The ratings on PT Bank Mandiri (Persero) (Bank Mandiri) reflect the continued improvement in the bank's financial profile, with satisfactory operating profitability and capitalization, its high (although declining) reliance on its holdings of government recapitalization bonds, as well as its franchise as the largest bank in the system with majority government ownership. Nevertheless, Bank Mandiri remains subject to the volatility associated with operating in a high risk and developing economic environment. The ratings of the bank, however, remained constrained by the ratings on the Republic of Indonesia (foreign currency B/Positive/B; local currency B+/Positive/B). In the past three years, the bank's key profitability indicators--net interest income (NII) margin, underlying profitability and after-tax profit return on average assets (ROAA)--have continued improving. In
