Friday, April 24, 2015

Interest Expense Erodes Mandiri Bank Profitability Level

Interest expenses are too high which is not in line with the company's interest income, causing the Bank's net interest margin decreased. PT Bank Mandiri (Persero) Tbk recorded a decline in net interest margin (NIM) in the first quarter of 2015. According to the report, the NIM Mandiri until March 2015 fell to 5.62% or lower when compared to the same period last year ie 5.92% .

According to Director of Bank Mandiri, Budi Gunadi Sadikin, a decrease in net interest margin is due to higher interest expense of the company, up to 35.3% in the first quarter of 2015. That is, it is not accompanied by interest income rose only 19.6%, so that this condition causes the net interest margin decreased to 5.62%.

"So if we see it, our interest income is actually a good rise, 19.6%. But in 2014, the bank's liquidity was difficult, so we raise flowers. Well it consequently impact on interest costs. So why NIM down, as interest income rose 19.6%, but interest expenses rose 35.3%, "Budi said in Jakarta on Friday, April 24th, 2015.

This makes the achievement of a net profit of state-owned bank, is no maximum on the first quarter of 2015, amounting to IDR5.1 trillion or grew only 4.3% compared to 4.9 trillion profit in quarter one year ago.

Furthermore, he considered, liquidity conditions in 2014 is very difficult, but to date, the Bank's liquidity has been improved, so that in the future, the company is optimistic that these conditions would increase interest income and lower interest expense. By doing so, NIM will undergo repairs.

"Until now, liquidity is improving, that's why in April we are lowering our funds rate, (deposits) gradually aggressive enough, now we expect in the second quarter of 2015, quarter-on-quarter interest expense could've been much better. It all has to do, "added Budi.

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