Universal Banking In 2004, Bank Mandiri achieved its goal of becoming a Additional Divestment Following the success of our Initial Public Offering IPO on Distribution Network Expansion As part of the drive to increase coverage area and market

9 Message from the President Dear Shareholders, I would like to take this opportunity to elaborate upon our vision of Bank Mandiri - to be a Regional Champion Bank, in accordance with Bank Indonesia’s long-term plan for the Indonesian Banking Architecture. In order to achieve this, Bank Mandiri has planned for three stages of transformation: Phase I 2000-2004 to become a Universal Bank; Phase II 2005-2009 to become a Dominant Domestic Bank; and Phase III 2010 onwards to become a Regional Champion Bank. This past year marked the completion of the first phase of Bank Mandiri’s journey of transformation, which established the foundations for future growth and development. By the end of Phase II 2009, we have targeted an increase in the value of the company to achieve a market capitalization of Rp100 trillion. I would now like to highlight several major milestones achieved during the recent post-merger and consolidation phases of Bank Mandiri. • In 2000 we consolidated and rationalized our branch network and staffing, established Good Corporate Governance and Risk Management procedures, and implemented a hub spoke IT system. • In 2001 we completed the integration of MASTER Mandiri Integrated System, reorganized our business units, developed our corporate plan, launched our Visa credit card and Mandiri Prioritas products, introduced the “3 No’s” policy, and issued a US125 million FRN that signaled Indonesia’s return to international capital markets following the economic crisis. • In 2002 we aligned job grading across the organization, launched the Officer Development Project ODP, established our Call Center SMS Banking, opened Commercial Banking Centers CBCs, introduced Credit Scoring Rating Systems, and issued US125 million in subordinated debt. • In 2003, we implemented eMAS Enterprise Mandiri Advanced System, launched internet banking, adopted a Balanced Scorecard, conducted a quasi reorganization, issued a US300 million MTN, and launched our Initial Public Offering IPO. Let me now describe several more recent achievements that are central to the on-going development and future growth of Bank Mandiri:

1. Universal Banking In 2004, Bank Mandiri achieved its goal of becoming a

universal bank, capable of serving all customer segments. For the first time, the bank’s loan portfolio was evenly balanced between corporate and non-corporate commercial and consumer lending, where previously the corporate segment dominated as a result of the extensive legacy of Bank Mandiri in corporate banking. In order to increase the bank’s competitive strengths in the non-corporate segments, Bank Mandiri has launched several initiatives in product development, distribution network expansion and customer service enhancement to expand both commercial and consumer banking.

2. Additional Divestment Following the success of our Initial Public Offering IPO on

14 July 2003, the Government of Indonesia continued its divestment program for Bank Mandiri through the sale of two billion Series B shares, representing 10 of paid-in capital of PT Bank Mandiri Persero Tbk, at Rp1,450 per share on 11 March 2004. The sale price reflected a 1.1 discount to the weighted average price of the previous trading day 10 March 2004 of Rp1,466 per share or a 3.3 discount to the previous day’s closing price of Rp1,500 per share. Proceeds from this divestment totaled Rp2.9 trillion or USD336 million. The divestment was done through a private placement after an accelerated overnight book building. Investors’ response to the private placement was quite positive, despite the general decline of the Jakarta Stock Exchange Composite Index at that time. Top tier domestic and international investors North America, Europe and Asia accounted for 30 and 70 of the private placement, respectively. The divestment resulted in a broader investor base for Bank Mandiri’s shares and contributed significantly to the Government’s privatization target for 2004.

3. Distribution Network Expansion As part of the drive to increase coverage area and market

share for funding and loans, Bank Mandiri aggressively expanded several distribution channels in 2004. Fifty-nine new branch offices bring the total branch network to 789. Our ATM network grew to 2,470 units with the addition of 473 new ATMs. Bank Mandiri also continues to support the commercial banking business, opening five new Commercial Banking Centers CBCs during the year and bringing the total to thirteen. Finally, to enhance customer service quality - particularly for high net worth customers - the Bank opened six new Priority Banking outlets, for a total of 22, by the end of 2004.

4. Human Capital Revitalization In order to support the second phase transformation, Bank