10 Consolidated Financial
Statements 09
Cross Reference of Annual Report
Award 2016 Criteria 08
Corporate Social Responsibility
07 Integrated Corporate
Governance 06
Corporate Governance
System to improve the efficiency of the credit process and maintain data quality on corporate, commercial and retail
segment. To increase the productivity of collection activity, especially in Consumer and Retail segment, Bank Mandiri
implements the Integrated Collection System. Bank Mandiri is using Summit System and ALM System to manage the risk
of trading book and banking book in the activities of treasury and asset liability management. In order to get an overview
of Bank Mandiris risk profile, both as a holding company as well as Bank Mandiris risk profile which has consolidated
and integrated with the subsidiaries, Bank Mandiri has implemented a Risk Profile Mandiri System RPX which is a
web-based system to accelerate and facilitate access control. In integrating bankwide risk management, Bank Mandiri has
implemented ERM system as a tool to monitor the overall risk management, particularly in calculating the capital to cover
all types of risk. ERM system has the capability to perform the computation of capital charge Standardized Approach and
the Advanced Approach, the implementation of operational risk management tools, active portfolio management, stress
testing and value-based management.
4. MethodologyModel Analytics
Bank Mandiri continuously implements risk measurement which refers to the international best practices by using
both quantitative and qualitative approach through the development of risk models such as rating, scoring, Value
at Risk VaR, portfolio management, stress testing and other models to support judgmental decision making.
Periodically, these risk models are calibrated and validated by the Risk Model Validator unit which is independent
to maintain the reliability and validity of the model as well as to meet the regulatory requirements. In order to
harmonize the implementation of Basel II and ERM with Basel II regulations and the application of best practices,
Bank Mandiri in cooperation with one of the leading consultants in risk management, assist in the adoption
and implementation of the Basel II framework and ERM. The implementation of Basel II and ERM on Bank Mandiri
covers the area of Credit Risk, Market Risk, Liquidity Risk, Interest Rate Risk in the Banking Book Position, Operational
Risk, Capital Management and Internal Capital Adequacy Assessment Process ICAAP.
The implementation of Basel II and ERM Implementation
Aspects Scope of
Implementations
Credit Risk The development and refinement
of Basel II Risk Parameters for the implementation of Internal Rating Based
Approach PD, LGD, and EAD
Market Risk Risk measurement of structured
products, limit trading treasury, and infrastructure of treasury system
Liquidity and Interest Rate Risk
Completion of liquidity limit framework, core deposit analysis, Risk Appetite
Statement RAS, stress testing liquidity, repricing gap method, and the
implementation of the ALM system
Implementation Aspects
Scope of Implementations
Operational Risk The development of Framework
and Governance Operational Risk Management ORM
Capital Management The completion of Economic Capital
models, development of framework portfolio optimization as well as capital
optimization
Internal Capital Adequacy Assessment
Process ICAAP The implementation of Risk Appetite
Statement, Stress Testing, Capital Planning, and synchronization with
regulation which related to Risk Based Bank Rating RBBR
Internal Control System Bank Mandiri runs the effective risk management practices
throughout working unit by implementing three lines of defense policy models with the following conditions:
1. Working units as risk owner is the first line of defense which
responsible in managing working unit risk. 2. Risk Management Unit as the second line of defense
performs the function of oversight. 3. Internal Audit Unit as the third line of defense carries out
independent assurance function. The implementation of Internal Control System on Risk
Management function is a shared responsibility either first, second or third line of defense.
Capital Disclosures
Capital Structure The capital structure of of Bank Mandiri consists of core capital
Tier 1 and supplementary capital Tier 2. Core capital Tier 1 is primarily attributable to:
1. Paid-in capital 2. Other comprehensive income consists of:
a. Difference in the financial statement translation b. Changes in fair value of financial assets in available for
sale category c. Fixed asset revaluation surplus
3. Other disclosed capital reserves: a. Agio
b. General reserves c. Prior years profit
d. Profit for the year
4. Non-controlling interests for capital on a consolidated basis
5. Reduction factors of core capital: a. Deferred taxes calculation
b. Goodwill c. Intangible assets
d. Participation e. Securitization exposures
Supplementary capital Tier 2 primarily derived from general reserves PPA over productive assets which shall be established
and subordinated loans.
03 Company at a Glance
04 Management Discussion and
Analysis on Companys Performance 05
Review of Business Support Function
01 Main Highlights
02 Management Report
Capital Adequacy
In order to provide added value to the stakeholders as well as a form of compliance of Bank Mandiri to comply with capital adequacy set by the regulator, Bank Mandiri always assures and ensures that the capital structure of Bank Mandiri is strong enough
to support the business development strategies of todays business and maintain business continuity in the future.
Risk management of capital aspect in Bank Mandiri includes diversification of capital sources in accordance with long-term strategic plans and capital allocation decisions efficiently in the business segment that has an optimum risk-return profile
including placements in subsidiaries. This aims to meet the expectations of stakeholders including investors and regulator. Bank Mandiri ensures that they have adequate capital to cover credit risk, market risk and operational risk, either under the
provisions of regulation regulatory capital and internal needs economic capital. Bank Mandiri refers to the regulation of Bank Indonesia and the Financial Services Authority Basel II and Basel III, particularly on Pillar 1, in terms of the calculation of capital
adequacy for credit risk, market risk and operational risk.
Besides the calculations above, Bank Mandiri is developing the calculation of capital adequacy by reference to Pillar 2 of Basel II or more commonly known as Internal Capital Adequacy Assessment Process ICAAP. ICAAP includes the determination of risk
appetite, overall risk assessment, capital planning, and bank-wide stress testing.
For capital adequacy calculation, Bank Mandiri uses the Standardized Approach
1
of Basel II for credit risk and has incorporated External Rating components. In addition, Bank Mandiri has gradually simulating the Internal Ratings-Based Approach. For market
risk, Bank Mandiri uses the Standardized Measurement Method
2
of Basel II, and internally using the Value at Risk. For operational risk, Bank Mandiri refers to Basic Indicator Approach
3
of Basel II. Bank Mandiri has implemented Basel III refers to the application of Basel and regulatory documentation and initiatives issued by
the FSA
4
. As part of the implementation of Basel III in Indonesia, Bank Mandiri has reported the calculation of Liquidity Coverage Ratio LCR
5
monthly and tested the calculation of Leverage Ratio LR
6
quarterly in accordance with the FSA regulation. The trial results per December 2016 the Bank on a consolidated basis showed that its core capital against the total assets of the Bank were
adequate to Leverage Ratio LR of 12.98, as well as showed that Bank Mandiri could maintain its adequacy of quality liquid assets that can be liquidated immediately to meet the cash flow needs out within the next 30 days with the Liquidity Coverage Ratio LCR
of 206.8.
Bank Mandiri actively participates in working groups of Basel III and Quantitative Impact Study QIS conducted by the Basel Committee on Banking Supervision BCBS through the Financial Services Authority which held semi annually. Based on the
position in June 2016, the Bank consolidated QIS results indicate that in general Bank Mandiri has met the guidelines under Basel III, with the simulation results of the Capital Adequacy Ratio CAR of 20.9 minimum ratio of ≥ 11.25. QIS results also showed
that the Bank operates at a low risk level, which is indicated by the adequacy Leverage Ratio LR of 13.6 minimum ratio of ≥ 3. As for the fulfillment of the Global Liquidity Standard which showed the resilience of liquidity and sources of stable funding, Bank
Mandiri has a Liquidity Coverage Ratio LCR of 212 minimum ratio of ≥ 100 and Net Stable Funding Ratio NSFR of 125 minimum ratio of ≥ 100.
---------------- 1 Referring to the SE OJK No. 42SEOJK.032016 regarding Guidelines for Calculation of Risk Weighted Assets for Credit Risk Approach.
2 Referring to the SE OJK No. 38SEOJK.032016 on Guidelines for Use in Calculation Method Standard Minimum Capital Requirement for Commercial Banks Take into account the Market Risk.
3 Referring to the SE OJK 24SEOJK.032016 on the calculation of RWA for Operational Risk by Using the Basic Indicator Approach. 4 Among other FSA Regulation No. 11POJK.032016 concerning Minimum Capital Requirement for Commercial Banks.
5 Referring to the FSA Regulations No. 42POJK.032015 on the Obligations Fulfillment of Liquidity Coverage Ratio for Commercial Banks. 6 Referring to the FSA Consultative Paper of 2014 on the Framework for Basel III Leverage Ratio.
10 Consolidated Financial
Statements 09
Cross Reference of Annual Report
Award 2016 Criteria 08
Corporate Social Responsibility
07 Integrated Corporate
Governance 06
Corporate Governance
Quantitative Disclosures of Capital Structure Table 1.a Quantitative Disclosure of Commercial Bank Capital Structure
in million Rupiah
December 31, 2016 December 31, 2015
Bank Consolidated
Bank Consolidated
I Core Capital Tier 1
130,356,495 140,303,507 93,252,808 101,081,429
1 Core CapitalCommon Equity Tier 1 CET 1
130,356,495 140,303,507 93,252,808 101,081,429
1.1 Paid Up Capital After deduction with Treasury Stock
11,666,667 11,666,667
1.2 Additional Capital Reserves
132,118,291 138,702,183 1.2.1
Supplementary factors 133,126,534 139,618,360
1.2.1.1 Other Comprehensive Income
24,870,451 25,371,375
1.2.1.1.1 The excess of financial statement translation
46,689 203,610
1.2.1.1.2 Potential benefits from the increase on fair value
of financial assets in available for sale category 27,242
27,242 1.2.1.1.3
The balance of revaluation surplus 24,796,520
25,140,523 1.2.1.2
Other disclosed capital reserves 108,256,083 114,246,985
1.2.1.2.1 Agio
17,476,308 17,316,192
1.2.1.2.2 General reserves
2,333,333 2,333,333
1.2.1.2.3 Prior years profit
75,375,254 80,790,895
1.2.1.2.4 Profit for the year
13,071,188 13,806,565
1.2.1.2.5 Capital paid in advance
- -
1.2.1.2.6 Others
- -
1.2.2 Reduction factors
1,008,243 916,177
1.2.2.1 Other Comprehensive Income
773,291 680,286
1.2.2.1.1 Less difference of financial statement translation
1,247 1,247
1.2.2.1.2 Potential loss from the increase on fair value of
financial assets in available for sale category 772,044
679,039 1.2.2.2
Other disclosed capital reserves 234,952
235,891 1.2.2.2.1
Disagio -
- 1.2.2.2.2
Prior years loss -
- 1.2.2.2.3
Loss for the year -
- 1.2.2.2.4
Less difference between PPA and CKPN on productive assets
- -
1.2.2.2.5 Less difference of amount of fair value
adjustment from the financial instruments in Trading Book
- -
1.2.2.2.6 PPA non-productive assets that should be
provided 234,952
235,891 1.2.2.2.7
Others -
- 1.3
Non-controlling interests that can be taken into account -
458,658 1.4
Reduction factors of core capital 13,428,463 10,524,001
1.4.1 Deferred taxes calculation
5,435,589 5,777,248
1.4.2 Goodwill
- 117,741
1.4.3 The whole other intangible assets
1,436,314 1,519,757
1.4.4 Investments that taken into account as a reduction
6,531,560 3,084,255
1.4.5 Lack of capital in insurance subsidiaries
- -
1.4.6 Securitization exposures
25,000 25,000
1.4.7 Other reduction factors of core capital
- -
1.4.7.1 Placement of funds on the instrument AT 1 andor Tier 2 in
other banks -
- 1.4.7.2
Cross-ownership on other entities acquired by the transition because of the law, grants, or grants will
- -
2 Additional Core CapitalAdditional Tier 1 AT 1
- -
- -
2.1 Instruments that meet the requirements of AT 1
- -
2.2 AgioDisagio
- -
2.3 Reduction factors of Additional Core Capital
- -
2.3.1 Placement of funds on the instrument AT 1 andor Tier 2 in other banks
- -
2.3.2 Cross-ownership on other entities acquired by the transition because
of the law, grants, or grants will -
-
03 Company at a Glance
04 Management Discussion and
Analysis on Companys Performance 05
Review of Business Support Function
01 Main Highlights
02 Management Report
II Supplementary Factors Tier 2
7,075,719 7,761,071 14,135,338 14,751,448
1 Capital instruments in the form of shares or others that meet the requirements of Tier 2
205,135 205,135
2 AgioDisagio
- -
3 PPA general reserves on productive assets that shall be constituted at most 1.25 of
RWA for Credit Risk 6,870,584
