Rising net income of Bank Mandiri in the first nine months of 2018 was attributed to the company's growing non-interest income, rising loan distribution, and its improving gross non-performing loan (NPL) ratio.

Based on the Q3-2018 corporate earnings report that was released on Wednesday (17/10), Bank Mandiri saw its non-interest income grow 11.4 percent (y/y) to IDR 18.75 trillion. Meanwhile, its net interest income only climbed 4.2 percent (y/y) to IDR 40.5 trillion. As a result, Bank Mandiri's net interest margin - which is the ratio that measures how successful the company is at investing its funds in comparison to its expenses on the same investments - in fact fell from 5.86 percent in Q3-2017 to 5.76 percent in Q3-2018.

Bank Mandiri's loan growth surged by 13.8 percent (y/y) to IDR 781.1 trillion (approx. USD $52.1 billion) from the same period one year earlier. This is a good result considering Bank Mandiri targets to see credit growth climb in the range of 11-13 percent (y/y) in full-year 2018.

Bank Mandiri's corporate credit rose markedly in Q3-2018, with credit for big corporations rising 27.6 percent (y/y) to IDR 301.4 trillion and micro-credit rising by 27.1 percent (y/y) to IDR 97.5 trillion. However, Bank Mandiri Finance Director Panji Irawan said small and medium business credit as well as medium corporate credit actually fell 6.8 percent (y/y) and 9.9 percent (y/y), respectively. The decline in these segments are attributed to Bank Mandiri's new focus on less risky segments for credit disbursement.

Bank Mandiri Deputy Director Sulaiman Arif Arianto said the bank's management is optimistic that full-year 2018 net income can reach IDR 22-24 trillion. He added that there is a very positive development regarding the bank's gross NPL ratio. This ratio eased from 3.75 percent in Q3-2017 to 3.01 percent in Q3-2018 amid a credit restructuring process and the monitoring of corporate debtors' potential to meet obligations. In line with the improving quality of credit, the cost of credit improved to around 2 percent.

Meanwhile, Bank Mandiri's operating costs rose 6.3 percent (y/y) to IDR 26.9 trillion in Q3-2018, while third-party funds grew 9.2 percent (y/y) to IDR 831.2 trillion.

Despite good corporate earnings in the third quarter of 2018, Bank Mandiri's shares were down 1.90 percent to IDR 6,450 a piece by 13:45 pm local Jakarta time on Thursday (18/10), a day when most Asian stocks are down amid renewed trade fears. So far this year shares of Bank Mandiri have fallen 17.83 percent. Being among the blue chips, Bank Mandiri shares have become victim of this year's massive capital outflows from emerging markets, including Indonesia, amid simmering trade concerns and the US Federal Reserve's monetary tightening.

Stock Quote Bank Mandiri - BMRI: