PT Bank Mandiri (Persero)

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. We could upgrade Mandiri if the bank's asset quality improves sustainably and the bank maintains strong capitalization. A reduction in weak loans (including NPLs and restructured loans) to about 6% of total loans, and credit costs remaining at a normalized loss rate of 1.2%-1.5% could indicate such improvement. 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

...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 following the country's economic recovery. 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 the pickup in loan growth and high 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. As of Sept. 30, 2022, COVID-affected restructured loans accounted...

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