Bank Mandiri, the country’s largest lender by assets, is considering an initial public offering next year for its Islamic unit, Bank Syariah Mandiri, a top executive has said.
Sunarso, a commercial director of Bank Mandiri, said on Thursday that the preparations for the offering were under way and the IPO was likely for next year.
“The preparations for the share sale, still have to be completed first but I don’t think it will take too long,” he said.
“We want the IPO to help strengthen the capital [of Bank Syariah Mandiri] .”
He did not provide any details regarding the size of the IPO or the total estimated funds to be raised.
Bank Mandiri has five units: Bank Syariah Mandiri, a Shariah-compliant lender; AXA Mandiri, a joint venture insurer; Mandiri Tunas Finance, a financing company; Mandiri Sekuritas, a brokerage company; and Bank Sinar Harapan Bali, a mid-size lender with a focus on microlending in Bali.
Sunarso said Bank Mandiri’s units had a combined net income of Rp 900 billion ($94 million) in the first half of the year and were expected to yield Rp 2 trillion in net income for all of 2012. Bank Syariah Mandiri contributed Rp 800 billion to Bank Mandiri’s total combined net income in the first half of the year, he said.
But if the Shariah lender wants to expand its reach, Sunarso said, it needs a stronger capital structure.
“BSM still needs a further injection of capital,” he said.
Raising funds from the public, he added, is one of the best options for Bank Syariah Mandiri to boost its capital.
Bank Mandiri said its net income rose 13 percent to Rp 7.1 trillion in the first half of this year from Rp 6.3 trillion in the same period last year.
Its net interest income—interest earned on loans after deducting interest paid for deposits—increased 11 percent to Rp 12.7 trillion from Rp 10.4 trillion.
Mandiri’s president director, Zulkifli Zaini, said late July’s solid lending helped the bank post positive results.
Total outstanding loans climbed 27 percent to Rp 350.4 trillion at the end of June from Rp 276.7 trillion a year earlier.
Bank Syariah Mandiri is one of 11 Islamic lenders in Indonesia. Others include Bank Muamalat, Bank Syariah Mega and Bank BRI Syariah. Islamic lenders follow the principles of Shariah, which, among other things, prohibits interest payments.
Shares of Bank Mandiri fell 1.8 percent to Rp 8,200 on the Indonesia Stock Exchange on Friday.
(Eberling Heffernan / 24 August 2012)
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com