GOVERNMENT RECAPITALIZATION BONDS continued OTHER RECEIVABLES - TRADE TRANSACTIONS

PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2005 and 2004 Expressed in millions of Rupiah, unless otherwise stated 44

9. SECURITIES PURCHASED WITH AGREEMENTS TO RESELL

a. A summary of securities purchased with agreements to resell 2005 Counterparty Securities Commencement Date Maturity Date Resell Value Unamortized Deferred Interest Income Net Value Rupiah PT Henan Putih Rai ENRG shares 10202005 01182006 104,750 950 103,800 PT Danatama Makmur ENRG shares 10282005 01262006 104,750 1,372 103,378 PT Henan Putih Rai BUMI shares 1222005 03022006 52,375 1,610 50,765 PT Danatama Makmur BUMI shares 1222005 03022006 52,375 1,610 50,765 PT Investindo Bonds FR25 12132005 01132006 8,387 52 8,335 Total Rupiah 322,637 5,594 317,043 2004 Counterparty Securities Commencement Date Maturity Date Resell Value Unamortized Deferred Interest Income Net Value Rupiah PT Bank Mega Bonds 12242004 01242005 483,472 3,472 480,000 PT Satya Mulia Gemilang Shares 11302004 05302005 134,973 9,917 125,056 PT Agung Ometraco Muda Shares 1020,212004 0420,212005 107,836 4,758 103,078 Total 726,281 18,147 708,134 Less:Allowance for possible losses 4,800 Total Rupiah 703,334 b. Movements of Allowance for securities purchased with agreements to resell: 2005 2004 Balance at beginning of year 4,800 - Reversalprovision during the year Note 37 4,800 4,800 Balance at end of year - 4,800 Management believes that the allowance for securities purchased with agreements to resell is adequate.

10. DERIVATIVE RECEIVABLES AND PAYABLES

As of December 31, 2005, a summary of derivative transactions is as follows: Notional Amount Fair Value Derivative Derivative Transactions Contract Note 2k Receivables Payables Third parties Foreign Exchange Related 1. Forward-buy US Dollar 622,074 605,772 1,655 17,957 Others 77,300 76,054 - 1,246 2. Forward-sell US Dollar 426,077 425,276 835 34 Others 59,919 59,401 594 76 3. Swap-buy US Dollar 2,666,750 2,644,010 1,239 23,979 PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2005 and 2004 Expressed in millions of Rupiah, unless otherwise stated 45

10. DERIVATIVE RECEIVABLES AND PAYABLES continued

Notional Amount Fair Value Derivative Derivative Transactions Contract Note 2k Receivables Payables 4. Swap - sell US Dolar 4,869,156 4,601,502 312,921 45,267 Others 150,000 149,620 - 380 Interest Rate Related 1. Swap - interest rate US Dolar - 97,533 Other 1,442 2,740 2. Forward Rate Agreement US Dolar - 334 Total 318,686 189,546 Less: Allowance for possible losses 3,443 - 315,243 189,546 Interest Rate Swaps On April 17, 2003 Bank Mandiri entered into interest rate swap agreements with counterparty banks with nominal values amounting to US125,000,000 full amount and US175,000,000 full amount, respectively. The underlying transaction is the Bank’s US300,000,000 full amount fixed interest rate Medium-Term Note MTN issued in April 2003 Note 24. Under this transaction, the Bank receives semi- annual fixed interest at the rate of 7.00 per annum and pays semi-annual floating interest at the rate of six-month Libor + 3.37 per annum until the maturity of the Note on April 22, 2008. The six-month Libor interest is stated in arrears. These transactions qualify as hedging for accounting purposes. The background and purpose of the issuance of the hedging instruments are related to interest rate risk management, whereby the Bank’s positive foreign currency interest rate gap position is exposed to downward trends in interest rates in the following five years. The Bank decided to convert its MTN’s fixed interest rate into floating interest rates in order to mitigate the risks of a decrease in net interest margin. The Bank uses the Discounted Cash Flows approach to calculate the fair value of the hedging instruments, while the short-cut method is used to determine their hedging effectiveness. As of December 31, 2005 and 2004, losses amounting to Rp86,039 and Rp24,215 as a result of the hedging fair value calculation have been offset against the gains from decrease of the MTNs, a hedged item, based on the fair value calculation Note 24. Bank Mandiri entered into an interest rate swap agreement with nominal amount of US125,000,000 full amount with counterparty bank in August 2002. The underlying transaction is the Bank’s US125,000,000 full amount fixed interest rate Subordinated Note issued in 2002 Note 29. Under the transaction, the Bank receives semi-annual fixed interest at the rate of 10.625 per annum and pays semi-annual floating interest at the rate of six-month LIBOR + 6.19 per annum for a 5-year period. The six-month Libor interest is stated in arrears. While the transaction is for the purpose of hedging the fixed rate coupon payments of the Subordinated Note with floating coupon payments, it does not qualify as a hedging transaction for accounting purposes. Cross Currency Swaps Bank Mandiri has entered into cross currency swap contracts, which are associated with the securities sale and repurchase agreements with several counterparty banks. The contract were initiated when Bank Mandiri sold its Government Recapitalization Bonds to the counterparty banks and received Rupiah funds. These funds were used to settle the spot leg of the cross currency swaps and Bank Mandiri will then receive US Dollar funds. On the settlement date, the Bank will receive Rupiah funds and pay US Dollar funds to the counterparty banks. Bank Mandiri is then obliged to use the Rupiah funds to repurchase the Government Recapitalization Bonds it previously sold to counterparty banks Notes 7 and 22.