Bank Mandiri wins the award this year for doing what it is good at: providing huge breadth and depth of services on a large scale.
Indonesian banks are among the most profitable in the world. With a net interest margin of more than 5%, Mandiri takes home more than any of the other Best Bank winners in the region, according to analysis by data provider SNL Financial during the awards judging period.
This high margin is partly a reflection of the cost of deposits in a country comprising thousands of islands, but Mandiri also delivers very strong returns — a 2.8% return on assets and 22.8% return on average equity. Among the rest of the field, only Trade and Development Bank of Mongolia delivers bigger returns.
As a result, Mandiri’s net profit grew 17% during the past year. Indeed, it now earns more profit than several banks with bigger asset bases, such as SCB in Thailand, HDFC in India and Public Bank in Malaysia (which is more than 50% larger in asset terms).
Size isn’t everything, of course, and double-digit loan growth during the past few years has put some pressure on asset quality across the Indonesian banking system, particularly as demand for Indonesian commodity exports has weakened, but Mandiri maintains a strong capital base. Its tier-1 ratio of 14.2% is higher than any of the other banks in the field and it has ample reserves to cover an expected rise in bad loans.
Pak Riswinandi, deputy president director of Bank Mandiri, accepted the 'Best Bank in Asia' award in front of about 200 of his peers during FinanceAsia's wards dinner held at the Four Seasons hotel in Singapore.
Strength at home
In Indonesia, BCA pushed it close once again after another good year squeezing performance out of low costs but for us the sheer size and scale of Bank Mandiri gets the nod.
In an archipelago of more than 15,000 islands and 240 million people this scope is important. As such, the fact it has more branches than any of its peers is key. And this is increasing. The bank lifted the number of branches from 1,811 in the first quarter of 2013 to 2,061 in the first quarter this year, a 13.8% rise. The number of automated teller machines is also extensive; the third largest in the country.
This formula has allowed it to reach some financial milestones during the year. Net profit grew 17.4% in the period as total assets rose nearly 14% from the year-ago period to Rp730 trillion, comfortably beating its rivals.
Its commitment to small- and medium-sized businesses during the period contributed to Bank Mandiri’s higher profits. Total deposits also topped its domestic peers, at Rp532 trillion, while return-on-equity hit 22.23%. Meanwhile, its net non-performing loan ratio is low at 0.4%.
Bank Mandiri offers extensive foreign exchange products across three categories – cash transactions, hedging products and investment products.
The bank notifies its customers of the latest market updates through e-mail alerts, text messages and a daily newspaper.
It has 11 dealing rooms and 29 sub-regional treasury marketing offices in 21 cities, utilizing its large presence across the country. The bank also has its e-fx web-based application service up and running in 100 branches, which allows branches and customers to perform foreign exchange transactions in real time.
