Bank Mandiri’s loan quality improved moderately in 2023: Moody’s

Share of impaired loans were “modestly lower” compared to 2022.

The quality of Bank Mandiri’s loans and Shariah financing is said to have improved moderately in 2023, according to a ratings report by Moody’s Investors Service.

The bank’s “Stage 3 loans”-- or loans which are considered impaired– impaired Shariah financing, and loans to problematic state-owned entities all accounted for around 4% of gross loans in 2023. This is “modestly lower” compared to 2022 levels, Moody’s said.

The reserve coverage of assets that Moody's considers problematic stood at around 100%, a good level. 

Other asset quality risks include Bank Mandiri's restructured loans and its higher growth appetite compared to domestic peers. Moody's expects stable asset risk for Bank Mandiri in 2024, supported by the benign operating environment in the country.

The funding of the bank remains strong, with mild weakening as Bank Mandiri increased its reliance on market funding to around 10% of assets in 2023. 

Additionally, Moody’s said that there is a very high probability of support from the Indonesian government in case of need.

“The very high government support assumption is underpinned by Bank Mandiri's high systemic importance and majority ownership by the government,” it said, adding that the rating outlook is stable.