PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2008 and 2007 Expressed in millions of Rupiah, unless otherwise stated
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55. RISK MANAGEMENT continued
Market and Liquidity Risk a. Liquidity Risk Management
Liquidity represents the Bank ability to meet all financial liabilities as they come due in normal condition. Bank’s liquidity is influenced by the funding structure, asset liquidity, liabilities to the
counterparty and loans commitment to the debtors. Liquidity risk is caused by the inability of the Bank to provide liquidity at normal price that effects the profitability and Bank’s capital. To mitigate potential
liquidity risk, the Bank manages its liquidity risk in order to be able to meet any financial obligation as it comes due, and to maintain an optimum level of liquidity. These objectives are achieved by setting and
implementing a liquidity risk management policy that designates an optimum liquidity reserve, measures and sets limits for liquidity risk, outlines scenario analyses and contingency plan, and
designs a funding strategy as well as preserves access to the market.
The liquidity level of the Bank is measured through primary reserve and secondary reserve levels. Primary reserves consist of cash in branches and the Minimum Reserve Requirements Giro Wajib
Minimum, or GWM that held at Bank Indonesia, Bank Indonesia arranged GWM, PBI No. 1019PBI2008 on October 14, 2008 about the Minimum Reserve Requirements for Bank Indonesia
for and foreign currency as have been amended with PBI. No. 1025PBI2008 on October 23, 2008, the Bank is required to maintain a daily GWM at a minimum of 5 of third party Rupiah funds and at a
minimum of 1 of third party foreign currency funds. As of December 31, 2008, Bank Mandiri maintained a GWM of 5.47 for Rupiah and 1.04 for foreign currency.
Secondary reserves may be in the form of central bank certificates Sertifikat Bank Indonesia, or SBI, Bank Indonesia deposits facility or FASBI, interbank placements and marketable securities trading
and available-for-sale portfolios. As of December 31, 2008, the Bank held Rp53,956,512 in secondary reserves or 19.32 of its Rp279,334,563 unaudited in third party funds.
The Bank’s potential liquidity risk is assessed and monitored through liquidity gap analysis, which is a projection of the future. Based on the Bank’s 2009 plan Rencana Kerja dan Anggaran Perusahaan, or
RKAP, the Bank’s liquidity is projected to be in a surplus position over the next 12 months. Each funding deficit projection is monitored through Maximum Cumulative Outflow MCO limit.
Bank’s ability to handle of differing liquidity pressures is assessed by running a range of liquidity scenarios that covers both normal and unusual situations. These also include scenarios for extreme or
crisis conditions stress testing, which then generates contingency plans. According to the contingency funding plan, Bank may source its funding needs through different
funding channels available other than third party funding. These may include repurchase agreement, bilateral funding, collateralised facility agreement, foreign exchange swap, and selling marketable
securities such as government bond.
b. Interest Rate Risk Management Interest Rate Risk represents risk that influences financial value increasedecrease of Bank’s assets
and liabilities Banking Book because of change in interest rate that will effect on Bank’s profit and capital. Interest rate risk is mostly due to difference in time repricing between Rate Sensitive Assets
RSA and Rate Sensitive Liabilities RSL. Bank’s Assets sensitive to interest rate are dominated with government bond and loans, and Liability sensitive to interest rate are dominated with Third Party Fund
demand deposits, savings deposits, and time deposits. The Bank manages its interest rate risk through the use of repricing gap analysis, duration gap
analysis and simulation. To describe the amount of the interest rate risk exposure, the Bank used re- pricing gap approach, whilst to measure the revenue sensitivity NII Sensitivity and Economic Value of
PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2008 and 2007 Expressed in millions of Rupiah, unless otherwise stated
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55. RISK MANAGEMENT continued
