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.
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 534 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
n. Loans continued
Loan Restructuring continued For loan restructurings which involve a conversion of loans into equity or other financial instruments,
a loss on loan restructuring is recognised only if the fair value of the equity or financial instruments received, deducted by estimated expenses to sell the equity or other financial instruments, is less
than the carrying amount of loans.
Overdue interest, which is capitalised to loans under new restructuring agreements, is recorded as deferred interest income and is amortised proportionately based on the amount of capitalised
interest relative to the loan principal upon collection. Losses on loan restructuring are presented as part of allowance for impairment losses.
o. Consumer Financing Receivables
Subsidiary’s consumer financing receivables are recognised initially at fair value plus directly attributable transaction costs and deducted by administration income and subsequently measured
at amortised cost using the effective interest rate method.
Early termination of a contract is treated as a cancellation of an existing contract and the resulting gain or loss is credited or charged to the current year’s consolidated statement of income at the
date of transaction.
Subsidiary’s consumer financing receivables 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, consumer financing receivables represented receivables net of unearned income on consumer financing, allowance for doubtful accounts and amount jointly financed by
other parties. Transaction costs, administration income and discount insurance were charged and credited directly to the consolidated statement of income.
Subsidiary’s unearned consumer financing income is the difference between total installments to be received from customers and total financing plus or deducted with transaction costs and discount
insurance which will be recognised as consumer financing income over the term of the contract using effective interest rate.
Joint financing
Joint financing consists of with and without recourse joint financing to end-user consumers. The consumer financing receivables under joint financing where each party assumes the credit risk
according to the risk portion without recourse are stated at net amount in the consolidated balance sheet. Consumer financing income and interest expense related to without recourse joint financing
are stated at net amount in the consolidated statement of income. Consumer financing receivables under joint financing where the Subsidiary assume the credit risk with recourse are stated at gross
amount in the consolidated balance sheet and the funds received from are presented as borrowings in the consolidated balance sheet in accordance with their portion. The consumer financing income
and interest expense related to with recourse joint financing are stated at gross amount in the consolidated statement of income.
For joint financing without recourse, Subsidiary has the right to set higher interest rates to customers than those as stated in the joint financing agreements with joint financing providers
which is the Bank. The difference is recognised as revenue and disclosed as “Consumer Financing Revenue”.
