Relations with Management or Key Employee of Bank Mandiri

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

5. Relations with Management or Key Employee of Bank Mandiri

Salaries and allowances, bonuses, long-term benefits for the Board of Commissioners, Directors, Audit Committee and Risk Monitoring Committee, the Sharia Supervisory Board and Senior Executive Vice President and Senior Vice President for the end of the year on 31 December 2016 and 2015 was Rp986,140 and Rp857,365 respectively or 3,15 and 2,98 of total other operating expenses consolidated. Value of Related Party Table for Transaction Value of Related Party on Year 2015 – 2016 In Million Rupiah Description 2016 2015 Assets Clearing with other bank 25,861 24,515 Allocation to Bank Indonesia and other bank 1,725,571 1,991,278 Stocks 18,571,548 16,516,404 Government Bond 98,933,278 103,869,361 Other trade invokes 5.934.300 7,051,775 Derivative Invoices 3.660 32,152 Loan Disbursed 100,201,483 75,405,807 Consumer Repayment Debt 10,532 5,886 Accepted Invoice 415,848 409,880 Stock Listing 50,331 50,331 Total Assets in related Party 225,872,412 205,357,389 Total consolidate asset 1.038.706.009 910,063,409 Percentage total assets to related party against consolidate asset 21.75 22.56 Liabilities Customer saving - Clearing wadiah 48.729.926 38,252,185 - Savings wadiah 1.973.087 1,342,075 - Time deposit 46,271,999 37,257,210 Saving from other bank - Clearing and saving 45,912 70,176 - Time Deposit 286,210 - Inter-bank call money 40,000 600.000 Derivative Liability 10,058 3,095 Liability on stock sell and bought back 230,024 467,123 Accepted liability 2,481,708 606,737 Stock issue 3,662,000 587.750 Credit acceptance - 25,178 Subordinate loan - 1,687,800 Total liability to related party 103.730.924 80,899,329 Total consolidate liability 824.559.898 736,198,705 Total percentage of liability to other parties against consolidate liability 12,58 10.99 Fund syirkah temporary 914.391 666,356 Percentage against total syirkah temporary fund 1,50 1.23 Profit loss report and other comprehensive result Interest from government Bond and SPN 5,490,404 5,364,814 Percentage against income interest and sharia income 7.16 7.49 Interest income receivable 971 3,759 Percentage against interest and sharia 0,01 0.01 Commitment and Contingency Credit facility given before utilize 38,790,412 20,811,629 Letter of Credit which could not be cancel as it still on-going 3,519,396 5,107,643 Guarantee in the form of Bank guarantee 23,212,078 23,280,899 Guarantee given in the form of Standby letters of credit 6,739,568 6,560,416 Total commitment and contingency for related party 72,261,454 55,760,587 Total consolidate commitment and contingency 196,288,542 174,421,838 Total percentage of commitment and contingency to related party against consolidate asset 36,81 31.97 Stated by gross before unamortized discount and lossesgains have not realizing from decreaseincrease in securities. 10 Consolidated Financial Statements 09 Cross Reference of Annual Report Award 2016 Criteria 08 Corporate Social Responsibility 07 Integrated Corporate Governance 06 Corporate Governance Comparison Between Target and Realization in 2016 and Projected 2017 Description 2016 2017 Target Realization Target Loan Growth 8,5 10,6 13,0 Gross NPL 3,98 3,96 3,65 Fund Growth 11,9 12,2 9,9 CASA 65,3 66,0 66,3 CER 44 39,6 44 Business Prospect The global economy in 2017 is predicted to be better than in 2016, though still cover with uncertainty. World economic growth in 2017 is expected to strengthen to 3.4, while the economy in developing countries are predicted to grow by up to 4.6. The volume of world trade is the driving factor mainstay of growth is also expected to reach 3.9 in 2017. According to the World Bank, Indonesias economic growth is considered quite well which is projected to reach the level of 5.3 during the year 2017. This is expected because of the support of the consumer sector and the size of government spending. In addition to the World Bank, the IMF also estimates that Indonesias economic growth in 2017 was in the range of 5.1. The inflation rate in 2017 is expected to average 4 YoY at the exchange rate of the Indonesian currency USD against the United States currency USD reached Rp13.300 USD. Table of Indonesia Economy Projection in 2017 Macro Indicator Project Values Economy Growth 5.3 Inflation YoY, average 4 Currency RpUSD Rp13,300 SPN 3 Months 5.3 Third Party fund growth YoY 9 - 11 Total Credit growth 12 Fed Rate 1.4 Source: Financial Note of State Budget 2017, Bank Indonesia, CNBC Banking Industry Prospect The weakening of the banking sector is expected to continue in 2017. According to Bank Indonesia, credit growth is predicted at 12 and Deposits will grow in the range of 9 to 11 and the NPL and loan interest rates are expected to decline until the second quarter 2017 year. With the new liquidity calculations using the loan to funding ratio LFR, the banking liquidity is not an issue. Despite slowing growth, the general stability of the Indonesian banking industry remain strong, underpinned by the resilience of the banking system and the relatively subdued performance of the financial markets. The resilience of the banking industry remains strong with the risks of credit, liquidity and market quite awake. Long Term Plan and Strategy 2017 Long Term Plan 2016-2020 Reflecting from strength and experience that exist, Bank Mandiri did its Corplan alignment in order to grow up healthy and sustain business. Bank Mandiri alignment Corplan 2016-2020 with a business focus on the main areas corresponding core competency in order to grow healthy and sustainable with the aspiration to become Indonesias best, ASEANs prominent to achieve a market capitalization of 500 billion, recording a YoY growth of 3 above the market, and an option the main job seekers in Indonesia. 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 In order to achieve this, Bank Mandiri will focus on three main strategic pillars: 1. The first pillar – Deepen client relationship, strengthen initiate core competency with: - Strengthen Bank Mandiri Position as number 1 in Corporate Banking. 1. Lending: growth in the market around 2.5; 2. Fee-based income contribution around 25 from the total income; 3. 75 wallet share in the top anchor clients. - Growth in line with the market in Commercial Banking: 1. Lending: growth in line with the market; 2. Fee-based income contribution around 20 from the total income. - Targeting 3-4 sector to be given solution and product package of specific sector. 2. The Second Pillar– Accelerate the growth segment, growth new core competency with: - First choice in Consumer banking especially for the middle -income class: 1. Payroll: dominated salary segment through payroll account acquire; 2. Home Moorgate: reaching to the second position in the market; 3. Personal Loans: triple business size; 4. Auto Loans: double business size; 5. CASA: 70 DPK in the form of CASA. - Triple growth in Micro SME. - Selective growth in SME segment and micro-SME by maintaining NPL. 3. Third Pillar – Integrate the group, synergize Mandiri Group with: - Strengthen the existence in 2 ASEAN countries: 4 contribute to group revenue. - Improve network productivity: branch revenue to increase by 20. - Encourage subsidiary company performance through improving synergy in Mandiri group: 20 contribution towards revenue group. Lastly, conduct strengthen foundation in 3 main building block: - Digitalization – reduce the cost to income ratio become ~38 by diverting 80 customer interaction to digital online. - Secure, Fast and Productive – Reduce cost of credit under 1,7 by focusing on strengthening to EWS, collections and restructuring as well as Improving productivity network through re-engineering process and developing analytics engine One Mandiri, which was building HR capability to support strategy achievement and Encourage company synergy culture values, work performance, mindset in Mandiri Group. Strategic Plan 2017 Untuk mencapai aspirasi Bank Mandiri Menjadi Lembaga Keuangan Terbaik di ASEAN Tahun 2020 maka Bank Mandiri telah merumuskan fokus utama tahun 2017 sebagai berikut: 1. Increase market revenue share through growth in business volume and fee-based income above the market; 2. Maintaining a healthy liquidity conditions through the monitoring of the Loan to Deposit Ratio LDR; 3. The growth of earning assets quality by keeping the target NPL Gross, Cost of Credit, CKPN RatioNPL and Write off Loan; 4. Improving Net Interest Margin and repair Cost of Fund; 5. Strengthening the Retail and Wholesale Transaction to improve the ratio of cost of funds, growing fees and commissions and Fee Ratio. Marketing Aspect Marketing Strategy Bank Mandiri designs marketing strategy which is adapted to the evolving needs of customers at all segments based on the “360° Marketing Strategy” that provides a wide range of contact points for the customers, both through conventional and digital media whereas for each program executed, Bank Mandiri will conduct measurement. In line with the ongoing transformation, Bank Mandiri keeps on improving its marketing strategy in order to make it more effective. In 2016, Bank Mandiri was focused on some of the marketing strategies included:

1. Bank Mandiris Branch and e-channel Services Improvement