PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2007 and 2006 Expressed in millions of Rupiah, unless otherwise stated
122
55. RISK MANAGEMENT continued
Credit Risk The Bank’s credit risk management mainly concentrated on balancing the performing loans expansion
and prudential loans management in order to prevent collectibility downgrade or Non Performing Loan NPL and optimize capital utilization allocated for credit risk.
To support this matter, Bank has established policies and written guidelines regarding loans disbursement, which includes the Bank Mandiri Credit Policy KPBM, Credit Manual PPK, and
Temporary Memorandum Credit Policy and Procedures that has not been accommodated in the KPBM and PPK. The purpose of those guidelines are to provide a comprehensive loan management manual
related to loan application, analysis process, approval process, documentation, monitoring and restructuring processes, including risk analysis and assessment.
In order to ensure prudential loan process, the Bank reviews and improves its credit policies periodically to fit with the current business. In alignment with the Strategic Business Unit SBU implementation, the
Bank produced Policies and Standard Loans Procedures SPK for each business segment in order to have better focus on capturing the business need by each business segment. Currently the completed
SPK are SPK of Corporate segment, SPK for Commercial segment, SPK for Small segment, SPK for Micro and Consumer segment.
In principles, credit risk management is implemented on both transactional and portfolio level. On transactional level, the Bank has implemented four-eye principle whereby every loan approval will involve
Business Unit and Risk Management Unit independently to obtain an objective decision. Four-eye principle process is conducted through the Credit Committee within the authority limit and credit decision
process are made through Credit Committee. The holder of credit decision authorization as credit committee member has competence, abilities and integrity. Therefore, the loan process becomes more
comprehensive and more prudent. As part of prudential banking practice, the party with authority in deciding loan disbursement beside using
the Loan Analysis form and financial spread sheet, the Loan Analysis form NAK also using Tools Rating BMRS and Scoring Tools MBSS SMESS to perform credit risk assessment more accurate and
interest rate risk based pricing. The Bank has Credit Rating and Credit Scoring Model Design and Development Guidance, which is a complete guidance for the Bank to create credit rating and credit
scoring model. Those models are implemented into the Credit Risk Tools as one of the credit decision tools. To monitor the performance of credit rating and credit scoring model, the scoring and rating result
performed by Business Units was reviewed periodically. Performance of rating model validation provides current performance model condition. As monitoring, rating scoring managed in the database, the Bank
produced Credit Scoring Review and Rating Outlook issued quarterly and semi annually. Those reports also stated information regarding attributeparameter scoring established by economic sectors. It is
valuable for Business Unit especially as guidance in setting targeted customer with performing classification in order to support prudential loan expansion.
Scoring and rating tools also intended to provide more objective assessment to the debtors so that lower risk debtors will get different treatment then the higher risk debtors.
To increase the Turn Around Time of loan disbursement, the Bank performed initiatives such as enhancement of Credit Memo for Corporate, Commercial, Small Business, Financial Institution and
Overseas Office that are more oriented with comprehensive risk analysis in order to support quick and accurate prudential banking based credit decision. Other than that, in order to prevent non-performing
loans, the Bank has developed and implemented Loan Monitoring System process and Early Warning Analysis for performing debtors to identify debtors who have high potential to be downgraded to NPL so
that the Management could immediately decide the account strategy and early action to obtain optimal result in order to minimize the Bank’s NPL growth.
PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2007 and 2006 Expressed in millions of Rupiah, unless otherwise stated
123
55. RISK MANAGEMENT continued
