PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2009, 2008 AND 2007
Expressed in millions of Rupiah, unless otherwise stated
Appendix 515 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued j.
Other Receivables - Trade Transactions
Other receivables - Trade Transactions represent receivables resulting from contracts for trade- related facilities given to customers, which will be reimbursed on maturity. They are presented at
their outstanding balances, net of allowance for possible losses.
k. Securities PurchasedSold under ResaleRepurchase Agreements
Securities purchased under resale agreements are presented as assets in the consolidated balance sheet at the agreed resale price less unamortised interest income and allowance for possible
losses. The difference between the purchase price and the agreed selling price is treated as deferred unamortised interest income and amortised as income over the period, commencing from
the acquisition date to the resale date.
Securities sold under repurchase agreements are presented as liabilities in the consolidated balance sheet at the agreed repurchase price less unamortised prepaid interest. The difference
between the selling price and the agreed repurchase price is treated as prepaid interest and is recognised as an expense over the period, commencing from the selling date to the repurchase
date.
l. Derivative Receivables and Derivative Payables
All derivative instruments including foreign currency transactions for funding and trading purposes are recognised in the consolidated balance sheet at their fair values. Fair value is determined based
on market value using Reuters rate at reporting date or discounted cash flow.
Derivative receivables are presented at the amount of unrealised gain from derivative contracts, less allowance for possible losses. Derivative payables are presented at the amount of unrealised
loss from derivative contracts.
Gains or losses from derivative contracts are presented in the consolidated financial statements based on its purpose designated upon acquisition, as 1 fair value hedge, 2 cash flow hedge, 3
net investment in a foreign operation hedge, and 4 trading instruments.
1. Gain or loss on a derivative contract designated and qualifying as a fair value hedging
instrument and the gain or loss arising from the changes in fair value of hedged assets and liabilities is recognised as gain or loss that can be set off one another during the same
accounting period. Any difference representing hedge ineffectiveness is directly recognised as gain or loss in the consolidated statement of income in current year.
2. The effective portion arising from gain or loss of derivative contracts, which are both designated
and qualify as a cash flow hedge instruments is reported as other comprehensive income, a separate component under the equity section. The hedge ineffectiveness portion is recognised
as a gain or loss in the current year consolidated statement of income.
3. Gain or loss arising from derivative contract that is designated, qualifies as a net investment
hedge in a foreign operation and that is highly effective is reported as other comprehensive income, a separate component under the equity section.
4. Gain or loss arising from derivative contract not designated as a hedging instrument or
derivative contract that does not qualify as a hedging instrument is recognised in the current year consolidated statement of income.
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2009, 2008 AND 2007
Expressed in millions of Rupiah, unless otherwise stated
Appendix 516 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued m. Loans
Loans represent provision of cash or cash equivalent based on agreements 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 loans, direct financing and joint financing, and channeling loans are stated at their
outstanding 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 sharia
financing which provides funds or cash equivalents, such as: a
profit sharing transactions in the form of mudharabah and musyarakah b
lease transactions in the form of ijarah or lease purchase based on ijarah muntahiyah bittamlik c
sale and purchase transactions in the form of murabahah and istishna d
loanborrowing in the form of receivables qardh and e
lease transactions in the form of ijarah for multiservice transaction based on agreement or approval between Bank Syariah Mandiri and other parties who have the
responsibility to return the funds over a period of time with reward of ujroh, without reward, or profit sharing.
Brief explanation for each type of sharia financing is as follows: Mudharabah is a placement of funds from lenders shahibul maal to fund managers mudharib to
undertake certain business activity by using profit sharing or net revenue sharing arrangement between both parties based on the ratio nisbah which has been agreed upfront.
Musyarakah is a placement of funds by fund owners to jointly place these funds in certain business activity with profit sharing scheme based on previously agreed nisbah. Loss is borne by the fund
owners according to proportion in the funds.
Ijarah is a leasing arrangement of goods andor services between the owner of a leased object lessor and leasee including the right to use the leased object, for the purpose of obtaining return
on the leased object. Ijarah muntahiyah bittamlik is a leasing arrangement between the lessor and the lessee to obtain profit on the leased object being leased with option to transfer ownership of the
leased 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 realisable deferred
margin. 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.
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2009, 2008 AND 2007
Expressed in millions of Rupiah, unless otherwise stated
Appendix 517 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued m. Loans continued
Loans Purchased from IBRA Bank Indonesia issued Regulation No. 47PBI2002 regarding “Prudential Principles for Credits
Purchased by Banks from IBRA” dated 27 September 2002, which applies for all loans purchased from IBRA starting 1 January 2002.
The difference between the outstanding loan principal and purchase price is booked as deferred income if the Bank enters into a new 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 can only be adjusted once the Bank has recovered
the original purchase price.
Income arising from the loans purchased from IBRA is recognised on a cash basis. If the Bank enters into a new credit agreement with the borrower, any receipts from a borrower are recognised
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 recognised firstly as a deduction of outstanding principal. The excess of receipts over the outstanding principal balance
shall be recognised as interest income.
Bank Indonesia allows the Bank to classify all the loans purchased from IBRA as Current for a period of one year from the date of loan booking. Thereafter, the loans are classified based on the
normal loan rating guidelines from Bank Indonesia.
Bank Indonesia requires banks to fully recover the purchase price of the loans within five years from the date of loan booking. Any unpaid amount after five years should be written off by the banks.
Based on the letter from Bank Indonesia No. 958DPNPIDPnP dated 16 February 2007, Bank Mandiri can continue to manage ex-IBRA loans which have passed a period of 5 years after
purchase, if the loans at the time reach 5-years period, are classified as current based on factors of business prospects, performance and the ability of debtors to pay as stipulated in the relevant BI
regulation regarding Asset Quality.
Loan Restructuring Loan restructuring may involve a modification of the terms of the loans, conversion of loans into
equity or other financial instruments andor a combination of both. Losses on loan restructurings in respect of modification of the terms of the loans are recognised
only if the present value of total future cash receipts specified by the new terms of the loans, including both receipts designated as interest and those designated as loan principal, are less than
the carrying amount of loans before restructuring.
For loan restructurings which involve a conversion of loans into equity or other financial instruments, a loss on loan restructuring is recognised only if the fair value of the equity or financial instruments
received, deducted by estimated expenses to sell the equity or other financial instruments, is less than the carrying amount of loans.
Overdue interest, which is capitalised to loans under new restructuring agreements, is recorded as deferred interest income and is amortised proportionately based on the amount of capitalised
interest relative to the loan principal upon collection. Losses on loan restructuring are presented as part of allowance for possible losses.
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2009, 2008 AND 2007
Expressed in millions of Rupiah, unless otherwise stated
Appendix 518 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued n. Consumer Financing Receivables
Consumer financing receivables are stated at their outstanding balance less the portion of joint financings where the credit risk is assumed by joint financing providers in accordance with the
financings portion without recourse, unearned consumer financing income and the allowance for possible losses.
Unearned consumer financing income, which is the difference between the total installment payments to be received from consumers and the principal amount of consumer financing, and is
recognised as earned income over the term of the contract based on a constant rate of return on the net consumer financing receivables.
Administration income from consumers is recognised in the consolidated statement of income upon signing the financing contract.
Early termination of a contract is treated as a cancellation of an existing contract and the resulting gain or loss is credited or charged to the current year’s consolidated statement of income at the
date of transaction.
o. Joint Financing
