bank mandiri in green banking

November 2014

1

Outline

2

3

1 Mandiri Overview

4

Project Eligibility

Key Issues in Green Banking

Our Partnership with AFD

2

2009

BAPINDO

1998 - 2003

2 October 1998

Bank Mandiri was

established

31 July 1999

Legal merger of 4

legacy banks

BDN BBD

2005

14 July 2003

IPO of Bank Mandiri

offering 4 billion shares

(~20%)

0.6 2.4

4.3 5.3

7.1 9.2

20

05

20

06

20

07

20

08

20

09

20

10

2014

Business

Transformation II

3 business focus:

- Wholesale Transaction

- Retail Deposit &

Payment

- Retail Financing

2020

Bank Sinar Harapan Bali

investasi

A Leading Financial

Institution

Our Journey

Business

Transformation I

3 phases:

- Back on Track

- Outperform the Market

- Shaping the End Game

Net Profit

Business

Transformation II I

- Business

Transformation

- Developing Integrated

Human Capital & IT

- Focusing on non-

organic growthBest

Bank in ASEAN

3

Bank Mandiri's vast business network shows its strong national coverage and International presence. Bank Mandiri also has extensive network with national and international banking institutions.

• 2.087 branches• 2.524 micro channels• 7 Overseas Offices

- Singapore- Hongkong- Shanghai- Cayman Island- Dili- London- Kuala Lumpur

• 120 Currency• 1.224 Correspondent Bank

Banking Relationship

Business Network

11,604 ATMs

E-channel

Note: Data as of H1 2014

Business Network & Banking Relationship

Cash Management13,437 Customers

4

Bank Mandiri’s 1H 2014 performance demonstrated marked improvements in several key indicators:

Key Financial Highlights

Nominal (%)

Assets (Rp Trillion) 672.1 764.9 92.8 13.8%

Loans (Rp Trillion) 428.7 485.8 57.1 13.3%

Low Cost Funds (Rp Trillion) 319.6 345.6 26.0 8.1%

Net Interest Margin (%) 5.34% 5.74% 0.40% 7.5%

Net NPL Ratio (%) 0.47% 0.81% 0.34% 72.30%

Earning after Tax (Rp Trillion) 8.294 9.585 1.3 15.6%

Δ1H'141H'13

Bank Mandiri Credit Ratings

Moody’s Fitch

Outlook STABLE Outlook STABLE

Long Term Rating Baa3 LT FC Issuer Default BBB-

Foreign LT Bank Deposits Baa3 LT LC Issuer Default BBB-

Local LT Bank Deposits Baa3

Pefindo Standard & Poor’s

Outlook STABLE Outlook STABLE

LT General Obligation idAAA LT Foreign Issuer Credit BB+

Subordinated Debt idAA+ LT Local Issuer Credit BB+

5

Credit Rating

Comprehensive Product & Services, Growing Beyond The Bank…

6

Insurance Niche Banking Multi-Finance

• Remain the leader in syariah financing

• Capital injection program over 3 years

• Cross-sell syariahproducts to Mandiricustomers

• Expansion of business to fully utilize current capital base

• Cross-sell capital market services to broad range of Mandiri customers

• Refocus business toward higher fee income

• AXA Mandiri Financial Service (AXA Mandiri), Provide end-to-end life insurance business (bank assurance).

• Mandiri AXA General Insurance (MAGI), provide various asset protection and general insurance service

• Inhealth, Life insurance

• Enhance operating model

• Improve risk management systems and IT

• Improve productivity

• Use Bank Mandiri’snetwork and customer throughout Indonesia to develop multi-finance segment, especially in vehicle-ownership financing.

InsuranceSyariah Banking Investment Banking

AXA Mandiri Financial ServiceMandiri AXA General Insurance Bank Sinar

Harapan Bali

Awards & Recognitions

7

The Assets The Asset Triple A Transaction Banking Awards 2014 – Treasury, Trade and Risk Management:• CFO of the Year, Indonesia - Pahala Mansury, Managing Director of

Finance & Strategy• Best in Treasury and Working Capital-SMEs, Indonesia• Best Service Provider - Cash Management, Indonesia

Project Finance Magazine• Asia Pacific Oil & Gas Deal of The Year 2013

Infobank MagazineInfobank Digital Brand of The Year 2013, Categories:• 1st Place for Digital Brand Conventional Bank• 1st Place for Digital Brand e-Money • 1st Place for Digital Brand Credit Card • 1st Place for Digital Brand Wealth Management

Infobank Magazine & MRIBanking Service Excellence

Corporate Governance Asia4th Asian Excellence Recognition Awards 2014 :• Asia’s Best CEO (Indonesia) – Budi G. Sadikin• Asia’s Best CFO (Indonesia) – Pahala N. Mansury• Best CSR• Best Corporate Communications Team• Best Investor Relations Company• Best Investor Relations Officer – Bret Ginesky

The Asian Banking & Finance MagazineThe Asian Banking & Finance Wholesale Banking Awards 2014 dan Retail Banking Awards 2014:• Domestic Retail Bank of the Year - Indonesia

Asiamoney Magazine• Best Domestic Bank in Indonesia• Best Domestic Interest Rates Service Provider in Indonesia

Roy Morgan Research• Customer Satisfaction Award, Consumer Bank of The Year Indonesia

2013

The Corporate Treasurer Asia-Pacific Country Transaction Bank Awards 2013: Best Trade Finance Bank in Indonesia

Fortune Indonesia Magazine & Hay Group Indonesia Fortune Most Admired Companies 2014: • The Best 20 of Most Admired Companies in Indonesia

Marketing Magazine & Carre-Center for Customer Satisfaction & Loyalty (CCSL) Contact Center Service Excellence Award 2014

Finance AsiaBest bank in Asia 2014

8

Outline

2 Our Partnership with AFD

3

1 Mandiri Overview

Project eligibility

Key Issues in Green Banking4

9

AFD Line of Credit Facility

AFD credit facility provide foreign exchange liquidity with competitive pricing and efficient structure and improving the bank’s reputation (reputation leverage), especially in the area of green banking.

Long term financing facilities granted to the bank for eligible project that approved by AFD.Bank Mandiri has been working with AFD since the signing of the first credit facility agreement in 2010 and the second agreement in 2013.

1st Line of CreditCredit Facility Agreement

17 June 2010

Project typeFinancing ‘Renewable and Energy Efficiency Projects’

Financing Credit Line

Amount USD.100 mio (total)

Tenor 7 - 10 years

2nd Line of CreditCredit Facility Agreement

8 November 2013

Agence Française de Développement (AFD), a French international developmentagency, partnership with Bank Mandiri providing credit facility as commitment to fostereconomic growth and green project in developing countries.

Project typeFinancing ‘Renewable and Energy Efficiency Projects’

Financing Credit Line

Amount USD.100 mio (total)

Tenor 5 - 10 years

10

AFD Line of Credit Facility

AFD 1st Line of Credit Facility - Realized

AFD 2nd Line of Credit Facility – Project Pipeline

No. Project

1. Gas sewer/clean energy2. Biogas Power Plant3. Combine Cycle 21.6 MW4. Mini hydro 9 MW5. Mini hydro 1.6 MW

No. Project type

1. Geothermal2. Solar Cell3. Mini-hydro 4. Mini-hydro 5. Biomass

Project / Pipeline Project

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AFD Line of Credit Facility

Technical assistance / Capacity building program

AFD 1st Line of Credit Facility

AFD 2nd Line of Credit Facility

AFD provide technical assistance / capacity building program in form of consult with technical expert, training or seminar.

No. Seminar/Training Date Participants

1.Climate Change &

Carbon Footprint18 Mar 2010

50 participants (RM Business Unit, Legal & Risk Management)

2.Environment Friendly Business Opportunities & Carbon Credit

19 Oct 2010150 participant (BOD, Group Head, Dept Head, officer of Bank Mandiri, and customer/ business practitioners)

No. Seminar/Training Date Participants

1. Green Banking Seminar 16 Jan 2014150 participant (BOD, Group Head, Dept Head, and Officers of Bank Mandiri)

2. Hydropower Training 6 – 7 Mei 201430 Participants (RM Business Unit and Risk Management)

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Outline

2 Case: Mandiri – AFD Partnership

3

1 Mandiri Overview

4

Project eligibility

Key issues

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Eligible Project : We’re looking for…

1. Renewable energy projects, including:• Geothermal energy projects • Hydropower projects • Biomass based power • Heat generation projects

2. Energy efficiency projects, including: • Modernization industry leading to energy saving• Natural gas or biomass-based cogeneration• Fuel switch to less CO2 emitting sources• Reduction of losses in electricity network

3. Other projects , including:• sustainable forestry• recycling industries• non-till farming system • conversion agriculture

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• Contract with contractors or machine manufacturer to build factory/plant • Continuity of supply / raw material• Support from expert• Operating & maintenance procedure• Project location/field accordance with its designation

Experienced in the business/industry or supported by expert with min. 5 years exp.

Management

Technical

Risk Acceptance Criteria : We’re concerning on…

• All license/permit comply with government/industry requirement• AMDAL or UKL/UPL

Legal

Long term/multiyear sales contract or minimal cover/equal to the credit tenor Marketing

• Considered capable to provide self financing portion• sound financial condition

Finance

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Outline

2 Case: Mandiri – AFD Partnership

3

1 Mandiri Overview

4

Project eligibility

Key issues

16

Key Issues of Green Financing from Bank Perspective

Trend/ Market demand

Customer Capacity

Bank Capacity

Incentives

What’s the Benefit?

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Funding from Financial Institution not included in LDR calculation, increasing the LDR ratio

More paperwork for customer and the bank, should be compensate with extra benefit for both the bank and customer

Extra Administration

Burdening the Loan to Deposit Ratio (LDR)

Key Issues in Partnering on Green Finance

Need more incentives in terms of interest, tenor, risk participation, etc. Incentives

Need clear definition & classification on eligible project to be considered as green projects

Different in perception

thank you

PT. Bank Mandiri (Persero) Tbk.Financial Institutions Coverage & Solutions GroupPlaza Mandiri Lt.22Jl. Jend. Gatot Subroto Kav. 36-38, JakartaWebsite : www.bankmandiri.co.idEmail : trustee@bankmandiri.co.id

© PT Bank Mandiri (Persero) Tbk.

Appendix

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Transaction Banking SolutionsReliable Electronic Platform to process your transaction and at the same time enhance your visibility and decision making through real time connection

•Import Module•Export Module•Guarantee Module•Financing Request

•Account Portfolio•Payment Management•Liquidity Management•Reporting

•Real Time Tax Payment

•Forex Rate Update•Deal Forex•Settlement

•Easy RTE Reporting

Customer

global trade

cash management

tax gateway

e-fx

e-rte

scm

•Value Chain Platform (vendor)•Easy to monitor•Online disbursement•Accept invoice online

© PT. Bank Mandiri (Persero) Tbk21

AFD Line of Credit Facility

Project Eligibility

1. Renewable energy projects, including:• Geothermal energy projects • Hydropower projects • Biomass based power • Heat generation projects

2. Energy efficiency projects, including: • Modernization industry leading to energy saving• Natural gas or biomass-based cogeneration• Fuel switch to less CO2 emitting sources• Reduction of losses in electricity network

3. Other projects , including:• sustainable forestry• recycling industries• non-till farming system • conversion agriculture

Currency of loans USD/ IDR/ SGD or other currency

Minimum maturity of the loans 5 years

Maximum amount to be drawn on the Credit Facility for any single project

USD 20 Mio

OthersBank Mandiri may make larger loans by using its own complementary resources.

Financial Eligibility

© PT. Bank Mandiri (Persero) Tbk2222

Key Issues from Bank Perspective

No. Issue Participants

1 Eligible Parties Bank should ensure that the debtor meets the criteria as eligible party.

2 Financial Threshold Bank should set a limit to avoid concentration in one or several debtors.

3 Object of Financing The financing object can be either a new project or enhancement project.

4 Scope of Assessment The project’s assessment should cover environmental and social aspect.

5 Scope of Activities Bank should not only provide loan facility but also advisory.

6 ConsultationFor projects that impact the community, should first be conducted adiscussions with the community, especially for projects that havesignificant impact. The results of the consultation must be documented.

7 Grievance ProceduresBank may ask the debtor to provide complaint procedure for projects thataffecting the community.

8 Annual Reporting ObligationBank may ask the debtor to provide a periodic project reports (at leastannually).

9 Legal Compliance Covenants The debtor must comply with the applicable regulation.

10 Independent ExpertBank may appoint an independent experts for example, to monitor theprojects.