Fitch Kerek Rating Bank Mandiri Becomes BBB

Photo: Doc. Bank Mandiri

JAKARTA - The international rating agency, Fitch Ratings has just confirmed the Long-Term and Short-Term International rankings (International Long-Term Foreign & Local Currency Rating) for Bank Mandiri, from what was originally BBB- for the last 4 years has now become BBB.

Not only that, Fitch Ratings has also raised the National Long-Term Rating ranking, from the original AA+(idn) since 2019 to AAA (idn).

Meanwhile, in January 2024, the Standard & Poor (S&P) rating agency also increased Bank Mandiri's (rating) rating, from the previous BBB-Stable/A-3 to BBB/Stable/A-2.

Bank Mandiri Corporate Secretary Teuku Ali Usman said this rating increase was based on the results of the rating agency's reassessment of the government's tendency to support Bank Mandiri as a state-owned bank with the largest and crucial assets for the Indonesian banking system.

"They see a stable and sustainable profitability profile, maintained asset quality with a healthy DPK basis, and solid capital structure, which is also a factor that encourages the increase in Bank Mandiri's ranking," Ali said in an official statement on Thursday, May 9.

Ali added, with this rating increase, it is hoped that Bank Mandiri can attract more investors, both Equity Investors and Fixed-Income Investors, as well as make investors more confident in the sustainability of Bank Mandiri's performance in the future.

"This rating improvement is a form of recognition for the continuous improvement in Bank Mandiri's financial condition," he explained.

This is inseparable from the performance of the bank codenamed BMRI, which is increasingly prudent in expanding its business in the midst of volatile market conditions and global economic and financial uncertainty. This is reflected in Bank Mandiri's ability to channel consolidated loans of IDR 1,435 trillion in the first quarter of 2024, an increase of 19.1 percent year on year (yoy).

This achievement surpassed industrial credit growth which grew by 12.4 percent on an annual basis at the end of March 2024.

Bank Mandiri also prioritizes the principle of prudence, including carrying out various initiatives and service innovations for all customers and stakeholders to achieve sustainable business growth.

This effort also bore fruit, as seen from Bank Mandiri's better asset quality position, compared to five large banks. It was noted that Gross bank only's non-performing loan ratio (NPL) which was maintained to 1.02 percent as of March 2024, fell 68 basis points (bps) from the same period last year which was 1.7 percent.

At the same time, Bank Mandiri is also very prudent and conservative in setting credit reserves, as reflected in the coverage ratio of bank only which is at the level of 368 percent. Improvements in terms of credit quality are also reflected in credit or cost of credit (CoC) costs which are maintained at a low level of 0.99 percent as of the end of March 2024.

The growth in financial performance was also driven by a series of Bank Mandiri's innovations and digital strategies. One of them is through Super App Livin' by Mandiri which has been able to manage 846 million transactions in the first quarter of 2024, an increase of 41.7 percent yoy with the number of users reaching 24.4 million, up 40 percent yoy.

Meanwhile, the value of Livin' by Mandiri transactions in the first quarter of 2024 has reached Rp921 trillion, which also grew by 27.4 percent when compared to the same period as last year.

The presence of Livin' by Mandiri has contributed to the company's non-interest income growth, which is reflected in Livin' (FBI) by Mandiri's fee-based income of IDR 557 billion, an increase of 25.5 percent YoY.

As for the Wholesale Digital Super Platform Kopra by Mandiri service, it has consistently succeeded in becoming a market leader for digital wholesale transactions by managing IDR 4,773 trillion transactions until the first quarter of 2024.

In addition, the growth of Kopra by Mandiri users has also more than doubled in the past year to 200 thousand users as of the end of March 2024, of which 93 percent of the giro are contributed by Kopra by Mandiri users.

This digital optimization also contributed to the growth of Bank Mandiri's consolidated third party funds (DPK) which reached 13 percent yoy from Rp1,391 trillion in the first quarter of 2023 to Rp1,572 trillion at the end of the first quarter of 2024. This growth was driven by savings which rose 10.6 percent yoy to Rp607 trillion on a consolidated basis.

In addition to recording positive financial performance, as an agent of development, Bank Mandiri also continues to be committed to contributing to national development that supports a sustainable ecosystem. This commitment is realized by implementing environmental, social and governance principles or environmental, social and governance (ESG) of Bank Mandiri.

So that in total, Bank Mandiri's sustainable portfolio managed to grow 14 percent from March 2023 to IDR 264 trillion at the end of March 2024. This amount is equivalent to 24 percent of Bank Mandiri's total credit portfolio.