanding principal andor as interest income following the terms or conditions as
set out in the new credit agreement. If the Bank does not enter into a new credit agreement with the borrower, any receipts from a borrower must be recognized firstly as a deduction of outstanding
principal. The excess of receipts over the outstanding principal balance shall be recognized as interest income.
