Bank Mandiri Persero additional_discussion: Follow-up Issues Identified through SSC Discussion

• Report date: 2026-05-30
• Issuer / Theme: Bank Mandiri Persero / discussion follow-up triggers
• Report type: additional_discussion
• Discussion scope: Summary of additional research Q&A on Bank Mandiri Persero’s funding, asset quality, government support, and foreign-currency liquidity discussed in the discussion on 2026-05-29
• Reference context: Existing issuer_summary dated 2026-05-07, issuer notes / knowledge snapshot / source registry, discussion dated 2026-05-29

1. Purpose and Treatment of This Report

This report is a supplementary report that connects the discussion on Bank Mandiri Persero (hereafter, Bank Mandiri) with the context of the existing issuer_summary. It does not establish a new investment view or rating outlook. Its purpose is to preserve the questions, answers, hypotheses, and additional confirmation items raised in the discussion so that they are not lost in subsequent research.

The central view already confirmed in the existing issuer_summary is that Bank Mandiri is one of Indonesia’s largest state-owned commercial banks, supported by thick capital, low NPLs, a strong deposit and liquidity profile, government control, and systemic importance. At the same time, NIM, deposit composition, asset quality, dividends, RWA growth, the sovereign outlook, and ownership/supervisory changes related to Danantara / BP BUMN should continue to be monitored.

The latest discussion does not overturn that existing view. Rather, it focused on how to decompose the monitoring items identified in the existing summary into early-warning indicators for portfolio management purposes. Accordingly, the sections below distinguish between “issues already confirmed in the existing report,” “hypotheses discussed in the discussion,” and “items that still need to be confirmed through primary sources and detailed rating-agency materials.”

2. Analytical Read-Through from the Discussion

The most important point from the discussion is that downside risk for Bank Mandiri should be viewed not as deterioration in a single metric, but as a scenario in which multiple pressures interact. Specifically, the discussion considered the possibility that NIM pressure from deposit competition or higher market funding costs, rising delinquencies and SMLs in Retail, SME, and Commercial loans, worsening sector concentration in large Corporate / Commercial exposures, constraints on internal capital accumulation from dividends, changes in sovereign and government-support expectations, and simultaneous stress in foreign-currency market access and FX loan asset quality could coincide in the same phase rather than occurring separately.

As facts already confirmed in the existing report, as of 1Q 2026 Bank Mandiri had strong underlying metrics, including consolidated NPLs of 1.02%, a Tier 1 ratio of 18.8%, CAR of 19.7%, consolidated NIM of 4.70%, a CASA ratio in the low 70% range, and an LDR of around 90%. These figures support credit stability. However, the discussion highlighted the concern that the current low NPLs and thick capital alone are insufficient to capture early signs of deterioration.

As a discussion hypothesis, the first signs of deterioration in a normal environment are likely to appear in delinquencies, SMLs, Loan at Risk, and restructurings in Retail, SME, and Commercial loans. By contrast, the factors that could move rating headroom or market perception in a non-linear manner are sector concentration in large Corporate / Commercial exposures, SOE and government-related lending, and deterioration in foreign-currency loans to manufacturing, mining, and Commercial borrowers. Therefore, it is insufficient either to look only at deterioration in small-ticket lending or to look only at large corporate exposures.

The remaining unconfirmed items are the credit-cost sensitivity of each segment, government-support assessments by debt class, the foreign-currency maturity ladder, LCR/NSFR by currency, the breakdown of FX loans by sector in terms of SMLs, Stage 2 exposures, and restructurings, and the quantitative capital impact of investments, M&A, and dividend policy. These were identified as important issues in the discussion, but they have not been revalidated against new primary sources in this exercise.

3. Summary of Q&A Content

3.1 Linkage between Funding / Deposit Structure and Rising Credit Costs

The intent of the first question was to determine whether the first downside trigger for Bank Mandiri would be instability in its deposit and funding structure or an increase in credit costs. The existing issuer_summary states that the deposit base, CASA, LDR, NIM, credit costs, and capital should be monitored together, but the discussion reframed these items as a stress sequence.

The key point of the answer was that, while credit strength in a normal environment is supported by a thick deposit base and capital, simultaneous increases in domestic and overseas interest rates, deposit competition, lower loan yields, and rising credit costs could first pressure NIM and internal capital generation, and then feed through to CET1 and rating headroom. The key point here is the sequence: rather than the CET1 ratio deteriorating suddenly as the primary cause, the capital buffer would be eroded through weakening profitability and asset quality.

The follow-up question asked whether sensitivity to rising credit costs differs across the Retail, SME, and Corporate segments, and in particular whether SME and higher-risk Retail loans could more quickly lead to capital pressure. The answer noted that official materials alone do not confirm segment-level credit-cost sensitivity or the quantitative flow-through to CET1. It then organised the monitoring framework into Retail and SME delinquencies and NPLs, Commercial SMLs, and large concentration risk in Corporate exposures.

The credit-analysis implication is that Bank Mandiri’s strength should not be reduced to a simple statement that its capital is thick enough. Deposit growth, the CASA ratio, LDR, deposit costs, NIM, CoC, NPLs, SMLs, LaR, and Tier 1/CAR should be monitored as an early-warning line when they begin to deteriorate in the same direction.

3.2 Large-Scale Investment, M&A, Asset Rotation, and Dividend Policy

The intent of the second question was to confirm the impact of Bank Mandiri’s large-scale investments, M&A, non-core asset disposals, and dividend policy on its capital structure and liquidity. The existing issuer_summary identifies dividends, RWA growth, and capital ratios as monitoring items, but the discussion examined them more deeply from the perspective of whether growth investments and shareholder returns could narrow capital headroom in a downside scenario.

The key point of the answer was that, in the discussion, digitalisation, ecosystem expansion, selective loan growth, IT investment, and a high dividend payout ratio were raised as issues, while the specific targets, size, timing, and funding methods for any large-scale M&A or non-core asset disposals could not be confirmed. No confirmed fact was identified that a major M&A transaction is officially in progress. The discussion remained at the level of a hypothesis that the investment strategy may currently be tilted toward internal transformation, digital initiatives, and strengthening the transaction platform.

The follow-up question asked about the specific size of investments and M&A, the capital plan, and the balance with dividend policy. The answer noted that non-deposit funding, potential bond issuance, IT investment, and possible asset rotation were discussed, but public information was insufficient to quantitatively assess the capital plan. Continued high dividends could constrain capital accumulation through retained earnings, but the extent to which this would pressure CET1 remains unconfirmed.

The credit-analysis implication lies less in investments or M&A in themselves than in assessing internal capital generation when dividends, RWA growth, loan growth, and rising credit costs occur simultaneously. A large M&A transaction would clearly be important if it emerged, but even without one, if loan growth and higher credit costs coincide while the dividend payout ratio remains high, the pace of decline in capital headroom should be monitored.

3.3 Macroeconomic / Interest-Rate Shock and the Pattern of Asset-Quality Deterioration

The intent of the third question was to identify which loan segments would be most likely to deteriorate first if rising domestic interest rates in Indonesia, slower economic growth, and a downturn in specific industrial sectors occurred simultaneously. The existing report states that lagged deterioration should be monitored in Retail and SME, construction, real estate, energy, mining, government-related, and related-party exposures.

The key point of the answer was that, although total NPLs are low, the latest segment-level NPLs, SMLs, Stage 2 exposures, CoC, and coverage ratios could not be sufficiently confirmed. The discussion organised the issue as follows: early deterioration signals in a normal environment are likely to appear in delinquencies and SMLs in Retail, SME, and Commercial loans, while because Bank Mandiri has a large Corporate / Commercial weighting, deterioration in large exposures or specific sectors could have a greater impact on market perception and the rating outlook than small-ticket lending.

The follow-up question asked whether priority should be given to monitoring rising delinquencies in Retail and SME loans or sector concentration risk in large corporate exposures. The answer concluded that the first-priority leading indicators are delinquencies, SMLs, and LaR in small-ticket, SME, and Commercial loans, while deterioration in large Corporate / Commercial exposures to manufacturing, construction, mining, agriculture, government and SOE-related borrowers, and FX loans should also be monitored as more serious indicators that could rapidly pressure rating headroom.

The credit-analysis implication is that total NPLs are a lagging indicator. SMLs before NPL formation, Stage 2 exposures, restructurings, payment delays, a reversal in LaR, CoC guidance approaching the upper end, and declining NPL coverage need to be monitored by segment and sector. Commercial loans in particular may become a leading signal of deterioration as an intermediate layer that is larger than Retail but more vulnerable than Corporate.

3.4 Effectiveness of Government Support and Systemic Importance

The intent of the fourth question was to confirm how far Bank Mandiri’s government-support expectations would function as credit enhancement in a downside scenario. The existing report states that government control and systemic importance are credit supports, but that government ownership and an explicit guarantee for individual bonds are different things.

The key point of the answer was that government-support expectations support ratings and market access in normal conditions, but they are not an explicit guarantee and are strongly linked to sovereign credit strength. In the discussion, Fitch’s Government Support Rating, S&P and Moody’s ratings, the ownership structure through Danantara / BP BUMN, and the scope of LPS deposit insurance were raised as issues. However, these indicate support likelihood and do not mean that all debt carries an equal guarantee.

The follow-up question asked not only about the “likelihood of support” but also “which debt and which circumstances can be treated as within the scope of support.” The answer organised the issue as follows: foreign-currency senior bonds and local-currency senior bonds are relatively more likely to incorporate government-support expectations, while Tier 2 instruments, hybrids, other capital instruments, subsidiary and affiliate debt, and market funding may incorporate support differently. However, Bank Mandiri-specific debt-class ratings and support assessments remain unconfirmed.

The credit-analysis implication is that government support should be viewed as a positive factor, while recognising its two-sided nature: in the event of sovereign deterioration, support expectations themselves can become a sovereign-linked risk. For foreign-currency bonds, even if Bank Mandiri’s standalone capital and NPLs are sound, spreads could be affected by Indonesia’s sovereign outlook, foreign-currency liquidity, the funding environment for the overall banking sector, and market perceptions of the support channel through Danantara / BP BUMN.

3.5 Capital-Market Access, Foreign-Currency Liquidity, and Dual Stress in FX Loans

The intent of the fifth question was to confirm how stable Bank Mandiri’s access to foreign-currency market debt and short-term foreign-currency funding would be under a simultaneous depreciation of the rupiah, deterioration in sovereign credit, and tightening of banking-sector liquidity. The existing report states that foreign-currency bonds should be monitored in relation to the Indonesian sovereign and banking-system liquidity.

The key point of the answer was that foreign-currency market access is viewed as strong in normal conditions, but higher foreign-currency funding costs and constraints on market access would first affect NIM, profitability, and internal capital generation, and could subsequently feed through to the CET1 buffer and rating headroom. In the discussion, points raised included the USD750mn global bond issuance in April 2026, investor distribution, LCR of 133%, NSFR of 108%, foreign-currency loans of Rp338.0tn, and the fact that the main sectors for FX loans are manufacturing, government, and mining. However, because these externally sourced points were not revalidated at the time this additional report was prepared, they are treated here as assertions made in the discussion.

The follow-up question asked whether foreign-currency liquidity risk should be assessed not simply by whether USD bonds can be issued, but as a scenario in which foreign-currency funding stress and deterioration in FX loan asset quality occur simultaneously. The answer concluded that if rupiah depreciation, a decline in commodity prices, and widening foreign-currency funding spreads coincide, rising delinquencies, SMLs, and restructurings in FX loans to manufacturing, mining, and Commercial borrowers could simultaneously pressure the foreign-currency liquidity buffer and internal capital generation.

The credit-analysis implication is that foreign-currency risk should not be viewed only through ALM. Alongside foreign-currency bond spreads, issuance tenor, new-issue premiums, investor demand, foreign-currency LCR/NSFR, and the foreign-currency maturity ladder, it is also necessary to monitor sector-level SMLs, the restructured ratio, Stage 2 exposures, delinquencies, and repayment burdens for FX loan borrowers without foreign-currency revenues. Even if foreign-currency market access is maintained, deterioration in FX loan asset quality would connect foreign-currency liquidity stress to credit-cost stress.

4. Classification of Issues

4.1 Issues Already Confirmed in the Existing Report

• Bank Mandiri is one of Indonesia’s largest state-owned commercial banks, and government control and systemic importance support its credit profile.
• As of 1Q 2026, loans, deposits, total assets, NIM, NPLs, Tier 1, and CAR are all at strong levels for a bank credit.
• The 2026 guidance requires careful monitoring of loan growth, NIM, and credit costs.
• Government control supports expectations of support, but it is not an explicit guarantee for individual bonds.
• In a downside scenario, attention should be paid to a phase in which lower NIM, deterioration in deposit composition, rising LaR, lower NPL coverage, and declining capital ratios occur simultaneously.

4.2 Assertions and Hypotheses from the Discussion

• Normal early deterioration signals are likely to appear first in delinquencies, SMLs, LaR, and restructurings in Retail, SME, and Commercial loans.
• Risks that could materially affect rating headroom lie in sector concentration in large Corporate / Commercial exposures, SOE and government-related lending, and deterioration in the asset quality of foreign-currency loans.
• If high dividends continue, they could pressure the CET1 buffer through internal capital generation when combined with loan growth and rising credit costs.
• Government-support expectations may support senior bonds and market access, but the effect may not be identical for subordinated instruments, capital instruments, subsidiary debt, and market funding.
• Foreign-currency liquidity stress needs to be assessed not only by whether USD bonds can be issued, but together with deterioration in FX loan asset quality in manufacturing, mining, and Commercial exposures.

4.3 Unconfirmed Items

• Latest segment-level NPLs, SMLs, Stage 2 exposures, CoC, LaR, restructurings, and coverage ratios.
• Segment-level credit-cost sensitivity under macroeconomic, interest-rate, and FX shocks, and the quantitative flow-through to CET1.
• Specific size, timing, and funding methods for large-scale investments, M&A, and non-core asset disposals.
• Capital plan combining future dividend policy, retained earnings, and RWA growth.
• Debt-class support assessments by Fitch / Moody’s / S&P, particularly for senior foreign-currency bonds, subordinated debt, Tier 2, hybrids, and subsidiary debt.
• Maturity ladder for foreign-currency market debt, short-term foreign-currency funding, LCR/NSFR by currency, concentration in foreign-currency deposits, committed lines, and hedging status.
• FX loan delinquencies, SMLs, Stage 2 exposures, restructurings, and repayment capacity by sector and by presence or absence of foreign-currency revenues.

5. Follow-up Items and Warning Lines

6. Candidates for Transfer to issuer_notes.md

This exercise does not update issuer_notes.md. However, the following items could be candidates for transfer as points to be continuously monitored in future research and report updates.

• Continue monitoring delinquencies, SMLs, LaR, and restructurings in Retail, SME, and Commercial loans as early-warning indicators that precede total NPLs.
• Continue monitoring sector concentration and increases in Stage 2 exposures and restructurings in Corporate / Commercial exposures to manufacturing, construction, mining, agriculture, SOE/government-related borrowers, and FX loans.
• Continue monitoring the impact of a high dividend policy, RWA growth, and rising credit costs on internal capital generation and the CET1 buffer.
• For government-support expectations, continue checking rating-agency materials and prospectuses to avoid conflating the scope of application to senior bonds, foreign-currency bonds, subordinated debt, capital instruments, and subsidiary debt.
• For foreign-currency market access, continue monitoring not only USD bond spreads and issuance access, but also the dual stress of deteriorating asset quality in FX loans to manufacturing, mining, and Commercial borrowers.

7. Unconfirmed Items and Next Confirmation

In the next practical review, the first step should be to check Bank Mandiri’s latest quarterly Analyst Meeting materials, Pillar 3 disclosure, LCR/NSFR disclosure, and detailed rating-agency reports, and translate the hypotheses raised in the discussion into numerical metrics. In particular, segment-level asset quality, the FX loan breakdown, the foreign-currency maturity ladder, debt-class ratings, support assessments, dividend policy, and capital plan should be prioritised.

In addition, the discussion included several items that were described as based on external sources, but at the time this additional_discussion was prepared, they were not newly revalidated on the web. Accordingly, specific descriptions regarding the April 2026 USD bond issuance, details of foreign-currency lending, and rating-agency support assessments need to be reconfirmed against official IR materials, original rating-agency publications, and prospectuses before the next report update or issuer_notes update.

8. Reference Context

• issuer_summary/issuers/bank_mandiri_persero/current/bank_mandiri_persero_issuer_summary_20260507.md
• issuer_summary/issuers/bank_mandiri_persero/issuer_notes.md
• issuer_summary/issuers/bank_mandiri_persero/knowledge_snapshot.md
• issuer_summary/issuers/bank_mandiri_persero/source_registry.md
• discussion dated 2026-05-29