These consolidated financial statements are originally issued in Bahasa.
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2015 and for the year then ended Expressed in millions of Rupiah, unless otherwise stated
39
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
c. Financial instruments continued G. Allowance for impairment losses of financial assets
a Financial assets carried at amortised cost The Group assesses at each reporting date whether there is objective evidence that a
financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective
evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset a “loss event” and that loss event or events has an impact on
the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
The criteria that the Group uses to determine that there is objective evidence of impairment loss include:
1. Significant financial difficulty of the issuer or obligor;
2. A breach of contract, such as a default or delinquency in interest or principal
payments; 3.
The lender, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concession that the lender would not otherwise consider;
4. There is a probability that the borrower will enter bankruptcy or other financial
reorganisation; 5.
The disappearance of an active market for that financial asset because of financial difficulties; or
6. Observable data indicating that there is a measurable decrease in the estimation.
The Group has determined specific objective evidence of an impairment loss for loans including:
1. Loans classified as Sub-standard, Doubtful and Loss non-performing loans in
accordance with Bank Indonesia Regulation No. 72PBI2005 dated January 20, 2005 regarding Asset Quality Rating for Commercial Banks, as amended by Bank Indonesia
Regulation No. 112PBI2009 dated January 29, 2009. Since October 24, 2012,
Group follows Bank Indonesia Regulation No. 1415PBI2012 regarding Asset Quality Rating for Commercial Banks and Circular Letter of Bank Indonesia No. 1528DPNP
dated July 31, 2013 regarding Asset Quality Rating for Commercial Banks. 2.
All restructured loans. The Group initially assesses whether objective evidence of impairment for financial asset
exists as described above. The individual assessment is performed on the individually significant impaired financial asset, using discounted cash flows method. The insignificant
impaired financial assets and non-impaired financial assets are included in group of financial asset with similar credit risk characteristics and collectively assessed.
If the Group assesses that there is no objective evidence of impairment for financial asset assessed individually, both for significant and insignificant amount, hence the account of
financial asset will be included in a group of financial asset with similar credit risk characteristics and collectively assesses them for impairment. Financial assets that are
individually assessed but non-impaired, those financial assets are still classified as financial assets that are assessed individually. Tough the Group provides allowance for
impairment losses based on probability of default for each segment that are generated by evaluating impairment of loans collectively.
These consolidated financial statements are originally issued in Bahasa.
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2015 and for the year then ended Expressed in millions of Rupiah, unless otherwise stated
40
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
c. Financial instruments continued G. Allowance for impairment losses of financial assets continued
a Financial assets carried at amortised cost continued In evaluating impairment for loans, the Bank determines loan portfolio into these three
categories: 1.
Loans which individually have significant value and if impairment occurred will have material impact to the consolidated financial statements, i.e. loans with Gross Annual
Sales GAS Corporate and Commercial, as well as loans with GAS outside Corporate and Commercial with outstanding balance more than Rp5,000;
2. Loans which individually have no significant value, i.e. loans with GAS Business,
Micro and Consumer with outstanding balance is less or equal to Rp5,000; and 3.
Restructured loans. Bank determines loans to be evaluated for impairment through individual evaluation if one
of the following condition is met: 1.
Loans which individually have significant value and objective evidence of impairment; or
2. Restructured loans which individually have significant value.
Bank determines loans to be evaluated for impairment through collective evaluation if one of the following condition is met:
1. Loans which individually have significant value and there are no objective evidence of
impairment; or 2.
Loans which individually have insignificant value; or 3.
Restructured loan which individually have insignificant value. Individual impairment calculation
The amount of the impairment is measured as the difference between the financial asset’s carrying amount and the present value of estimated future cash flows excluding future
impairment losses that have not been incurred discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through the allowance
for impairment losses account and the amount of the loss is recognised in the consolidated statement of profit or loss and other comprehensive income. If a loan or held-
to-maturity financial assets has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the cash flows that may result from foreclosure less costs for
obtaining and selling the collateral, whether or not foreclosure is probable.
The Bank uses a fair value of collateral method as a basis for future cash flow if, one of the following conditions is met:
1. Loans are collateral dependent, i.e. if source of loans repayment comes only from the
collateral; or 2.
Foreclosure of collateral is most likely to occur and supported with legal binding aspect.
