PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2016 and for the year then ended Expressed in millions of Rupiah, unless otherwise stated
218
61. RISK MANAGEMENT continued
The Risk Management Directorate and each strategic business unit are responsible for maintainingcoordinating 10 ten types of risk that faced by the Bank, discussing and proposing risk
management policies and guidelines. Bank Mandiri is developing the application of ICAAP, which aims to ensure that banks have a
comprehensive risk measurement process and the calculation of capital is according to the risk profile and able to provide the capital needed. One part of the ICAAP, which is the preparation of Risk Appetite
Statement RAS, RAS is the type and degree of risk that could be taken faced by the Bank iwithin its risk capacity in order to achieve its business goals. The application of this ICAAP is to support the
implementation of Basel II Pillar 2 as the best practice. All risks will be reported in quarterly risk profile report and semi-annually Bank’s soundness report in
order to describe all embedded risks in the Bank’s business activities, including consolidation with subsidiaries’s risks.
In relations to the changes in the organizational structure of the Bank, namely the establishment of the Directorate of Distribution which is to optimize the role of the region, starting June 2016, Bank Mandiri
created Regional Risk Dashboard as a means of monitoring risk management in each region. Risk management in the region is for inherent risks, especially credit risk for the region.
A. Credit risk
The Bank’s credit risk management is mainly focused to improve the balance between prudent loan expansion and maintenance in order to prevent quality deterioration downgrading to Non
Performing Loan NPL category and to optimise capital utilisation to achieve the optimum of Return On Risk Weighted Asset RORWA.
To support this objective, the Bank periodically reviews and updates its policies and procedures for credit in general, by business segment and tools risk management. 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, monitoringsettlement process for non-performingrestructuring 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 the Quality of
Asset Assessment 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 to transactional and portfolio levels. At the transactional level, the Bank has implemented the four-eye principles 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 principles 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 mitigate credit risk, Credit Committee sets loan structure for every debtor through appropriate covenants that aligns with debtor needs and conditions. This is to ensure the debtor uses the loan
effectively according to original purpose so that bank and debtors interest are fulfilled. Guidelines for determining the structure of collateral in order to mitigate credit risk policy has been regulated in detail
according to the SPK Credit Standard Procedures for each segment.
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2016 and for the year then ended Expressed in millions of Rupiah, unless otherwise stated
219
61. RISK MANAGEMENT continued
A. Credit risk continued The collateral that can be accepted by the Bank includes Movable Assets among others cash,
receivables, inventory, and marketable securities, Non-Movable Assets among others property, land, and equipment, and personalcorporate guarantee. The collateral coverage criteria for each segment
is divided as follows:
Segment Collateral
Minimum Coverage Amount
Wholesale Funded project
100 - 150 of credit limit Inventory
Receivable Fixed Asset
Land or land and property Other collateral accepted by the Bank
Retail Fixed asset
100 - 200 of credit limit Inventory
Receivable Land or land and property
Other collateral accepted by the Bank
Collateral coverage amount is determined by type and limit of credit facility, type and value of collateral and evaluation of debtor.
To guarantee the credit facility, fixed asset such as land and building are preferable than other types of collateral. The fair value of collateral is assessed by internal assessors Credit Operation Unit
and an external assessors who have already been appointed by the Business UnitCredit Recovery Unit.
Collateral can be exchanged as long as the new collateral fulfills marketability and collateral value adequacy criteria. If debtors failed to pay off their loan, the collateral will be liquidated as a second
way out to ensure credit recovery. 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 includes Credit Rating and Credit Scoring Tools, financial spread sheet, comprehensive Credit Analysis
Memorandum. In portfolio has been carried out through master limit, ICLS Integrated Credit Liabilities and name cleareance.
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. BMRS that has been developed by the Bank consists of Rating System for Corporate Commercial
segment, Rating System for Wholesale SME, Rating System for Project Finance, Rating System for Financial Institution - Bank, Rating System for Financial Institution - Non Bank Multifinance, and
Rating System for Bank Perkreditan Rakyat BPR. The Bank has also developed a Rating System for Financial InstitutionsBanks, called Bank Mandiri
Financial Institution Rating BMFIR, so that the Bank can identify and measure the risk level of Bank Counterpart which can be tolerated in granting Credit Line facilities.
