PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2010, 2009 AND 2008
Expressed in millions of Rupiah, unless otherwise stated
Appendix 532 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
m. Derivative Receivables and Derivative Payables continued
Derivative receivables are classified as financial assets at fair value through profit or loss, meanwhile derivative payables are classified as financial liabilities at fair value through profit or loss.
Refer to Note 2b for the accounting policy of financial assets and liabilities at fair value through profit or loss.
n. Loans
Loans represent agreement to provide 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.
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 receivables 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 with the selling price equal to cost of the goods plus agreed profit margin. Murabahah receivables are stated at amount of
receivables less realised deferred margin and allowance for impairment 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 any promising 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
AS AT 31 DECEMBER 2010, 2009 AND 2008
Expressed in millions of Rupiah, unless otherwise stated
Appendix 533 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
n. Loans continued
Loans are classified as financial assets in loans and receivables. Refer to Note 2b for the accounting policy of loans and receivables.
Prior to 1 January 2010, loans are stated at their outstanding balance, net of allowance for possible losses.
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
impairment 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.
Prior to 1 January 2010, for Bank Indonesia reporting purposes, 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.
Loans purchased from IBRA are classified as financial assets in loans and receivables. Refer to Note 2b for the accounting policy of loans and receivables.
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. Prior to 1 January 2010, 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. The losses on loan restructurings was recorded as a deduction to loan and charge to consolidated statement of
income. Since 1 January 2010, the potential loss arising from credit restructuring is accounted for in the allowance for impairment losses.
