PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004 and 2003, and April 30, 2003 Expressed in millions of Rupiah, unless otherwise stated
157
58. ECONOMIC CONDITIONS
The operations of the Bank have been affected, and may continue to be affected for the foreseeable future by the economic conditions in Indonesia. Despite the recent improvement in the key economic
indicators, Indonesian banks have engaged in limited lending activities. Any worsening of the economic conditions, including a significant depreciation of the Rupiah or increase in interest rates,
could adversely affect the ability of the Bank’s customers including borrowers and other contractual counterparties to fulfill their obligations when they mature, and consequently negatively impact the
Bank’s profitability and its capital adequacy. Economic improvements and sustained recovery are dependent upon several factors such as the fiscal and monetary action being undertaken by the
Government and others, actions that are beyond the control of the Bank.
The accompanying consolidated financial statements include the effects of the adverse economic conditions to the extent they can be determined and estimated. It is not possible to determine the
future effects a continuation of the adverse economic conditions may have on Bank Mandiri’s and its Subsidiaries’ liquidity, earnings and realization of their earning assets, including the effects from their
customers, creditors, shareholders and other stakeholders. The ultimate effect of these uncertainties on the stated amounts of assets and liabilities at the balance sheet date cannot presently be
determined. Related effects will be reported in the consolidated financial statements as they become known and can be estimated.
59. GOVERNMENT GUARANTEE OF OBLIGATIONS OF LOCALLY INCORPORATED BANKS Based on the Decree of the Minister of Finance of Republic Indonesia No. 26KMK.0171998 dated
January 28, 1998, which was replaced by the Decree of the Minister of Finance No. 179KMK.0172000 dated May 26, 2000, the Government of the Republic of Indonesia is
guaranteeing certain obligations of locally incorporated banks namely demand deposits, savings, time deposits and deposits on call, bonds, marketable securities, inter-bank placements, fund
borrowings, currency swaps and contingent liabilities such as bank guarantees, standby letters of credit and other liabilities, excluding subordinated loans and amounts due to directors,
commissioners and related parties. Based on Joint Decrees of the Directors of Bank Indonesia and Head of IBRA No. 3246KEPDIR
and No. 181BPPN0599 dated May 14, 1999, the guarantee period is automatically extended, unless otherwise i.e. that within six months from the maturity of this guarantee, IBRA decides not to extend
its maturity. In 2001, the Joint Decrees of the Directors of Bank Indonesia and the Head of IBRA were replaced by BI regulation No. 37PBI2001 and the Decree of the Head of IBRA No.
1035BPPN0401.
The Head of IBRA issued Decree No. SK-1036BPPN0401 in 2001 that provides for specific operational guidance in respect of the Government of the Republic of Indonesia’s Guarantee of
obligations of locally incorporated banks. The Government charges a premium in respect of its guarantee program in accordance with
prevailing regulations Note 44.
Based on Presidential Decree No. 152004 dated February 27, 2004 in relation to the termination of IBRA’s duties and its dissolution, and Decree of the Minister of Finance No. 84KMK.062004 dated
February 27, 2004, the Government of the Republic of Indonesia established Unit Pelaksana Penjaminan Pemerintah, a new institution replacing IBRA, to continue the Government guarantee
program for obligations of locally incorporated banks.
PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004 and 2003, and April 30, 2003 Expressed in millions of Rupiah, unless otherwise stated
158
60. IMPLEMENTATION OF QUASI-REORGANIZATION
For three consecutive years from 2000 to 2002, Bank Mandiri reported accumulated net profits of Rp7,512,786. However, the Bank still had significant accumulated losses amounting to
Rp161,874,901 as of April 30, 2003 before quasi-reorganization. To eliminate the negative consequences of being burdened by its accumulated losses, the shareholder approved a quasi-
reorganization as of May 29, 2003. In relation to the quasi-reorganization, the Bank determined that the fair value of all assets and
liabilities was higher than the historical net book value as at April 30, 2003, the date of the quasi- reorganization. Therefore, the Bank eliminated the accumulated losses against the additional paid-in
capitalagio without adjusting the asset and liability accounts to their fair values. Moreover, the net profit during the four-month period ended April 30, 2003 had been included in the accumulated losses
account prior to the elimination against additional paid-in capitalagio. The quasi-reorganization adjustments resulted in the elimination of accumulated losses of Rp162,874,901 as of April 30, 2003
against additional paid-in capitalagio.
The Consolidated Balance Sheets as of April 30, 2003, before and after quasi-reorganization, are as follows:
Before Quasi- Reorganization
After Quasi- Reorganization
ASSETS
Cash 1,846,539
1,846,539 Current accounts with Bank Indonesia
9,643,221 9,643,221
Current accounts with other banks - net 412,651
412,651 Placements with Bank Indonesia and other banks - net
7,019,538 7,019,538
Securities - net 12,734,855
12,734,855 Government Recapitalization Bonds
150,332,380 150,332,380
Trade documents and other facilities - net 1,971,769
1,971,769 Derivative receivables - net
417,761 417,761
Loans - net 59,320,887
59,320,887 Acceptances receivables - net
2,688,233 2,688,233
Investments in shares of stock - net 122,271
122,271 Premises and equipment - net
2,043,088 2,043,088
Deferred tax assets - net 2,923,968
2,923,968 Other assets - net
9,808,748 9,808,748
TOTAL ASSETS 261,285,909
261,285,909 LIABILITIES AND SHAREHOLDER’S EQUITY
Liabilities immediately payable 443,908
443,908 Deposits from customers
187,224,517 187,224,517
Deposits from other banks 13,790,831
13,790,831 Securities sold with agreements to repurchase
735,000 735,000
Derivative payables 13,128
13,128 Acceptances payable
2,791,637 2,791,637
Securities issued 4,053,877
4,053,877 Fund borrowings
12,658,279 12,658,279
Estimated losses on commitments and contingencies 1,488,315
1,488,315 Accrued expenses
974,474 974,474
Taxes payable 1,091,009
1,091,009 Other liabilities
9,906,046 9,906,046
Subordinated loans 5,901,077
5,901,077 Loan capital
2,926,193 2,926,193
TOTAL LIABILITIES 243,998,291
243,998,291
Minority interests in net assets of consolidated subsidiaries 3,238
3,238
