Bank Mandiri's 1H16 net profit plummets 31.5% YoY to US$543m

Find out where the earnings drag came from.

According to Maybank Kim Eng, Bank Mandiri’s 1H16 net profit of IDR7.1t or ~US$543m (-31.5% YoY) was well behind its initial FY16 forecast of IDR19.4t or ~US$1.4b. Acceleration in corporate loans by 13% YoY in 2Q16 vs. 6% YoY in 1Q16 was offset by a 20bps QoQ decline in blended yield to 9.1%.

Here's more from Maybank Kim Eng:

The latter was a reflection of a rising proportion of restructured loans from an average of 4.9% in the past three quarters to 6.3% by 2Q16. As such, NIM dropped to 6% in 2Q16, which made up 6.2% of NIM in 1H16.

The bigger earnings drag came from the higher impairment to a total of IDR9.8t in 1H16. Despite the jump in provisioning charges, BMRI’s coverage ratio dropped to 113% vs. the 145% average for peers as the NPL ratio shot up to 3.9%, driven by the commercial and SME segments.