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Singapore Stock Exchange. This exercise was the first tranche of a USD1 billion
MTN program.
4. Implementation of Enterprise Mandiri Advanced System eMAS
On 17 August 2003, Indonesia’s Independence Day, Bank Mandiri
completed the implementation of eMAS at all branches—a process begun in
November 2002. The eMAS program included improvements to our delivery
channels, replacement of our core banking system, and strengthening of
our MIS and IT infrastructure. This highly integrated system is expected
to improve our transaction processing capabilities, enhancing all of Bank
Mandiri’s operations and business development activities.
5. Acquisition of Mandiri Visa card’s operating center
We entered a new era in our credit card business when we acquired the loan
portfolio and transitioned all back-office operations in-house for the Mandiri
Visa card in August 2003 from GE Finance Indonesia.
6. Establishment of a Bancassurance joint venture
In December we commenced operations at PT AXA Mandiri Financial Services
AMFS. This joint venture between Bank Mandiri and AXA Asia Pacific Holdings,
M e s s a g e f ro m t h e Pre s i d e nt C E O
12
representing one of the world’s largest insurance firms, was set up to provide a
new range of insurance and investment products to Bank Mandiri customers
through our extensive branch network.
Financial Performance
I would also like to briefly highlight our 2003 financial performance as measured
by the following ratios: ROA increased to 2.8 compared to 2.3 in 2002;
ROE declined to 23.6 from 26.2 in 2002 largely due to an increase in our
capital; cost to income ratio declined to 40.4 compared to 42.8 in 2002; CAR
increased to 27.7 compared to 23.4 in 2002; earnings per share increased to
Rp229 compared to Rp179 in 2002; and book value per share increased to Rp1,020
compared to Rp722 in 2002.
We also made significant progress in improving our mix of assets and
liabilities. In line with our strategy to reduce our cost of funds, we re-priced
interest rates on all deposit accounts, reducing total third party funds to
Rp178,811 billion from Rp184,114 billion in 2002 and increasing the proportion of
deposits in lower cost savings and current accounts to 44.5, up from 33.8 in
2002. In particular, savings deposits grew to Rp41,307 billion in 2003 compared to
Rp29,926 billion in 2002.
Our loan portfolio grew by 16.1 to Rp75,943 billion from Rp65,417 billion in
2002, while the balance of loans between corporate, commercial and consumer
segments improved as well; corporate loans accounted for 62.9 of total loans
at the end of 2002, but had declined to 52.2 by the end of 2003.
The decline in third party deposits in 2003 was funded through the sale
of government recap bonds, which generated Rp25,816 billion from a
nominal value of Rp24,505 billion. The proportion of government recap bonds
to total assets declined to 49.3 in 2003 from 59.4 in 2002, while loans increased
from 26.1 to 30.4 of assets. The sale of bonds also contributed to profit and
improved our reserves. In 2003, Bank Mandiri’s net profit increased 27.9 to
Rp4,586 billion compared to Rp3,586 billion in 2002.
We intend to maintain a 50 dividend payout ratio taking into consideration our
business and financial performance as well as future prospects. On 31 December
2003 we paid an interim dividend of Rp50share and will propose the payment
of a final dividend during our next Annual General Meeting.
Future Challenges
Looking ahead, we intend to build upon our successful business transformation
and positive performance to become one of the leading banks in Southeast Asia
a Regional Champion Bank. Already a leader in the region’s largest economy,
Bank Mandiri is well positioned for
M e s s a g e f ro m t h e Pre s i d e nt C E O
• RoA 2.8
• Roe 23.6
• CAR 27.7
• epS Rp229
• BVpS Rp1,020
B a n k M a n d i r i 2 0 0 3 A n n u a l R e p o r t 13
further growth. This goal will be realized as we renew our focus on the commercial
and consumer banking segments, continue to strengthen the systems and
operations of each of our businesses, and consolidate our position as Indonesia’s
universal bank a Domestic Powerhouse.
I remain convinced that our vision, to be the trusted and preferred bank, can
be achieved through the capabilities and commitment of all of the management
and staff at Bank Mandiri, along with the continuing support of our many
stakeholders. We have recently integrated this vision into our corporate campaign,
“One Heart, One Nation, One Bank.”
On behalf of the Board of Directors I would like to thank the staff of Bank
Mandiri for their unceasing efforts to build the bank into a strong competitor.
I would also like to thank the Board of Commissioners and Audit Committee for
their invaluable contributions in guiding us throughout the year.
Finally, I would like to thank our many stakeholders. We appreciate your support.
PT Bank Mandiri Persero Tbk.
E.C.W. Neloe President CEO
M e s s a g e f ro m t h e Pre s i d e nt C E O
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B a n k M a n d i r i 2 0 0 3 A n n u a l R e p o r t 15
E. C. W. Neloe president Ceo
