2002 Q3 Analysts Meeting

(1)

PT Bank Mandiri (

Persero

)

Q3 2002 Results

(2)

1

Table of contents

Bank Mandiri At A Glance

Q3 2002 Results &

(3)

Dominant market position

¾ Largest bank in terms of assets, loans and deposits ¾ Strong brand recognition

Extensive infrastructure

¾ Extensive reach with 682 branches 1,268 ATM network

¾ Centralised online system

Large customer base

¾ 6.7 million deposit accounts

¾ Strong and deep relationships with government and corporate borrowers

¾ Gaining momentum in consumer segment

Leading Indonesian bank

High asset quality and strong capital position ¾ Sufficiently capitalised

¾ Conservative provisioning standards

¾ Aggressive loan restructuring and write-off

Market-driven management team

¾ Independent, professional team with extensive banking experience

¾ Emphasise on shareholder returns

Market Share by Assets – Q2 2002

Visa The Banker 2001 & 2002

Finance Asia Best Local Bank

2001 & 2002 Best Indonesian Bank

2001 & 2002

Best Trade Finance 2001 & 2002

Customer Satisfaction Award 2002

23.7%

11.9% 10.0%

7.5% 4.5%

2.7% 2.5% 2.4% 2.3% 2.3%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% M andi ri BN I BC A BR I D anam

on BII

(4)

Mandiri’s market share

Growth September 2002 Loan growth

•

Total system growth: 8.1% (IDR 29.1

trillion) to IDR 387.7 trillion.

•

Bank Mandiri growth 18.3% (IDR 8.8

trillion) to IDR 57.0 trillion.

-0.7% -4.1% 2.2% -3.0% 8.1% 18.3% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0%

Assets Deposits Loans

(5)

4

Total Operating Income

132.3

1,276

2,964

Non interest income

(6.2)

5,530

5,189

Net Interest Income

10.2

(17,646)

(19,449)

Interest expense

39.3

5,839

8,136

Loans and Others

(5.1)

17,337

16,502

Government Bonds

6.3

23,176

24,638

Interest Income

Change

Audited

Unaudited

(7)

Balance Sheet

6.3

236.6

251.5

Total Liabilities and Equity

50.5

10.3

15.5

Equity

4.3

226.3

236.0

Total Liabilities

(3.3)

27.6

26.7

Other Liabilities

6.5

9.3

9.9

Subordinated Loans & Borrowing Capital

(21.2)

18.9

14.9

Fund Borrowing & Issued Securities

8.2

170.5

184.5

Deposits (Demand dep., Savings, Time Dep.)

Liabilities and Equity

6.3

236.6

251.6

Total Assets

(8.9)

16.7

15.2

Other Assets

(1.1)

153.8

155.5

Government Bonds

30.3

(5.6)

(7.3)

Provision for Loan Losses

34.1

42.5

57.0

Loans

6.5

18.5

19.7

C.A. with other bank, Placement and Sec.

8.5

10.6

11.5

Cash and Current Account w/BI

Assets

YOY

Audited

Unaudited

(8)

Key Financial Ratios

Additional Statistics

9,675

8,982

Exchange Rate Rp/USD

719

1,268

Number of ATMs

17,626

17,572

Number of Employees

25.0

30.9

Loan to Deposits – non Bank Ratio

105.8

142.5

Provisions to NPL Exposure

12.5

9.0

Non-Performing Loan Ratio

29.3

29.6

Capital Adequacy Ratio (CAR) – Bank Only

32.0

41.6

Cost to Income Ratio

3.0

2.9

Net Interest Margin (p.a.)

22.8

27.5

Return on Equity – after tax

1.5

2.1

Return on Assets (p.a.) – before tax

Audited

Unaudited

3Q 2001

3Q 2002

(9)

Mandiri’s Recap Bonds

As a result of government recapitalisation, a significant portion of Bank Mandiri’s assets is comprised of

government bonds.

Fixed Rates Bonds yield range from 10% to 16.5%, Variable Rate Bonds generate market returns 3-month SBI and SIBOR+2% for Hedge Bonds.

To improve the Bank’s balance sheet and enhance profitability, management has gradually converted these government bonds into loans. Up to September 30, 2002, a total of Rp 25.0 tn of government bonds had been sold.

Maturity Profile

Portfolio Breakdown

Total Government Bonds as of Sept ‘02 : Rp 155.5tn (US$ 17.3bn)

Notes : *) Consists of Fixed rate Rp 7.8 T & Variable rate Rp 1.9 T. **) Consists of Fixed rate Rp 18.3 T & variable rate Rp 16.2 T.

Fixed Rate Rp16.9T

10.9% Hedge

Bonds Rp46.5T

29.9% Variable

Rate Rp92.1T

59.2%

Trading* Rp9.7T

6.2% Avail.

For Sale** Rp34.5T

22.2% Held to

Maturity Rp111.3 T,71.6%

0 10 20 30 40 50 60 70 80

90 Rp Tn.

<1 year 1 - 2 years

2 - 3 years

3 - 4 years

4 - 5 years

> 5 years

(10)

21,845

12,194

14,883

19,372

31,918

36,752

1,001

4,667 4,000 6,000

10,000

7,000

17,018

2,951

17,736

4,676

6,677 8,017

12,017 13,901

10,421 10,883

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Pre

Post

Year

Mandiri’s Recap Bonds: Before and After Re-profiling

(11)

¾

Corporate lending

–

Capitalize on leadership and dominance in corporate banking and focus on higher quality corporate

clients

¾

Commercial lending

–

Leverage off its existing SME advantage and provide loans to clients in a focused group of industries

¾

Consumer lending

–

Well positioned to build on its 6.7 million retail deposit accounts and multi-channel distribution network

Loan growth

33.9

45.5

6.7

8.8

1.0 1.3

0 10 20 30 40 50

Rp tn

Corporate Loans Commercial Loans Consumer Loans

Loans by Customers

September/01 September/02

+34.2%

(12)

Total loan growth (Bank only)

September 30, 2001 to September 30, 2002 (Rp

tn)

41.6 19.0 (1.2) 2.1 (1.7) (4.1) 55.7

0

10

20

30

40

50

60

70

Loans Outstanding

At Sept. 30, 2001

New Loans Impact of Exchange Rate Loans Purchased from IBRA Loan Write-offs Principal Collection Loans Outstanding

At Sept 30, 2002 47.2 15.0 (2.7) 0.6 (1.2) _(3.2) 55.7

0

10

20

30

40

50

60

70

Loans Outstanding

At Jan. 1, 2002

New Loans Impact of Exchange Rate Loans Purchased from IBRA Loan Write-offs Principal Collection Loans Outstanding

At Sept 30, 2002

January 1, 2002 to September 30, 2002 (Rp

(13)

Interest spread (Bank only)

1.75%

2.28%

2.11%

2.07%

2.12%

2.13%

2.15%

2.19%

2.25%

1.0% 1.2% 1.4% 1.6% 1.8% 2.0% 2.2% 2.4% 2.6% 2.8% 3.0%

Dec'01 Jan'02 Feb'02 Mar'02 Apr'02 May'02 June'02 Jul'02 Aug'02 Sep'02

In

te

re

s

t S

p

re

a

d

11.0 11.5 12.0 12.5 13.0 13.5 14.0 14.5

A

ver

ag

e R

a

te

(14)

0 10 20 30 40 50 60

1999 2000 2001 Q3 '02

0% 10% 20% 30% 40% 50% 60% 70% 80%

Loan quality improving

Restructured a significant portion of NPL and grew loan portfolio by increasing new loans.

Non-performing loans substantially reduced through write-offs, restructurings, NPL transfers to IBRA and credit risk management system enhancements.

Loan Category

Loan Classification

(in Rp trillion)

NPLs

(in%)

0.9% 2.7%

5.5%

20.0%

71.0%

Current

Special Mention

Sub Standard

Doubtful

Loss

5.1

4.7

8.5

31.2

NPL

(Nominal)

9.0%

9.8%

19.8%

70.9%

(15)

Properly provisioned

The Bank’s conservative provisioning policy

can be summarized as follows:

Internal provisioning guidelines:

I. Adhering to BI’s minimum requirement on individual exposures

II. Adding a general provision

III. Setting aside additional provisions for borrowers belonging to Groups that have any members in worse loan categories

IV. Adding additional provision for potential losses on

restructured loans, based on a present value calculation

22.1 12.5 6.1 7.2 142.5% 0 5 10 15 20 25

1999 2000 2001 Q3 '02

R p T ril lio n 0% 20% 40% 60% 80% 100% 120% 140% 160% (% )

Total Loan Provisions As % of NPLs

(16)

37.6 22.3 129.8 0.8 (3.7) 3.1 (4.8) (0.6) 33.9 25.4 125.0 0.2

0

20

40

60

80

100

120

140

160

180

200

Total Deposits, 12-01

Demand Savings Time Deposits Certificates of Deposit Total Deposits, 09-02

Deposit base

¾

Bank Mandiri’s strategy in deposits is to improve the funding mix through growth in savings

deposits

Deposit Growth (Sep 30, 2001 to Sep 30, 2002)

Deposit Growth (Dec. 2001 to Sep 30, 2002)

35.0 19.9 115.0 0.5 (1.1) 5.5 10.0 (0.2) 33.9 25.4 125.0 0.2

0

20

40

60

80

100

120

140

160

180

200

Total Deposits, 09-01

(17)

14.31

18.03

22.30 22.47

24.68 25.41

0

5

10

15

20

25

30

Dec-99

Dec-00

Dec-01

Q1/2002 Q2/2002 Q3/2002

Rp

T

n

(18)

SME and Consumer Banking – Progress to Date

Rp 1.0 tn

Rp 6.7 tn

Rp 1.3 tn

Rp 8.8 tn

Loans to Retail Customers:

•Consumer loans

•SME loans

126,000

0

206,000

60,000

Card customers:

•

Credit card

•

Debit card

719

1,268

ATMs

2

4

Priority Banking Centres

601

682

Branches

2 liability products (Mandiri

Travel Cheque, Garuda

Citilink)

1 investment products

(Dana Pendapatan Tetap)

4 liability products & services (Statement

Savings, Debit Card, SMS, Western Union)

3 asset products (Mitra Karya, Graha

Mandiri, Multi Guna)

1 investment products (Dana Investa)

New consumer products &

services introduced

6.05 million

6.74 million

Retail customers

Q3 2001

Q3 2002

(19)

-1 , 000

2, 000 3, 000 4, 000 5, 000 6, 000

Jan

-0 1

Feb-0 1 M ar

-0 1

Apr

-0 1 M

ay-0 1

Jun

-0 1

Jul-0 1

Aug-0 1

Sep-0 1 Oct

-0 1

Nov-0 1

Dec-0 1 Jan

-0 2

Feb-0 2

M ar

-0 2 Apr

-0 2 M

ay-0 2 Jun

-0 2

Jul-0 2

Aug-0 2

Sep-0 2 Oct

-0 2

ATMs

Av. Transact ion/ ATM

(20)

-1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000

Jan-01

Feb-01

Mar-01

Apr-01

May-01

Jun-01

Jul-01

Aug-01

Sep-01

Oct-01

Nov-01

Dec-01

Jan-02

Feb-02

Mar-02

Apr-02

May-02

Jun-02

Jul-02

Aug-02

Sep-02

Oct-02

TOTAL

Withdrawal

Inquiry

Transfer

(21)

Key deliverables from the three year IT development program (2001-2003)

Enrich Delivery Channels

Add 1,500 ATM units and enhance ATM functionality;

Develop internet banking, e-commerce and call centre capabilities

Improve cash management system functionality;

Install point of sale terminals; Develop kiosk banking and mobile branch outlets; Develop

corporate desktop banking; Select middleware to integrate delivery channels.

Progress To Date:

9

Launched call centre, SMS banking and internet banking (Q2 2002)

9

Installed 84 ATMs (by Q3 2002), another 332 ATMs to be installed by Q4 2002

9

Added bill payment and transfer services features in ATMs

9

Work In Progress: Corporate Destktop Banking, Point of Sale, Kiosk Banking

(22)

IT Development (2)

2.

Develop new integrated Core Banking System

Develop Bank-wide Customer Information File/Central Liabilities System (CIF/CLS); Full

Loans & Collection, Remittance & Payments, General Ledger, AP/AR, Loan Origination,

Customer Relationship Management (CRM), Trade Finance, Integrated Card System and

Branch Delivery System including Teller System and Self Service Branch

Progress To Date:

9

Pilot on 18 November 2002

3.

Develop MIS system supported by latest Data Warehousing technology

To set up and improve regulatory reporting system, Management Information System,

Marketing, credit risk management information, Performance Management System and

Desktop companion software

Progress To Date:

9

Bank Indonesia Reporting commenced in Q1 2002

9

Performance Management System has been in trial since Q2 2002

(23)

IT Development (3)

4.

Strengthen infrastructure system

Enhance data centre operation to achieve ISO certification;

Consolidate servers to reduce legacy IBM AS/400 population; Develop disaster recovery

centre;

Redesign communication network to provide a reliable, integrated and intelligent network

Progress To Date:

9

Implemented server consolidation

9

Set up network loop and voice for Plaza Mandiri, JCO and Plaza Bapindo (to support eMAS

implementation scheduled for the end of 2003)

(24)

Bank Mandiri : Positioned to grow

L

ong standing

corporate and

commercial

relationships

E

xtensive deposit

base provides

opportunity to grow

consumer business

S

trongly

capitalised

and

well-provisioned

E

xperienced

management

team with focus

on improved

corporate

governance

I

mproved financial

performance

and significant

opportunities for

growth

L

eading

universal bank in