ASSETS
CASH 2a 315,746,897 201,359,028
PLACEMENTS WITH BANK INDONESIA 2a,2d,3 2,120,005,705 1,381,906,403
CURRENT ACCOUNT WITH OTHER BANKS 2a,2b,2c,2e,4,40
Third parties 245,682,590 47,937,944
Related party 60,115,912 70,523,068
Total Current Account with Other Banks 305,798,502 118,461,012 Allowance for possible losses (3,057,985) (4,905)
Net 302,740,517 118,456,107
PLACEMENTS WITH OTHER BANKS 2c.2f,5
Third parties 30,000,000 184,045,200
Allowance for possible losses (300,000) (3,297,194)
Net 29,700,000 180,748,006
INVESTMENT IN SECURITIES 2c,2g,6
Third parties
Availabele for sale 8,765,497 6,000,000
Held to maturity 1,265,096,512 780,444,070
Total Investment in Securities/Bonds 1,273,862,009 786,444,070 Allowance for possible losses (12,738,620) (8,034,697)
Net 1,261,123,389 778,409,373
RECEIVABLES 2b,2c,2h,7,40
Murabahah
Third parties 6,792,039,969 5,178,707,666
Related party 2,898,441 1,625,639
Total Murabahah Receivables 6,794,938,410 5,180,333,305
Istishna
Third parties 141,760,811 117,346,235
Ijarah Receivables
Third parties 2,134,476 2,421,291
Total Receivables 6,938,833,697 5,300,100,831
Allowance for possible losses (272,317,835) (180,447,059)
Net 6,666,515,862 5,119,653,772
FUNDS OF QARDH 2c,2j,8
Third parties 618,845,394 526,169,107
Allowance for possible losses (6,821,408) (3,804,690)
Net 612,023,986 522,364,417
Mudharabah
Third parties 2,963,646,872 2,339,676,256
Allowance for possible losses (37,575,801) (25,024,012)
Net 2,926,071,071 2,314,652,244
Musyarakah 2c,2i,10
Third parties 2,613,729,398 1,997,758,463
Allowance for possible losses (256,539,526) (124,822,506)
Net 2,357,189,872 1,872,935,957
Total Financing 5,577,376,270 4,337,434,719
Allowance for possible losses (294,115,327) (149,846,518)
Net 5,283,260,943 4,187,588,201
ASSETS ACQUIRED FOR IJARAH 2k,11
Fair Value 269,424,722 235,162,360
Accumulated Depreciation (123,965,948) (72,492,634)
Net 145,458,774 162,669,726
ISTISHNA ASSETS IN COMPLETION 2l - 5,024,000
PREMISESS AND EQUIPMENT AND 2m,12
ACCUMULATED DEPRECIATION
Fair Value 383,675,892 262,933,089
Accumulated Depreciation (191,659,670) (160,140,176)
Book Value 192,016,222 102,792,913
OTHER ASSETS
Deferred tax assets 2ac, 19 11,509,812 9,807,914
Take over guarantee 2c2
Realizable value 26,765,759 28,031,269
Allowance for possible losses (22,300,000)
-Net 4,465,759 28,031,269
Others 2c,2n,2o,13 121,370,120 86,579,429
Total Other Assets 137,345,691 124,418,612
TOTAL ASSETS 17,065,937,986 12,885,390,558
LIABILITIES, TEMPORARY SYIRKAH FUNDS AND STOCKHOLDERS' EQUITY
Unrestricted Investment Mudharabah Saving Deposits
Third parties 48,352,825 40,616,968
Unrestricted Investment Mudharabah Time Deposits
Third parties 218,380,535 138,534,050
Total Temporary Syirkah Funds Bank 266,733,360 179,151,018
Total Temporary Syirkah Funds 13,314,736,094 9,427,402,194
STOCKHOLDERS' EQUITY
Capital Stock-par value of Rp 5.000 per share Authorized - 200.000.000 shares
Issued and fully paid 111.648.713 shares
in 2008 and 71.674.513 shares in 2007 558,243,565 358,372,565 Unrealize Profit (loss) - bonds 765,497 -Retained Earning
Appropriated 206,993,156 206,993,156
Unappropriated 442,426,408 246,010,467
Total Stockholders' Equity 1,208,428,626 811,376,188
TOTAL LIABILITIES, TEMPORARY SYIRKAH FUNDS
AND STOCKHOLDERS' EQUITY 17,065,937,986 12,885,390,558
AS MUDHARIB:
Income From Sales and Purcahse
Murabahah Margin Income 2u,29,53 824,274,869 552,679,012
Istishna Paralel - Net Income 12,226,444 8,241,105
Total Income From Sales and Purcahse 836,501,313 560,920,117
Income from rent
Ijarah Income - Net 15,240,458 24,713,676
Revenue sharing
Revenue sharing - Mudharabah 443,355,992 264,813,301
Revenue sharing - Musyarakah 260,521,406 200,090,296
Total Revenue sharing 703,877,398 464,903,597
OTHER OPERATING REVENUE 2v,30,53 180,770,412 146,736,008
TOTAL REVENUE FROM FUND MANAGEMENT
AS MUDHARIB 1,736,389,581 1,197,273,398
THIRD PARTIES' ON RETURN OF TEMPORY SYIRKAH FUNDS 2w,31,53 (793,049,197) (511,873,694) OTHER OPERATING REVENUE
Revenue from Banking services 32.53 285,181,366 193,375,976
Revenue from restricted investment 15,805,055 16,544,134
Total other operating revenue 300,986,421 209,920,110
OPERATING EXPENSES
Salaries and employee benefit 33.53 (294,251,847) (207,798,478)
General and administrative 34.53 (241,669,986) (195,391,229)
Depreciation and amortization: 35.53
Depreciation of premises and equipment (31,999,963) (34,236,284)
Provision for possible losses on earnings assets (309,296,455) (253,812,932)
Provision for possible losses on non earnings assets (24,300,000) -Reversal (expense) losses estimated on commitments and contingencies (796,521) 701,724 Other operating expenses:
Bonus 2x,36 (19,560,249) (17,514,528)
Others 36.53 (42,512,354) (20,200,553)
Total other operating expenses: (964,387,375) (728,252,280)
INCOME FROM OPERATIONS 279,939,430 167,067,534
NON OPERATING INCOME AND EXPENSE 37.53
Non operating income 8,651,995 1,147,548
Balance as of December 31, 2006 358,372,565 131,865,270206,993,156 697,230,991
Net income for 2007 - - 115,455,198 115,455,198 Tantiem payment 27 - - (1,310,000) (1,310,000) Balance as of December 31, 2007 358,372,565 246,010,468206,993,156 811,376,189
Stock Issued 28 199,871,000 - - 199,871,000 Unrealized profit (loss) - Securities - - 765,497 765,497 Net income for 2008 - - 196,415,940 196,415,940
Balance as of December 31, 2008 206,993,156558,243,565 443,191,905 1,208,428,626
Receipt from other operating revenue 300,986,422 209,920,090
Receivable (1,881,608,887) (1,005,796,201)
Qardh loan (89,659,570) (275,873,276)
Mudharabah financing (611,418,826) (1,220,563,913)
Musyarakah financing (484,253,915) (443,562,062)
Net Cash used in Operating Activities (2,879,415,264) (2,743,726,538)
CASH FLOWS FROM INVESTING ACTIVITIES Purchase of available or sale
and held to maturity (481,948,518) (284,213,059)
Increase in Unrestricted Investment 3,797,573,094 3,227,259,917
Increase in Restricted Investment 89,760,806
-Additional Paid in Capital 100,000,000
-Payment of Tamtiem - (1,310,000)
Net Cash provided by Financing Activities 3,787,333,900 3,225,949,917
NET INCREASE IN CASH AND CASH EQUIVALENT 404,824,661 177,300,399
CASH AND CASH EQUIVALENT AT BEGINNING OF YEAR 1,031,726,443 854,426,044
CASH AND CASH EQUIVALENT AT END OF YEAR 1,436,551,104 1,031,726,443
Cash and cash equivalent at and of year consist of:
Cash 315,746,897 201,359,028
Current account with Bank Indonesia 3 815,005,705 711,906,403
Current account with Other Banks 4 305,798,502 118,461,012
Total 1,436,551,104 1,031,726,443
Balance at beginning of year 2a 291,710,424 255,213,860
Receipt fund 109,336,340 146,569,682
Profit from Investment 26,356,800 29,599,392
Bank's share as invesment agent fees 32 (15,805,055) (16,544,134)
Fund withdrawal 14 (140,951,200) (123,128,376)
Investment at end of period 45 270,647,309 291,710,424
Sources of Zakah Fund 2y, 43
Zakah from Bank 34 2,886,380 1,640,000
Zakah from Non Bank 1,372,224 888,089
Total Sources of Zakah Fund 4,258,604 2,528,089
Uses of Zakah Fund
Distributed through LAZ BSM Ummat 2a 7,657 1,898,727
Total Uses of Zakah Fund 7,657 1,898,727
Increase (Decrease) Zakah Fund 4,250,947 629,362 Beginning balance of Zakah Fund 816,571 187,209 Ending balance of Zakah Fund 14 5,067,518 816,571
Penalties 44 2,151,357 1,237,510 Prohibited earnings 2e 223,252 379,274
Total Sources of Qardh Funds 2,374,609 1,616,784
Uses of Qardh Funds
Distributed through LAZ BSM Ummat 2a 1,459,231 967,248
Total Uses of Qardh Funds 1,459,231 967,248
Foreign exchange 55,193 46,236
Increase (Decrease) of Qardh Funds 970,571 695,772
Beginning Balance of Qardh Funds 2,049,534 1,353,762
Ending Balance of Qardh Funds 14 3,020,105 2,049,534
Main Operating Income (Accrual) 2a,2u,29,30 1,736,389,580 1,197,273,397
Less:
Unearned Revenue:
Income from murabahah margin 7 27,632,169 18,467,066 Income from istishna - -Profit sharing:
Mudharabah financing - Musyarakah financing -
-Rent income 7 2,134,476 2,421,291
Total Less 29,766,645 20,888,357
Add:
Revenue previous period which received cash on current period Receipt from Receivable Settlement:
Murabahah margin 7 18,467,067 11,659,290 Istishna -
Rent income 7 2,421,291 2,418,104
Receipt from sharing receivable:
Mudharabah financing - Musyarakah financing -
-Total Add 20,888,358 14,077,394
Available profit Sharing 2a 1,727,511,293 1,190,462,434
Profit sharing of bank syariah's right 934,462,096 678,588,740
Profit sharing of owner fund 31 793,049,197 511,873,694 Consist of:
Owner fund's right on distributed profit sharing 723,505,844 461,192,198 Owner fund's right on undistributed profit sharing 15 69,543,353 50,681,496
a. Background
PT Bank Syariah Mandiri (Bank) was initially established under the name of PT Bank Industri Nasional, abbreviated as PT BINA or also known as PT National Industrial Banking Corporation Ltd., having its head office in Jakarta, based on notarial deed No. 115 dated June 15, 1955 of Meester Raden Soedja, S.H., in Jakarta. the notarial deed was approved by the Minister of Justice and Human Rights of the Republic of Indonesia (formerly known as the Minister of Justice of the Republic of Indonesia) in his decision letter No. J.A.5/69/23 dated July 16, 1955, and it was registered in the State Court Office of South Jakarta No. 1810 dated October 6, 1955. The articles of association were published in the State Gazette No. 37 dated May 8, 1956 as Supplement No. 390.
In accordance with the Articles of Association Amendment concerning Bank's Capital Stock No. 12 dated April 6,1967 which was amended with Article of Association Amendment concerning Bank's Capital Stock No. 37 dated October 4, 1967, both of Adlan Yulizar, S.H., in Jakarta, and which have been published in the State Gazette No. 34 dated April 29, 1969 as Supplement No. 55, the Bank's name was changed from PT Bank Industri Nasional, abbreviated as PT BINA or also known as PT National Industrial Banking Corporation Ltd., into PT Bank Maritim Indonesia.
In accordance with the Minutes of Meeting No. 146 dated August 10, 1973, which was notarized under notarial deed No. 146 of Raden Soeratman, S.H. in Jakarta, which has been published in the State Gazette No. 79 dated October 1, 1974, as Supplement No. 554, the Bank's name was changed from PT Bank Maritim Indonesia into PT Bank Susila Bakti.
In accordance with Notary Deed of Decision of Meeting No. 29 dated May 19, 1999 of Machrani Moertolo Soenarto, SH., in Jakarta, which was approved by the Minister of Justice of the Republic of Indonesia in his decision letter No. C2-1210.HT.01.04.TH 99 dated July 1, 1999 and was published in the State Gazette No. 87 dated October 31, 2000 as Supplement No. 6587, Bank changed its name from PT Bank Susila Bakti into PT Bank Syariah Sakinah Mandiri.
In accordance with Notary Deed of Decision of Meeting No. 7 dated July 7, 1999 of Machrani Moertolo Soenarto, S.H., in Jakarta, which was revised respectively with notary deed of minutes of meeting No. 6 dated July 22, 1999 and notary deed of minutes of meeting No. 9 dated July 23, 1999, both of Hasanal Yani Ali Ami, S.H., in Jakarta, and Notary Deed of Decision of Meeting No. 23 dated September 8, 1999 of Sutjipto, S.H., in Jakarta concerning the Change of the Bank's Capital Stock, which was approved by the Minister of Justice of the Republic of Indonesia in his decision letter No. 16495.HT.01.04.TH 99 dated September 16, 1999 and was published in the State Gazette No. 87 dated October 31, 2000 as Supplement No. 6588, Bank changed its name from PT Bank Syariah Sakinah Mandiri into PT Bank Syariah Mandiri.
In accordance with Notary Deed of Decision of Meeting No. 38 dated March 10, 2000 of Lia Muliani, S.H., in Jakarta, substituting for Sutjipto, S.H., concerning the Change of the Bank's Capital Stock, Bank changed the amount of its capital stock, of which change was approved by the Minister of Justice and Human Rights of the Republic of Indonesia in his decision letter No. C-11545.HT.01.04.TH.2000 dated June 6, 2000 and was published in the State Gazette No. 87 dated October 31, 2000 as Supplement No. 6589.
The latest change of the capital stock is as stated in the Notary Deed of Decision of Meeting of PT Bank Syariah Mandiri No. 59 dated May 17, 2006 of Imas Fatimah, S.H., in Jakarta, which has been published in the State Gazette No. 74 dated September 15, 2006 as Supplement No. 960.
The Bank's head office is located at Jalan M.H. Thamrin No. 5 Jakarta 10340. As of December 31, 2008, the Bank has 57 branches, 79 sub branches, 76 cash offices, 43 payment points, 47 sharia service offices and 13 mobile cash offices.
Based on the Minutes of the Extraordinary General Meeting of Stockholders of PT Bank Syariah Mandiri No. 10 dated June 19, 2008 of Badarusyamsi, S.H., M.Kn., in Jakarta the composition of the Sharia Supervisory Board on June 19, 2008 up to the General Meeting of Stockholder after the promotion is as follows:
The Sharia Supervisory Board
Chairman: Professor K.H. M. Ali Yafie
Member: Drs. H. Muhamad Hidayat, M.B.A, M.H. Member: Dr. M. Syafii Antonio, M.Ec.
According to the Bank Indonesia regulation No.6/24/PBI/2004 concerning The Commercial Bank whose scope of activities are based on sharia principles, the duties, authorities and responsibilities of Sharia Supervisory Board include:
- Ascertaining and supervising the conduct of the Bank's operation with fatwa issued by the National Sharia Board;
- Evaluating sharia aspect on operation manual and products issued by Bank; - Giving an opinion in sharia aspect to overall operation in Bank's publication report; - Analyzing new products and services that are not included in fatwa to be proposed to the
National Sharia Board;
- Submitting sharia observation report at least every 6 (six) months to Directors, Commissioners, National Sharia Board and Bank Indonesia.
Meanwhile, the minutes of the Extraordinary General Meeting of Stockholders on June 19, 2007 was notarized under the Notary Deed of Minutes of Meeting of the Extraordinary General Meeting of Stockholders of Bank Syariah Mandiri No. 119. Referring to the above and the letter of Bank Indonesia No. 9/11/DpG/DPbs dated July 13, 2007, the composition of the Board of Commissioners and the Board of Directors of the Bank as of December 31, 2008 and 2007, are as follows:
2008 2007
Board of Com m issioners
President Commissioner: Achmad Marzuki A. Noor Ilham
Commissioners: Abdillah Drs. H. Zainul Arifin, MBA
Commissioners: Lilis Kurniasih Djakfarudin Junus
Commissioners: Tardi
--Board of Directors
President Director: Yuslam Fauzi, SE Yuslam Fauzi, SE
Director: Sugiharto Ir. Muhammad Haryoko
Director: Hanawijaya Hanawijaya
Director: Amran P. Nasution Amran P. Nasution
Director: Zainal Fanani Zainal Fanani
Director: Srie Sulistyowati Srie Sulistyowati
Based on Notary Deed of Decision of Meeting of PT Bank Syariah Mandiri No. 59 dated May 17, 2006 of Imas Fatimah, S.H., in Jakarta, which was published in the State Gazette No. 74 dated September 15, 2006 as Supplement No. 960, the terms of President Commissioner and President Director were changed into Head Commissioner and Head Director, and there were also changes in the job description, authority and responsibility of Sharia Supervisory Board, which was revised in accordance with the prevailing rules and regulations.
The composition of the audit committee as of December 31, 2008 and 2007 are as follow:
2008 2007
Audit Comm ittee
Chairman: Abdillah Drs. H. Zainul Arifin, M.B.A
Member: Tjeppy Kustiwa Abdillah
Member: Kasmadi Andrianto Kasmadi Andrianto
Salary and benefit expenses incurred for the members of the board of directors, commissioners and the Sharia Supervisory Board amounted to Rp 10,101,164 and Rp 7,006,306 as of December 31, 2008 and 2007, respectively.
b. Public Offering of Mudharabah Sharia Bond
On October 22, 2003 the Bank obtained the notice of effectivity from the Chairman of Capital Market Supervisory Agency (Bapepam) in his letter No. S-2545/PM/2003 for public offering of its Mudharabah Sharia Bonds amounting Rp 200,000,000, bonds with 5 (five) years maturity date, due on October 31, 2008. The entire Sharia bond fund amounting to Rp 200,000.000 has been repaid on October 31, 2008.
As of November 3, 2003 all of the outstanding bonds issued by the Bank have been listed in the Indonesia Stock Exchanges (formerly Surabaya Stock Exchanges).
c. Mudharabah Sharia Subordinated Notes
On January 31, 2007 the Bank made a limited offering and sale of Subordinated Notes of Mudharabah Sharia 2007 (Bank's subnotes) amounting Rp 200,000,000. The duration of these subnotes is 10 (ten) years with call option in the 5th (fifth) year since the issuance date. The issuance of the Bank's Subnotes is conducted in 3 (three) phases, they are:
- Phase I was on January 31, 2007 with nominal amount of Rp 105,000,000; - Phase II was on February 27, 2007 with nominal amount of Rp 65,000,000; - Phase III was on April 5, 2007 with nominal amount of Rp 30,000,000.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Preparation of Financial Statem ents
The financial statements have been prepared in conformity with Statement of Financial Accounting Standards ("PSAK") No. 101 regarding “Presentation of Sharia Financial Statements” and PSAK No. 59 regarding "Accounting for Sharia Banks", the Accounting Guidelines for Indonesian Sharia Banks (PAPSI), and other generally accepted accounting principles issued by Indonesian Institute of Accountant (IAI), and where applicable, prevailing banking industry accounting and practices prescribed by the banking authority in Indonesia and the Capital Market Supervisory Agency (Bapepam) under regulation No. VIII.G.7 of decision letter No.KEP-06/PM/2000 dated March 13, 2000 of the Chairman of BAPEPAM concerning "Guidelines for Financial Statements Presentation".
The financial statements were prepared on the accrual basis using the historical cost concept except for certain securities which are stated at fair values, foreclosed assets which are stated at net realizable values, and certain land and building which are stated at revalued amounts.
The statements of cash flows present receipts and payments of cash and cash equivalents classified into operating, investing and financing activities, using the direct method. For cash flows presentation purposes, cash and cash equivalents consist of cash, current accounts with Bank Indonesia, and current accounts with other banks, which are not pledged as collateral or restricted for use.
Based on PSAK No. 101, sharia bank financial statements should include the following: (i) Balance sheet;
(ii) Statements of income; (iii) Statements of cash flow;
(iv) Statements of changes in stockholders' equity; (v) Statements of changes in restricted investments;
(vi) Statements of Income Reconciliation of Income and profit sharing (vii) Statements of sources and uses of zakah, infaq and shadaqah funds; (viii) Statements of sources and uses of qardhul hasan funds;
(ix) Notes to financial statements.
Balance sheet, statements of income, cash flow and changes in stockholders' equity are financial reports that reflect Bank's activities as an investor with its right and liabilities.
Statements of changes in restricted investments are the financial statements that reflect changes in restricted investments managed by Bank to other parties benefit based on mudharabah contract or investment agent.
Statement of Reconciliation of income and Profit Sharing are reconciliation between income of Sharia Bank on accrual basis and income distributed as profit sharing to fund owners on a cash basis.
Statements of sources and uses of zakah, infaq and shadaqah funds and sources and uses of qardhul hasan funds are financial statements that reflect Bank's role as amanah holder in charity activities in separate operation.
Statements of sources and used of zakah, infaq and shadaqah funds are statement that show the sources of zakah, infaq and Shadaqah funds, its uses and the period. They also show the sources of zakah, infaq and shadaqah fund that have not been distributed on certain dates.
Restricted investments represent investments from restricted investment owners, which are managed by the Bank as the investment agent based on the principles of mudharabah muqayyadah. Restricted investments are neither assets nor liabilities of the Bank, since the Bank is not entitled to use or withdraw the investments and Bank has no obligation of returning the investments and does not share the risk involved in the investment. The Bank receives a profit based on the investment gain ratio. Undistributed funds would be recognized in current liabilities account. The Bank started to manage restricted investments in 2003.
Zakah is some of the wealth that must be taken out by Muzak (the zakah payer) to give to mustahiq (the zakah receiver). The sources of zakah, infaq, shadaqah funds are from Bank and other parties received by Bank to be distributed to the people who have the right. The uses of zakah, infaq and shadaqah funds are in the form of the distribution to the people who have the right based on the sharia principles.
The Bank does not directly operate the function of management of zakah, infaq and shadaqah funds, and also the Qardhul Hasan funds.
Since 2002 the Bank has distributed zakah, through zakah management Bank (Lembaga Amil Zakat (LAZ) BSM Ummat.
Effectively on January 1, 2005, Bank has made statements of sources and uses of zakah, infaq and shadaqah funds and sources and uses of qardhul hasan funds.
b. Transactions with Related Parties
In its normal course of business, the Bank entered into transactions with related parties as defined under PSAK No. 7, "Related Party Disclosures".
All significant transactions with related parties, whether or not made at terms and conditions similar to those granted to third parties, are disclosed in the notes herein. Transactions with state-and region-owned entities are not disclosed as transactions with related parties.
c. Allowance for Possible Losses on Earning Assets non Earning Assets and Estim ated Losses on Com m itment and Contingencies.
1) Productive Assets its placements of Bank funds in rupiah and foreign currency to get income in financing, Sharia Bonds, Placements capital investment, temporary capital investment, commitment and contingency in transaction of administrative accounts and Bank Indonesia Wadiah Certificate and capitals funds that could be equaled.
Financing is Placements Fund or bill which equaled with: a) Sharing transaction in Mudharabah and Musyarakah;
b) Leasing transaction in Ijarah or buy Rent in Ijarah muntahiyah bittamlik; c) Trading transaction in Murabahah receivable, Salaam, Istishna;
d) Land transaction in Qardh receivable; and
e) Leasing services transaction in Ijarah for multi service transaction
based on agreement between Bank Sharia and/or UUS and other party who appoint the lessor to return fund after period determined in condition with or without ujroh financial return and profit sharing.
The guidelines in determining the allowance for possible losses on earning assets are as follows:
a) General reserve of at least 1% of earning assets classified as current, excluding Bank Indonesia W adiah Certificates and Government Bonds based on the principles of sharia, and also on the portion of earning assets guaranteed by government guarantee and cash collateral in the form of current accounts, saving accounts, deposits, guarantee deposits, and/or gold and all accompanied with letter stating the power of attorney for to cash the collateral.
b) Special reserve, at a minimum of:
(1) 5% of earning assets classified as Special Mention less collateral value; and (2) 15% of earning assets classified as Substandard less collateral value; and (3) 50% of earning assets classified as Doubtful less collateral value; and (4) 100% of earning assets classified as Loss less collateral value.
c) The obligation to reserve allowance for possible losses does not apply for earning assets for lease transactions which include transfer of title, such as the contracts of ijarah or ijarah muthahiyah bittamlik. Bank must provide depreciation/amortization of the assets of ijarah muntahiyah bittamlik (Note 2.k.).
The outstanding balance of earning assets is written off against the respective allowance for possible losses when the management believes that the assets are determined to be definitely uncollectible. Recovery of earning assets for previously written off is credited to allowance for possible losses in the period they were recovered.
Based on Bank Indonesia Regulation No. 9/9/PBI/2007 concerning the revision on Bank Indonesia Regulation No. 8/21/PBI/2006 concerning the Assets Quality Evaluation of Commercial Bank that Conducts its Business Based on the Principles of Sharia, the administrative account transaction quality and financing are classified into 5 (five) categories, namely current, special mention, substandard, doubtful and loss. Meanwhile, the quality of securities and placements with banks are classified into 3 (three) categories, they are current, substandard and loss; and the quality of equity deposit is classified into 4 (four) categories, namely current, substandard, doubtful and loss.
2) Non earning assets represent Bank assets excluding earning assets which have potential loss such as foreclosed assets, unused property, inter-branches account, suspense account and inventories.
a) Foreclosed asset is asset acquired through auction or non auction based on voluntary submission by owner or authority to sell the assets guaranteed through non auction in term of debtors default in repaying debt to Bank.
The Bank is required to reevaluate the foreclosed asset to determine net realizable value of the asset acquired in the acquisition. Bank appointed independent appraisal to reevaluate the foreclosed asset in the amount of Rp 5,000,000,000 (five billion) or more. While foreclosed asset below Rp 5,000,000,000 (five billion) is reevaluated by internal appraisal.
The Bank is required to use the lowest price if there are several values proposed the by independent or internal appraisal.
The quality of completed foreclosed asset is determined as: - Current, if acquired in 1 (one) year;
- Substandard, if acquired more than 1 (one) year to 3 (three) years; - Doubtful, if acquired more than 3 (three) years to 5 (five) years; - Loss, if acquired more than 5 (five) years.
The quality of un-completed foreclosed asset is determined to be one level below the regulation.
Foreclosed asset related to completion of financing (presented as other asset) is recognized based on net realizable value. Net realizable value is fair value net of estimated disposal expense. Difference net realizable value and balance of uncollectible receivables or financing is recognized as addition or deduction of allowance for possible losses on between receivables or financing.
b) Unused Property
The Bank required to identify and determine unused property and receive the directors approval and document it.
The Bank is required to conduct completion on unused property and prepare documentation for the completion.
The quality of completed unused property is determined as: - Current, acquired in 1(one) year;
- Substandard, acquired in 1 (one) year to 3 (three) years; - Doubtful, acquired in 3 (three) years to 5 (five) years; - Losses, acquired in more than 5 (five) years.
Quality of uncompleted unused inventories is determined to be one level below the regulation.
c) Inter branch account is claim arising from an inter branch transaction that is uncompleted in determined period.
The quality of inter branch account is determined as: - Current, recorded in period of 180 days.
- Loss, recorded in more than 180 days.
d) Suspense Account represents unidentified transaction or transaction that are not recorded with proper documentation and are not reclassified in the required account.
Bank is required to complete suspense accounts.
The quality of Suspense Account is determined as: - Current, recorded in period of 180 days. - Loss, recorded in more than 180 days.
e) Inventory is a temporary account for non cash asset before submitted to debtors in transaction based on Murabahah, Salam and Istishna.
The Bank is required to identify and determined inventories as receive to the directors approval and document it.
The Bank is required to complete and docum ent the inventories.
The quality of completed inventories is determined as: - Current, acquired in 1(one) year;
- Substandard, acquired in 1 (one) year to 3 (three) years; - Doubtful, acquired in 3 (three) years to 5 (five) years; - Losses, acquired in more than 5 (five) years.
Quality of uncompleted inventories is determined to be one level below the regulation.
3) Administrative account is commitment and contingencies (off balance sheet) based on sharia principle including current bank guarantee, acceptance/endorsement, irrevocable letter of credit, import based on timely LC, standby LC and other guarantees in accordance with sharia principle.
Commitment and contingencies bearing credit risks consist of outstanding irrevocable letters of credit and bank guarantees. Provision for possible losses on commitments and contingencies is recorded under “Estimated Losses on Commitment and Contingencies”.
d. Placem ents with Bank Indonesia
e. Current Accounts with Other Banks
Current accounts with other banks are stated at their outstanding balance net of allowance for possible losses. Bonuses received from Sharia banks are recognized as other operating income. Interest on current accounts placed with conventional banks are not recognized as the Bank's income but are recorded as part of the charity fund (Qardhul Hasan).
f. Placem ents with Other Banks
Placements with other banks represent placements in the form of mudharabah time deposits and mudharabah investments and other placements based on sharia principles in other sharia banks. Placements with other banks are stated at their outstanding balance net of allowance for possible losses.
g. Securities
Sharia securities is the proof of investment under the sharia principles commonly traded in money market, such as sharia bonds, sharia mutual funds certificates and other securities based on sharia principles.
Securities are classified based on management intention at the purchasing date in accordance with PSAK No. 50 (Revision of 2001) on "Accounting for Certain Investments in Securities", on the following classifications:
1) Held to maturity securities are stated at cost. Any permanent decline in the value of the security is charged to current operations.
2) Available for sale securities are stated at fair values. Unrealized gains (losses) from the increase or decrease in fair values are not recognized in the current year's profit and loss but are presented as a separated component of stockholder's equity. Gains or losses are recognized in profit and loss upon realization.
Sharia mutual fund units are stated at their fair values, which represent the net asset value of the mutual fund units as of balance sheet date.
Export bills represent prepayments made to other parties in connection with the export and import transactions of customers. Export bills are stated at their outstanding balance.
Allowance for possible losses is deducted from the related securities account.
h. Receivables
Receivables represent claims arising from the sale and purchase and/or leasing transactions conducted on the basis of Murabahah, Istishna, and/or Ijarah contracts.
Istishna is a purchase agreement between an al-mustashni (buyer) and an as-shani (manufacturer acting as the seller). Based on the contract, the buyer orders the manufacturer to make or to supply al-mashnu (goods ordered) to the specifications required by the buyer at an agreed price. Istishna receivables are presented based on the outstanding billings less allowance for possible losses. In a istishna transaction, the Bank acts as the fund provider.
Ijarah is a lease contract between muajjir (lessor) and musta'jir (lessee) on ma'jur (object of lease) to earn a return on the object. An ijarah muntahiyah bit tamlik is a leasing agreement between a lessor and a lessee in order to earn a gain on the object, which includes an option to transfer the ownership title of the object after a specified period of time in accordance with the lease contract.
The transfer of title of the lease object to the lessee in an ijarah muntahiyah bit tamlik may be made by:
(i) a grant;
(ii) sale prior to the end of the contract for an amount equivalent to the remaining lease installments;
(iii) sale prior to the end of the contract at a specified amount as agreed at the inception of the contract, and
(iv) gradual sale at a specific price as agreed in the contract.
Ijarah income receivable is recognized when the ijarah installment becomes due. Ijarah income receivable is stated at its net realizable value, which is the outstanding balance of the receivable less allowance for possible losses.
The Bank provides allowance for possible losses based on the quality of each receivable balance.
i. Financing
Mudharabah financing is a commercial cooperation contract between the Bank as the owner of funds (shahibul maal) and the customer as a fund manager (m udharib) to conduct certain project, by implying profit sharing and net revenue sharing method. The profit arising from the project is distributed based on a predetermined ratio.
Mudharabah financing is stated at the outstanding balance of financing less allowance for possible losses. Allowance for possible losses is provided based on the quality of the financing based on the review on each individual account.
Musyarakah financing is a partnership contract between the fund-owners (musyarakah partners) in contributing funds and conducting business through partnership. All parties share profits based on a predetermined ratio, while the loss will be distributed proportionally based on capital contribution.
Permanent musyarakah financing refer to a condition in which the fund portion of each partner is made explicit in the contract and shall stay the same until the contract expires.
Declining musyarakah financing (musyarakah mutanaqisha) refers to condition in which the fund portion of one partner will the transferred in several stage to the other partner, resulting the declining of fund portion and, when the contract expires, making the other partner the full owner of the business.
Musyarakah financing is stated at the outstanding balance of the financing less allowance for possible losses. The Bank provides allowance for possible losses based on the quality of the financing based on the review on each individual balance.
j. Qardh
Qardh represents provision of funds or similar claims based on an agreement or contract between the borrower and the lender, wherein the borrower should pay the loan after a specified period of time. The lender may receive some fee, however, this may not be stated in the agreement. The fee is recognized upon receipt.
Qardh includes hiwalah and rahn.
Hiwalah is the assignment of customer's debts and/or receivables to the Bank. The Bank will obtain a fee (ujroh) from this transaction, which is recognized upon receipt.
Rahn represents the exchange of goods or assets owned by the customer for an equivalent amount of money. Assets or goods pawned are appraised based on market value, reduced by a certain percentage. The Bank will obtain a fee (ujroh) from this transaction, which is recognized upon receipt.
Qardh is recognized in the amount lent at the transaction date. Any excess amount paid by the borrower in repaying a qardh is recognized as revenue upon receipt.
Qardh is stated at its outstanding balance less allowance for possible losses.
k. Ijarah Assets
Ijarah assets represent assets which are objects of lease (ijarah) transactions and are recognized in the balance sheet at the acquisition cost less accumulated depreciation. The assets in an ijarah transaction are depreciated based on the depreciation policy for similar assets, while in an ijarah muntahiyah bit tamlik transactions, the asset for lease is depreciated over the lease period.
l. Istishna Assets in Completion
Istishna assets in completion are istishna assets which are still in process. If the completion of payment is done simultaneously with the process of making istishna asset, then:
1) Deferred expense that is paid prior to the contract is recognized as istishna asset in progress when the contract is signed.
2) Istishna expense is recognized as istishna asset in progress when it is done.
3) Parallel istishna expense is recognized as istishna asset in progress when the bill is received from sub contractor as much the amount of bill.
m . Prem ises and Equipment
Premises and equipment are stated at cost less accumulated depreciation, except for landrights and buildings, which were revalued in accordance with government regulation in 1998. Depreciation is computed using the straight -line method based on the estimated useful lives of the assets as follows:
Years
Buildings 20
Installations, office equipment and vehicles 4 - 5
The cost of repairs and maintenance is charged to operations as incurred; significant renewals and betterments are capitalized. W hen assets are retired or otherwise disposed of, their cost and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to current operations.
In accordance with PSAK No. 47, "Accounting for Land", acquisition of land after January 1, 1999 is stated at cost and is not depreciated. Significant expenses incurred in the acquisition or renewal of the land rights are deferred and amortized over the terms of the landrights or their useful lives, whichever is shorter.
The Bank conducts a review at the end of the year to determine whether there are indications of asset impairment in accordance with PSAK No. 48 on "Accounting for Impairment of Asset Value". If there are any indications of impairment, the Bank should compute the estimated recoverable amount of all of it assets and determine if there is a decrease in the value of the asset and recognize an impairment loss to current year operations.
n. Prepaid Expenses
Prepaid expenses (recorded under "Other Assets" account) are amortized over their expected beneficial periods using the straight-line method.
o. Deferred Income and Expenses
p. Current Liabilities
Current liabilities represent obligations to third parties, based on a contract or an order by those having authority that have to be settled immediately. Current liabilities are stated at the amount of the Bank's liability.
q. W adiah Deposits
W adiah deposits represent other parties' funds in the form of demand deposits and savings deposits. Demand deposits can be used as payment instrum ents, and are available for withdrawal at any time through check, automatic teller machines and other methods available. Demand deposits and savings deposits may earn bonus based on Bank's policy. W adiah deposits in that forms are stated at the amount entrusted by depositors.
r. Deposits from Other Banks
Deposits from other banks represent liabilities to other banks in the form of wadiah demand deposits, wadiah saving deposits and Interbank Mudharabah Investment Certificate. Deposits from other banks are stated at the amounts payable to other banks.
s. Securities Issued
Securities issued are stated at their nominal value. Costs incurred in the issuance of these securities were charged to expense in the period they were incurred.
t. Tem porary Syirkah Funds
Temporary Syirkah Funds represent investment that received by sharia entity which have right to manage and invested funds, accordance to sharia entity policy or bearing regulation from owners of the funds, with profit sharing based on agreement; but less in temporary syirkah funds is caused by normal losses which not from fraud, careless or dispute agreement, sharia entity doesn’t have any liability to redeem this fund. The example of temporary syirkah fund are receive fund from mudharabah muthlaqah, mudharabah muqayyadah, mudharabah musyarakah investment and other similar account.
1) Mudharabah mutlaqah represents mudharabah financing in which the fund owner (Shahibul maal) grants freedom to fund manager (m udharib Bank) in managing its investment.
2) Mudharabah muqayyadah represents mudharabah financing in which the fund owner sets restrictions against fund manager regarding, among other, the place, the means and the object of investment.
3) Mudharabah musyarakah represents mudharabah financing in which fund manager submits its capital or fund in the investment.
The relation between sharia entity and the owner of temporary syirkah fund represent partnership based on mudharabah muthlaqah, mudharabah muqayyadah or musyarakah.
agreement. Sharia entity have right to manage and investing received fund with or without bearing such as place, way or object of investment.
Temporary syirkah fund is one of the balance sheet part which accordance with sharia principle that give right to sharia entity to manage and invest fund, including to mixing this fund with the other fund.
The owner of temporary syirkah funds receive a part of profit accordance to agreement and receive loss based on total funds of each party. Profit sharing of temporary syirkah fund could be revenue sharing or gain sharing concept.
u. Bank’s Revenue from Fund Managem ent as Mudharib
Bank’s revenue from fund management as Mudharib consist of income from Murabahah and Istishna transaction, income from profit sharing of Mudharabah and Musyarakah financing, income from Ijarah Muntahiyah Bittamlik (leasing) and other.
Revenue from Murabahah is recognized upon delivery of goods if payment is in cash or deferred, so the recognition of principle and revenue has done proportionally based on generally bank accounting practice (vide: Bank Indonesia Letter No. 10/1260/DPbS dated October 15, 2008 and Bank Indonesia Letter No.9/634/DPbS dated April 20, 2007).
In relation with the rate of mudharabah receivable risk, the Bank established policy on murabahah revenue recognition as follow:
1) For murabahah with arrear payment 1 (one) year or less (without connected with cash collectibility risk from receivable (doubtful account) and receivable management expense and collectibility, revenue is recognized using effective (annuity) method based on term. 2) For murabahah with arrear payment more than 1 (one) year which cash collectibility risk from receivable (doubtful account) and or receivable management expense and small collectibility, revenue is recognized based on effective (annuity) method.
3) For arrear murabahah more than 1 (one) year which uncollected receivable risk and or receivable management expense and big collectibility, revenue is recognized proportionally or use proportional method based on agreement period.
4) For arrear murabahah more than 1 (one) year which cash collectibility risk from receivable (doubtful account) and or receivable management expense and big collectibility, revenue is recognized when all of the receivables collected.
The Bank determine risk policy based on internal regulation.
Revenue from ijarah is recognized proportionally during the agreement period.
Revenue from musyarakah distributed to active partner is recognized in accordance with the agreement on musyarakah revenue. While revenue distributed to passive partner is recognized as right of passive partner on revenue sharing and liability.
v. Other Main Operating Incom e
Other main operating income consists of income derived from Bank Indonesia Sharia Certificates, placements with other sharia banks and profit sharing from sharia securities. Other main operating income is recognized upon collection (cash basis).
w. Third Parties' Share on Returns of Tem porary Syirkah Funds
The share of third parties in the returns of temporary syirkah funds represent the share of third parties in the revenues of the Bank derived from the management of such funds, which is based on mudharabah mutlaqah principles. The income that is shared is income collected (cash basis).
The Bank uses revenue sharing as a means of distributing profits to fund owners.
Margin income and profit sharing on financing facilities and other earning assets for distribution to fund owners and the Bank are computed proportionally based on the fund participation of fund owners and the Bank which was used in the channeling of financing facilities and other earning assets. Margin income and profit allocated to the fund owners are distributed to fund owners as shahibul maal and the Bank as mudharib based on a predetermined ratio. Margin income and profit sharing from financing facilities and other earning assets using the Bank's funds, are entirely for the Bank, including income from the Bank's fee-based transactions.
x. Sources and Uses of Zakah, Infaq and Shadaqah Fund and Qardhul Hasan Fund The management of sources and uses of zakah, infaq and shadaqah fund, and qardhul hasan fund is delegated to Zakah Management Board (Lembaga Amil Zakat) of Bank Syariah Mandiri Ummat and the Bank does not require reports on the result of the management of the fund.
y. Fee and Com m ission Incom e
Fee and commission income, which are directly related to financing activities or loans, are recognized as income at the transaction date.
z. Pension Plan and Em ployee Benefits
P e n s i o n P l a n
E m p l o y e e s B e n e f i t s P l a n
The Bank recorded employee service entitlements as stipulated under the Indonesian Law No.13/2003 (the labor law). In accordance with PSAK 24 (revised 2004), the Projected Unit Credit Method has been adopted to determine the employee benefits and past service costs. The statement has changed the accounting standard.
Based on PSAK 24 (revised 2004), the employee service entitlements would be immediately recognized, except for actuarial gains (losses) and non-vested cost. The accumulated difference between actuarial gains (losses), being more than 10% from the present value would be amortized over the average remaining service. But, the actuarial gains (losses) arising from service provided by an active employee after retirement would immediately be recognized.
aa. Transactions and Balances in Foreign Currencies
Transactions in foreign currencies are recorded in Rupiah based on the rates of exchange prevailing at the time the transactions are made. A contract to trade one currency with another is named Sharf. As of December 31, 2008 and 2007, monetary assets and liabilities in foreign currencies are translated into Rupiah based on Reuter's published spot rate at 16.00 pm (west Indonesian local time) at that date, as follows (in full amount):
2008 2007
Rp Rp
Euro 1 15,356 13,822
United States Dollar 1 10,900 9,393
Australian Dollar 1 7,554 8,266
Singapore Dollar 1 7,588 6,533
Saudi Arabia Riyal 1 2,856 2,504
Japanese Yen 1 121 84
The resulting gains or losses are credited or charged to current operations.
Foreign currency transactions of the Sharia bank (excluding bank notes) can be conducted for purpose of hedging only. The bank is not allowed to enter foreign currency transactions for speculative purposes. The difference between the agreed rate in the contract and the cash rate (mark to market) at the date of delivery is recognized as gain or loss at the time of delivery or withdrawal of the fund.
ab. Segment Inform ation
ac. Income Tax
The Bank applies the liabilities method to determine its income tax expense. Under the liability method, deferred tax assets and liabilities are recognized for temporary differences between the financial and the tax bases of assets and liabilities at each reporting date. This method also requires the recognition of future tax benefits, to the extent that realization of such benefits is probable.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the assets are realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
Amendments to tax obligations are recorded when an assessment is received or, if appealed against by the Bank, when the result of the appeal is determined.
ad. Basic Earning Per Share
Basic earning per share is calculated by dividing the income for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. The weighted average number of ordinary shares outstanding is 111,648,713 and 71,674,513 (full amount) shares as of December 31, 2008 and 2007 respectively.
ae. Use of Estim ates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimations and assumptions that affect amounts reported therein. Due to inherent uncertainty in making estimates, actual results reported in future periods might be based on amounts, which differ from those estimated.
3. PLACEMENT W ITH BANK INDONESIA
2008 2007
Rp Rp
W adiah current account
Rupiah 800,835,705 688,423,903
United States Dollar 14,170,000 23,482,500
Total wadiah current account 815,005,705 711,906,403
Bank Indonesia Sharia Certificates 1,305,000,000 670,000,000
In accordance with Bank Indonesia Regulation No.6/21/PBI/2004 dated August 3, 2004 and Bank Indonesia Regulation No. 8/23/PBI/2006 dated October 5, 2006, which was amended through Bank Indonesia Regulation No.10/23/PBI/2008 dated October 16, 2008, every bank has to maintain Statutory Reserves equivalent to 5% and 1% of its rupiah denominated third-party deposits and foreign currency denominated third-party deposits. Besides to fulfill that regulation, the bank with liquidity to deposits ratio less than 80% and:
(i) having third party deposits of more than Rp 1 trillion up to Rp 10 trillion has to maintain additional statutory reserves of 1% of its rupiah denominated third-party deposits;
(ii) having third-party deposits of m ore than Rp 10 trillion up to Rp 50 trillion has to maintain additional statutory reserves of 2% of its rupiah denominated third-party deposits;
(iii) having third-party deposits of more than Rp 50 trillion has to maintain additional statutory reserves of 3% of its rupiah denominated third-party deposits.
Complying with Article 3 item (2) of Bank Indonesia regulation No. 6/21/PBI/2004 dated August 3, 2003, the Bank’s statutory reserves denominated in Rupiah as of December 31, 2008 and 2007 are 5.61% and 6.62% respectively. Meanwhile, statutory reserves denominated in United States Dollars as of December 31, 2008 and 2007 are 1.95% and 3.84% respectively.
Bank Indonesia Sharia Certificates received annual bonus at rates ranging from the equivalent of 5.95% to 11.42% in 2008 and equivalent of 4.72% to 7.83% in 2007, which is computed at the maturity date. The maturity date of Bank Indonesia Syariah Certificates ranged from 7 to 28 days.
4. CURRENT ACCOUNTS W ITH OTHER BANKS
2008 2007
Rp Rp
a. Third parties Rupiah
PT Bank Bukopin Tbk - Sharia Business Unit -- 4,317
PT Bank Negara Indonesia (Persero) Tbk
Sharia Business Unit 46,615,887
Saudi Arabia Riyal
Al Rajhi Banking & Investment 517,577 446,006
United States Dollar
PT Bank Negara Indonesia (Persero) Tbk
Sharia Business Unit 82,864,987
--Al Rajhi Banking & Investment 46,572 40,133
2008 2007
Rp Rp
Conventional Bank Rupiah
PT Bank Pembangunan Daerah Aceh 43,269 162,611
PT Bank Negara Indonesia (Persero) Tbk 1,192,976 500,242
PT Bank Central Asia Tbk (ATM Prima) 2,252,164 2,626,748
PT Bank Pembangunan Daerah Jawa Tengah 1,993 990
United States Dollar
W achovia Bank N.A. 2,097,472 7,323,819
Citibank N.A., New York 1,465,531 23,326,134
PT Bank Central Asia Tbk - Jakarta 85,756,253 6,714,087
Singapore Dollar
United Overseas Bank 1,960,572 1,174,478
Euro
Dresdner Bank AG 13,002,704 4,690,555
Australian Dollar
Australian and New Zealand Bank 1,314,383 546,684
Japanese Yen
Sumitomo Mitsui Banking 6,550,250 381,140
Total 115,637,567 47,447,488
Total third-party 245,682,590 47,937,944
b. Related parties
Total conventional bank 175,753,479 117,970,556
Total of current account with other banks 305,798,502 118,461,012
Allowance for possible losses (3,057,985) (4,905)
Net 302,740,517 118,456,107
The movement of allowance for possible losses for current accounts with other banks is as follows:
2 008 2 00 7
Fo reig n Fo reig n
R upiah Currency Total R upiah Currency Total
Balance at beginning
of year 43 4,862 4,905 -- 4,659 4,659
Provision (reversal)
during the year 1,034,400 2,017,900 3,052,300 43 43
Translation differences -- 780 780 -- 203 203
B alance at end of
Based on the management's review and evaluation of the collectibility of its current accounts with other banks as of December 31, 2008 and 2007, all current accounts with other banks were classified as current. Management believes that the allowance established is adequate to cover possible losses on uncollectible current accounts with other banks and is in compliance with Bank Indonesia regulations.
All interest income received from current account with other Banks which are not brought in 2008 and 2007 amounting Rp 1,234,582 and Rp 698,186 respectively, are recorded as charity fund (Note 14).
5. PLACEMENTS W ITH OTHER BANKS
2008 2007
Rp Rp
Rupiah Time deposits
PT Bank Syariah Muamalat Indonesia Tbk -- 10,000,000
PT Bank Tabungan Negara (Persero) -
Sharia Business Unit 30,000,000
--Mudharabah investments
PT Bank Syariah Mega Indonesia -- 20,000,000
United States Dollar Time deposits
PT Bank Syariah Muamalat Indonesia Tbk -- 28,179,000
Mudharabah investments
PT Bank DKI - Sharia Business Unit 64,811,700
OCBC Singapore -- 61,054,500
Total 30,000,000 184,045,200
Allowance for possible losses (300,000) (3,297,194)
Net 29,700,000 180,748,006
The annual profit sharing rates for mudharabah investments in Rupiah and United States Dollars were at the equivalent of 7.35% in 2008 and 4.60%.
Placements with other banks based on maturity before deducted by allowance for possible losses are
Less than 1 m onth -- 30,000,000 30,000,000 145,866,200 10,000,000 155,866,200
1 - 3 m onths -- -- -- -- 28,179,000 28,179,000
T otal -- 3 0 ,0 0 0,0 0 0 3 0 ,0 0 0,0 0 0 1 4 5,8 6 6,2 0 0 3 8 ,1 7 9,0 0 0 1 8 4,0 4 5,2 0 0
The movement of allowance for possible losses on placements with other banks is as follows:
2 0 08 2 0 07 U n ite d U n ite d S ta te s S ta te s
R u p ia h D o lla r T o ta l R u p ia h D o lla r T o ta l
Balance at beginning of year 1,272,876 2,024,318 3,297,194 969,894 450,150 1,420,044
Provision (reversa l of allo w a nce ) d urin g th e
year (972,876) (2,349,096) (3,321,972) 302,983 1,555,380 1,858,363
Translation differences -- 324,778 324,778 -- 18,787 18,787
B a lan ce at en d o f ye ar 3 0 0,0 0 0 -- 3 0 0,0 0 0 1 ,2 7 2,8 7 7 2 ,0 2 4,3 1 7 3 ,2 9 7,1 9 4
Based on the management's review and evaluation of the collectibility of its placements with other banks as of December 31, 2008 and 2007, all placements with other banks were classified as current. Management believes that the allowance established is adequate to cover possible losses on uncollectible placements with other banks and is in compliance with Bank Indonesia regulations.
6. INVESTM ENT IN SECURITIES
Sharia obligation 986,120,810 -- 986,120,810 776,360,323 -- 776,360,323
L/C im port usa nce 277,000,000 -- 277,000,000 -- --
Export bills -- 1,975,702 1,975,702 -- 4,083,747 4,083,747
1,263,120,810 1,975,702 1,265,096,512 776,360,323 4,083,747 780,444,070
Total 1,271,886,306 1,975,702 1,273,862,009 782,360,323 4,083,747 786,444,070
Allow ance for possible
losses (12,718,863) (19,757) (12,738,620) (7,823,603) (211,094) (8,034,697)
b. Based on issuer
PT Indosat (Persero) Tbk PT Pefindo idAA + 168,959,348 PT Pefindo -- 108,122,000
PT Perkebunan Nusantara (Persero) III PT Pefindo idA 80,220,235 PT Pefindo -- 80,000,000
PT Apexindo Pratam a Duta PT Pefindo idA- 78,887,538 PT Pefindo -- 77,866,538
PT Perusahaan Listrik Negara PT Pefindo idA 65,000,000 PT Pefindo -- 65,000,000
PT Berlian Laju Tanker Tbk PT Pefindo idAA - 47,128,366 PT Pefindo -- 55,998,642
PT Pem bangunan Perum ahan (Persero) PT Pefindo idBBB- 50,000,000 PT Pefindo -- 50,000,000
PT Citra Sari M akm ur -- A - -- PT M oody’s
Indonesia
--45,459,333
PT Hum puss A+ 41,291,528 -- -- 44,057,528
PT CSM Corporatam a PT Pefindo A- 42,165,879 PT Pefindo -- 43,973,879
PT Perkebunan Nusantara (Persero) VII PT Pefindo idA 40,070,516 PT Pefindo -- 40,352,579
PT Berlina PT M oody’s
In donesia
BBB+ 33,544,837 PT M oody’s
Indonesia
--33,544,837
PT M atahari Putra Prim a Tbk PT Pefindo idA+ 32,570,856 PT Pefindo -- 32,801,967
PT Sona Topaz Tourism PT Pefindo A+ 31,097,208 PT Pefindo -- 31,291,625
PT Adhi Karya (Persero) PT Pefindo idA- 32,027,000 PT Pefindo -- 30,000,000
PT Bank Syariah M uam alat In donesia Tbk
PT Pefindo idBBB 30,000,000
PT Pefindo
--23,726,184
PT Bank Bukopin Tbk -- idA- -- PT Pefindo -- 14,165,211
PT Ricky Putra Glo balindo PT M oody’s
In donesia
Total allow ance for possible losses (12,738,620) (8,034,697)
N e t 1 ,2 6 1,1 2 3,3 8 9 7 7 8,4 0 9,3 7 3
The securities are listed in the Indonesia Stock Exchange.
In 2007 the Bank's management changed the policy concerning placements of bonds in the form of Sharia Bonds to Held to Maturity. Management believes that it is in accordance with the sharia principles and Bank's cautious principles.
Export bills have remaining term to maturity of less than 3 (three) months.
The movement of allowance for possible losses on securities is as follows:
2 0 08 2 0 07 U n ite d S tate s U n ite d S ta te s
R u p ia h D o lla r T o ta l R u p ia h D o lla r T o ta l
Balance at beginning
of year 7,823,603 211,094 8,034,697 4,882,708 139,602 5,022,310
Provision (reversa l of allow ance) during
the year 4,895,260 (225,205) 4,670,055 2,940,895 65,666 3,006,561
Translation differences -- 33,868 33,868 -- 5,826 5,826
B a lan ce at en d o f ye ar 1 2 ,7 1 8,8 6 3 1 9 ,75 7 1 2 ,7 3 8,6 2 0 7 ,8 2 3,6 0 3 2 1 1,0 9 4 8 ,0 3 4,6 9 7
Based on the management's review and evaluation of the collectibility of all its securities as of December 31, 2008 and 2007, all securities were classified as current. Management believes that the allowance established is adequate to cover possible losses on securities and is in compliance with Bank Indonesia regulations.
7. RECEIVABLES
The detail of receivables are as follows:
a. By type:
M urabahah 5,649,140,173 282,167,317 75,488,872 55,807,127 221,101,341 6,283,704,830
A llow ance for possible
losses (54,872,460) (12,355,647) (6,566,897) (10,095,931) (177,916,907) (261,807,842)
Net 5,594,267,713 269,811,670 68,921,975 45,711,196 43,184,434 6,021,896,988
Istishna 94,316,153 132,415 -- -- 47,312,243 141,760,811
A llow ance for possible
losses (942,358) (6,620) -- -- (4,151,601) (5,100,579)
Net 93,373,795 125,795 -- -- 43,160,642 136,660,232
Ijarah 2,118,580 15,896 -- -- -- 2,134,476
Net 2,118,580 15,896 -- -- -- 2,134,476
Total
Rupiah receivables 5,745,574,906 282,315,628 75,488,872 55,807,127 268,413,584 6,427,600,117
Total allow ance for
possible losses (55,814,818) (12,362,267) (6,566,897) (10,095,931) (182,068,508) (266,908,421)
To tal Ru piah receivables
2 0 08
C u rren t Sp ecial Su b sta n d ard D o u b tfu l Lo ss T o ta l R p R p R p R p R p R p
United States D ollar
M urabahah 499,077,462 11,488,275 -- -- 667,843 511,233,580
A llow ance for possible
losses (4,666,984) (121,982) -- -- (620,448) (5,409,414)
Net 494,410,478 11,366,293 -- -- 47,395 505,824,166
Total United States D ollar
receivables 499,077,462 11,488,275 -- -- 667,843 511,233,580
Total Allow ance for
possible losses (4,666,984) (121,982) -- -- (620,448) (5,409,414)
Total U nited States D ollar
receivables - Net 494,410,478 11,366,293 -- -- 47,395 505,824,166
Total receivables 6,244,652,368 293,803,903 75,488,872 55,807,127 269,081,427 6,938,833,697
Total allow ance for
possible losses (60,481,802) (12,484,249) (6,566,897) (10,095,931) (182,688,956) (272,317,835)
T o tal R ece ivab les -
M urabahah 4,177,834,228 450,585,918 62,397,503 139,579,880 104,603,955 4,935,001,484
A llow ance for possible
losses (41,778,342) (12,432,888) (5,360,173) (55,983,740) (56,339,565) (171,894,708)
Net 4,136,055,886 438,153,030 57,037,330 83,596,140 48,264,390 4,763,106,776
Istishna 69,698,487 47,462,242 -- -- -- 117,160,729
A llow ance for possible
losses (696,969) (50,499) -- -- -- (747,468)
Net 69,001,518 47,411,743 -- -- -- 116,413,261
Ijarah 2,405,395 15,896 -- -- -- 2,421,291
Net 2,405,395 15,896 -- -- -- 2,421,291
Total receivables Rupiah 4,249,938,110 498,064,056 62,397,503 139,579,880 104,603,955 5,054,583,504
Total allow ance for
possible losses (42,475,311) (12,483,387) (5,360,173) (55,983,740) (56,339,565) (172,642,176)
Total receivables Rupiah
- Net 4,207,462,799 485,580,669 57,037,330 83,596,140 48,264,390 4,881,941,328
United States D ollar
M urabahah 199,903,197 1,841,727 -- 37,595,903 5,990,994 245,331,821
A llow ance for possible
losses (1,950,780) 15 -- (3,739,174) (2,113,119) (7,803,058)
2 0 07
States D ollar 200,088,703 1,841,727 -- 37,595,903 5,990,994 245,517,327
Total allow ance for
possible losses (1,952,605) 15 -- (3,739,174) (2,113,119) (7,804,883)
Total receivables United
States D ollar - Net 198,136,098 1,841,742 -- 33,856,729 3,877,875 237,712,444
Total receivables 4,450,026,813 499,905,783 62,397,503 177,175,783 110,594,949 5,300,100,831
Total allow ance for
possible losses (44,427,916) (12,483,372) (5,360,173) (59,722,914) (58,452,684) (180,447,059)
To tal R eceivables
-Social services 433,430,105 11,788,023 979,782 347,625 1,946,301 448,491,836
A llow ance for possible
losses (4,271,378) (578,667) (146,967) (173,812) (1,589,428) (6,760,252)
Net 429,158,727 11,209,356 832,815 173,813 356,873 441,731,584
Business service 951,792,063 14,120,648 16,112,261 9,962,932 8,016,693 1,000,004,596
A llow ance for possible
losses (9,454,537) (361,279) (850,463) (4,881,610) (5,200,881) (20,748,770)
Net 942,337,526 13,759,369 15,261,798 5,081,321 2,815,812 979,255,825
Transportation 327,508,235 60,071,081 39,502,648 11,284 13,753,047 440,846,295
A llow ance for possible
losses (3,235,329) (2,449,392) (3,493,916) (5,642) (3,304,949) (12,489,227)
Net 324,272,906 57,621,689 36,008,732 5,642 10,448,098 428,357,068
Trading 602,120,912 41,016,092 7,160,530 4,353,482 83,618,952 738,269,966
A llow ance for possible
losses (5,947,957) (1,871,012) (520,011) (1,353,530) (68,746,545) (78,439,055)
Net 596,172,955 39,145,080 6,640,519 2,999,952 14,872,407 659,830,913
Constructions 1,077,297,089 41,496,281 405,052 2,000,000 2,780,011 1,123,978,434
A llow ance for possible
losses (10,140,447) (2,068,071) (60,758) (438,588) (2,537,096) (15,244,960)
Net 1,067,156,642 39,428,210 344,294 1,561,412 242,915 1,108,733,474
M anufacturing 292,054,219 6,855,594 564,402 33,854,008 146,653,547 479,981,770
A llow ance for possible
losses (2,914,124) (339,444) (16,140) (1,046,038) (91,825,844) (96,141,591)
2 0 08 C u rre n t
S p e cia l
m en tio n Su b sta n d ard D o u b tfu l Lo ss T o ta l R p R p R p R p R p R p
M ining 181,691,992 7,610,031 2,263,801 339,658 209,725 192,115,208
A llow ance for possible
losses (1,269,247) (162,448) (284,434) (169,829) (2,945) (1,888,902)
Net 180,422,745 7,447,583 1,979,367 169,829 206,780 190,226,305
Agriculture 505,150,110 54,961,590 1,567,718 992,560 603,875 563,275,852
A llow ance for possible
losses (5,013,665) (2,571,767) (204,167) (399,301) (399,203) (8,588,103)
Net 500,136,445 52,389,823 1,363,550 593,259 204,672 554,687,748
Gas and electricity 65,543,936 600,811 -- -- -- 66,144,747
A llow ance for possible
losses (655,438) (27,218) -- -- -- (682,656)
Net 64,888,498 573,593 -- -- -- 65,462,091
O thers 1,308,986,245 43,795,476 6,932,677 3,945,579 10,831,433 1,374,491,410
A llow ance for possible
losses (12,912,696) (1,932,968) (990,041) (1,627,581) (8,461,617) (25,924,903)
Net 1,296,073,549 41,862,508 5,942,636 2,317,998 2,369,816 1,348,566,507
Total receivables Rupiah 5,745,574,906 282,315,627 75,488,872 55,807,127 268,413,584 6,427,600,117
Total allow ance for
possible losses (55,814,818) (12,362,266) (6,566,897) (10,095,931) (182,068,508) (266,908,421)
T ota l re ce iva ble s R u pia h
-Net 5,689,760,088 269,953,361 68,921,976 45,711,196 86,345,076 6,160,691,696
U nited States D ollar
Business service 62,304,765 -- -- -- 667,843 62,972,608
A llow ance for possible
losses (606,676) -- -- -- (620,448) (1,227,124)
Net 61,698,089 -- -- -- 47,395 61,745,485
M ining 257,768 11,149,811 -- -- -- 11,407,579
A llow ance for possible
losses (2,578) (105,059) -- -- -- (107,637)
Net 255,190 11,044,752 -- -- -- 11,299,942
Transportation 179,894,082 -- -- -- -- 179,894,082
A llow ance for possible
losses (1,779,746) -- -- -- -- (1,779,746)
Net 178,114,336 -- -- -- -- 178,114,335
Trading 12,183,722 -- -- -- -- 12,183,722
A llow ance for possible
losses (121,764) -- -- -- -- (121,764)
Net 12,061,958 -- -- -- -- 12,061,958
Construction 56,732,387 -- -- -- -- 56,732,387
A llow ance for possible
losses (349,323) -- -- -- -- (349,323)
Net 56,383,064 -- -- -- -- 56,383,064
Gas and Electricity 179,765,434 -- -- -- -- 179,765,434
A llow ance for possible
losses (1,727,504) -- -- -- -- (1,727,504)
