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Indonesia's biggest lender Bank Mandiri to boost loans to miners
February 8, 2017 / 10:54 AM / 10 months ago

Indonesia's biggest lender Bank Mandiri to boost loans to miners

JAKARTA, Feb 8 (Reuters) - Indonesia’s biggest bank by assets, PT Bank Mandiri Tbk, said on Wednesday it was looking to boost its lending to the country’s mining industry following an improvement in performance by some companies in the sector.

“We have started to eye the mining sector again, even coal, now that clients’ cashflow has got better,” Kartika Wirjoatmodjo, the chief executive of Mandiri, told reporters.

He said the state-controlled bank had already lifted lending to some copper and gold miners this year.

Mandiri’s plan is a sign of confidence in mining after Indonesian banks limited their lending exposure to the sector in the last few years when commodity prices were falling.

Lending to the mining sector in November by the country’s banks fell 3.44 percent from a year ago, but the pace of decline was significantly slower than the previous month when mining loans contracted 12.6 percent.

Wirjoatmodjo said this year he sees coal mining as “more positive” on stronger prices, although he said the bank would still be cautious in its lending.

Indonesia recently raised its 2017 coal production target to 470 million tonnes from 413 million. The country is the world’s top exporter of thermal coal and typically exports around three-quarters of its production.

Mandiri’s financial report as of the end of September showed that lending to miners represented 6 percent of its 434.8 trillion rupiah ($32.62 billion) unconsolidated outstanding loans, excluding micro and consumer lending.

In October, Mandiri reported an 18 percent fall in net profit in the first nine months of 2016 as it raised provisions to cover bad loans. Its non-performing loan (NPL) ratio at the time was 3.81 percent.

The banking industry’s NPL ratio to the mining sector was 7.38 percent in November, above a threshold that the central bank deems unhealthy.

Not all banks are as optimistic as Mandiri.

Another state bank, PT Bank Negara Indonesia Tbk, has kept its lending exposure to the mining sector below 5 percent, its Chief Executive Achmad Baiquni told Reuters.

“We are more selective towards companies, not necessarily the sector. If one is in coal mining, but its contract has good long-term prospects, we can give a loan. But so far our exposure has been limited,” Baiquni said. ($1 = 13,330.0000 rupiah) (Additional reporting and writing by Gayatri Suroyo; Editing by Ed Davies and Himani Sarkar)

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