Bank Mandiri (Persero) PT

The stable outlook on Mandiri reflects our expectation that the bank will maintain its strong market position and capitalization over the next 12-18 months. A downgrade of Mandiri is unlikely over the next 12-18 months. This is given a high likelihood of government support for the bank. Our assessment of Mandiri's stand-alone credit profile (SACP) would need to deteriorate by at least three notches for a downgrade, provided the sovereign rating on Indonesia is unchanged. We may revise downward our assessment of Mandiri's SACP if the bank's RAC ratio dips below 10% on a sustained basis and the earnings quality deteriorates. The RAC ratio could decline due to higher credit growth than we forecast or if profitability declines sharply. We

...PT Bank Mandiri (Persero)'s (Mandiri) should sustain its dominant market position. Mandiri is the largest banking group in Indonesia, with a diversified loan portfolio. The bank's loan growth and profitability should improve over the next two years, given stable economic conditions in the country. A stable retail deposit base supports Mandiri's funding profile, and the bank has sufficient liquidity cushion to meet short-term obligations. Mandiri's capitalization is likely to remain strong. We expect the bank's high profitability to help sustain a risk-adjusted capital (RAC) ratio of more than 10%, despite loan growth that is higher than the industry's and sizable dividend payouts. Mandiri remains one of the most profitable banks in Asia-Pacific, with five-year average return on assets of about 2%. Mandiri can manage rising asset quality risks. The bank's nonperforming loans (NPLs) could rise once the regulatory forbearance on restructuring expires in 2024. However, the deterioration should...

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