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Developing Islamic Financial CentersIn Indonesia and Opportunity & Challenges of Islamic Banking

Agus SudiartoPresident Director

PT Bank Syariah Mandiri

Mr. Agus SudiartoPresident Director of PT. Bank Syariah Mandiri

Mr. Agus Sudiarto was appointed as the President and Managing Director of Bank Syariah Mandiri on May 2014, one of the largest Islamic banks in Indonesia. Prior to his appointment as the Managing Director, he served as Senior Vice President of Special Asset Management Bank Mandiri (2010-2014), Senior Vice President of Assets Management of Bank Mandiri (2007-2007), and Vice President Recovery Manager of Bank Mandiri in Medan (2005-2006). He obtained his law degree from the University of Indonesia in 1988, and Master of Management from the Faculty of Economics, University of Indonesia in 2004.

He is trained under the following programmes, among others, Corporate Debt Management in Singapore; SME & Comm. Banking Attachment Program in New York, U.S.A.; High Impact Leadership in New York, U.S.A.; INSEAD Blue Ocean Strategy in Fountainebleau, France; Leading Team for Growth and Change in Virginia, U.S.A.; Training Great Leader Programme; Training Program Phase III Great Leader; Accountability Session 4DX; Service Excellence for Senior Manager; Mandiri New Horizon Workshop; 60 Hours Coach Certification Training.

Mr. Sudiarto is an Indonesian citizen and was born in Jakarta in 1964.

Contents 1. Opportunities & Challenges

2. Islamic Financial In Indonesia

3. Support for Islamic Financial Development in Indonesia

3

4. Bank Syariah Mandiri (BSM) Profile




4


Summaries of Opportunities & Challenges

5

• Islamic banking is growing rapidly but its penetration is still low

• The Potential number of moslem population in Indonesia

• Hajj Fund

• Infrastructure development

Domestic Market

Rapid growth of global Islamic financial

Indonesia has an opportunity to become one of Islamic economic center

Global Syariah Growth

Opportunities Challenges

• Low public awareness of Islamic banking

Market Dynamic

Inadequate in capital and industry scale

Inadequate in human resources and IT

Limited product and service

Internal capability

Source: GIFR 2015

In the assessment of Global Islamic Financial Report 2015, Indonesia ranked at 7th. That means Indonesia is potential and conducive for Islamic finance development. Based on assessment factors, there are optimism that Indonesia ranked will be higher in next period.

VARIABLES AND % WEIGHTS

VARIABLES%

WEIGHTS

Number of Islamic Banks 21.8Central Sharia Supervisory Regime 19.7Number of Institutions involved in Islamic Finance Industry

20.3

Size of Islamic Financial Asset 13.9Size of Sukuk 6.6Moslem Population 7.2Education and Culture 5.7Regulatory and Legal Infrastructure 4.9

Islamic Finance Country Index (IFCI, 2015)

Opportunities: Conducive Islamic Countries

6

7

• In 2012, around~ 17% of Indonesia's population is in middle class income or achieved > 42 million and will continue to rise to 69 million in 2020

• This fact shows that there are huge market potential that can still be achieved, especially for Islamic banking

* Populasi indonesia 2012: 248,2 juta

Developments and Projections of Middle Class Income in Indonesia (Million)

10 Countries With Largest Muslim Population in the World, 2015

Sumber: mapsofworld.com, wikipedia

32

35

71

74

77

77

134

167

176

209

Morocco

Algeria

Turkey

Iran

Nigeria

Egypt

Bangladesh

India

Pakistan

Indonesia

Share World Muslim Population

12.5%

10.7%

9.0%

7.6%

6.0%

3.9%

3,7%

3.7%

1,9%

1,6%

41.6

68.2

0

10

20

30

40

50

60

70

80

Middle

2012

2020

39%

Sumber: BCG Analysis

Opportunities: The Potential number of moslem population in Indonesia

0%

10%

20%

30%

40%

50%

60%

0% 100% 200% 300%

Banking Penetration

Islam

ic Ba

nkin

g Mar

ket S

hare KSA

Kuwait

Bahrain

Qatar

UAE Malaysia

Jordan

Bangladesh

PakistanIndonesia

Egypt

Turkey

Banking Penetration and Participation Asset Market Share

Indonesia Islamic Banking is a potential market, but still low in penetration. Population above 15 years who have bank account only 36.1%

Population, Account Bank (% Age 15+)

Source: The little Data Book on Financial Inclusion 2015 Source: EY-world-islamic-banking-competitiveness-report-2014-15

Opportunities: Low Banking Penetration

8

333 385 455 515606

93117

143153

159

5053

6984

89

1417

2024

28

2010 2011 2012 2013 2014

GCC ASEAN Turkey & ROW South Asia

9

Global Islamic Banking Assets (USD Miliar) Islamic Banking Assets Contribution in QISMUT+3 (2014)

Sumber: World Islamic Banking Competitiveness Report 2016, EY

490

882

16%1%

2%

3%5%

9%

11%

16%17%

36%

Pakistan Bahrain Indonesia Turkey Qatar

Kuwait UAE Malaysia KSA

Opportunities: Rapid growth of global Islamic financial market

QISMUT: Qatar, Indonesia, Saudi Arabia, Malaysia, the United Arab Emirates and Turkey

51.16

140.29

423.28

338.11

35.63

81.03

Turki

UniEmirat

Malaysia

SaudiArabia

Indonesia

Qatar

10

Asset growth of Islamic Banking In QISMUT Financing Growth of Islamic Banking in QISMUT

Sumber: Bank Sentral, BMI, EY, Islamic Corporation for the Development (ICD) & Thomson Reuters

23%

CAGR 2008 - 2013

34%

Qatar Indonesia Saudi Arabia

23% 6%

Malaysia UAE Turkey

24%

9%

USD billion

31,3%

CAGR Islamic Bank

2008 - 2013

33,4%

11,2%

20,5%

14,6%

29,3%

17,4%

CAGR Conven2008 - 2013

15,9%

3,1%

9,8%

4,9%

18,3%

Opportunities: Indonesia has an opportunity to become one of Islamic economic center

“the potential people who want to go for Hajj about 500,000 people per year, multiplied by an initial deposit of IDR25 million Hajj registration will be an additional funds with outstanding IDR12.5 Tn at least every year. The half of IDR12.5 Tn of potential funding will be placed in sharia securities (state bonds) and the other will be placed in banks”

(Director General of Hajj and Umrah (PHU), Ministry of Religious Affairs, Republic of Indonesia)

11

Opportunities: Hajj fund Management

439,100

92,41920,167

62,2886,601

78,346

144,795 31,483

Road Construction

Railwai City Transport Water Transportation

Electrical Construction

Water Supplay Information, Communication

& Tech

Total

Estimated needs of Indonesian development in five years Indonesian Infrastructure Budget year to year

8,270

10,591 11,317

12,913

21,037 22,778

2011 2012 2013 2014 2015 2016

• As the theme of government work plan, the infrastructure sector became one of the priority sectors nationaldevelopment. State budget for infrastructure spending in 2016 is USD22.78 billion

• The need of investment of infrastructure up to USD439 billion on 2015 – 2019 (source: The NationalDevelopment Planning Board (Bappenas). Therefore, the government need other funding resources to meetinfrastructure financing beside state budget. Islamic banking are expected to be alternative funding resources

• Indonesia Islamic banking has been contributing in financing infrastructure USD1.25 billion• BSM has been contributing to infrastructure development in Indonesia through financing amounted USD501

million and project based sukuk amounted USD273 million

USD million USD million

Opportunities: Infrastructure development

12

Conventional Loyalist

Floating Mass Market

SyariahLoyalist

Financial markets are dominated by

floating mass market

• Recognition and preference for products and services offered are still relatively low

• Lack of incentives for customer change their preferences from conventional products

• Islamic banking still faces public misperception among other related terms as well as the complexity of akadand perception no different with conventional bank product

Challenges: Low public awareness of Islamic banking

13

Challenges: Inadequate in capital and industry scale

14

• Average core capital of islamic bank in Indonesia are still limited compare to other islamic countries

• Regulation of capital adequacy are more tight based on Basel III, so bank need more capital

• From 12 islamic banks, 11 bank had core capital less than Rp5 trillion (USD66,30 billion)

• Impact: islamic banks be limited to expand office network, develop infrastructure, and services (under regulation opening of the network based on core capital)

• Islamic bank have challenge to increase efficiency and being favorite for customer and employee candidate

• products of islamic banking are very common and still imitating conventional banking products

• inadequate services and a limited number of office network

• Inadequate communication and socialization factor

Challenges: Limited product and service

15

• Indonesian education system does not yet support the needs of sharia industry

• Limited educational institution with islamic financial courses

Improper planning to requirement of IT according to business development

Challenges: Inadequate in human resources and IT

16




17


The development of Islamic banking in Indonesia is society driven

18

The development of Islamic banking in Indonesia is driven by society or bottom-up , to meet society needs with prioritize on real sector

Indonesia Malaysia

This is different with development of Islamic banking in Malaysia that more reliant on financial sector and dominated by government driven

Indonesian Sharia Financing Milestone: Preceded by Islamic Micro Finance Institution in the 1990s

1980 1994

Baitul Tamwil Salman Bandung, Kopersi Ridho Gusti Jakarta

IslamicBanking

Takaful

FinancialMarkets

Sukuk

1992 1999

2000

1st Islamic Bank Bank Muamalat Indonesia

2001

2002

2003

2004

2005

2006

2007

2008

2009

• 1st Islamic Branch Bank IFI Syariah

• 2nd Islamic Bank Bank Syariah MandiriOfficeChanneling

Islamic Banking ActUU No 21/2008

1st Takaful CompanyAsuransi Takaful Keluarga

1st Takaful BranchAsuransi Great Eastern

1st Islamic Re-Insurance ReINDO

• Islamic Money Market (IMA Certificate)

• Jakarta Islamic Index

• Islamic Capital Market

• ICM Master Plan (2005)

1st Corporate Sukuk Indosat (Mudharabah)

Sukuk Guidelines (2006)

Sukuk Act & Government Sukuk

2010

LKMS

to Present …19

The presence of islamic banking encourages the development of Islamic financial institutions

Islamic Banking

Other islamic financial institutions (insurance,

multifinance, etc)

Islamic education (law, economy, finance, etc)

Sharia legal services (arbitration, court, etc)

Sharia supervisory board

Islamic financial instruments (islamic securities, retail

sukuk, islamic mutual funds, etc)

Other islamic industry (hotel, IT, MLM)

20

21

Benchmark: Government support plays critical role to support growth

Saudi Arabia –

Growth mostly driven

by market demand –

strong retail client

affinity to Syariah,

despite limited

regulatory support

Bahrain – Syariah banks as an

institutional gateway to broader

Saudi Arabia regions; active

development of regulatory and

industry bodies support, e.g.

AAOIFI & CIBAFI1

1. AAOIFI stands for Accounting and Auditing Organization of Islamic Financial Institutions, CIBAFI stands for The Council of Islamic Banks and Financial Institutions 2. BIBD stands for Bank Islam Brunei DarussalamSource: Expert interviews, BCG analysis

Malaysia – Regulation & government support as

strongest drivers, besides tax incentives,

government leadership, and GLCs involvement.

Coordinated policy framework involving

stakeholders established

Brunei – Government role as

consolidator and industry

builder. Formed BIBD2 as

largest bank in Brunei which

most shares owned by Ministry

of Finance

SINGAPORE• Singapore’s goal of becoming a regional

Islamic finance hub has been dealt a blow by DBS Group Holdings Ltd.’s decision to close its Shariah banking unit. The Islamic Bank of Asia will be gradually wound down as it was “unable to achieve economies of scale,” in a Sept. 14

CAMBODIAVIETNAM

PHILIPPINES

• Islamic Banking Asset: USD1,65M• Market Share: <1% of Banking System• CAGR (2011-2015): 0.7%• Al-Amanah Islamic Investment Bank of

Philippines (AAIIBP), initially established as Philippine Amanah Bank in 1973, remains the sole Islamic bank in the country and has eight branches in Mindanao, as at the end of 2014

BRUNEI

• Islamic Banking Asset: USD4,976.3M• Market Share: 41.5% of Banking System• CAGR (2011-2015): 3.7%• Bank Islam Brunei Darussalam (BIBD)

remains the only retail Islamic bank in the country

THAILAND

• Islamic Banking Asset: USD3,328M• Market Share: 0.7% of Banking System• CAGR (2010-2014): 2.8%• the Islamic Bank of Thailand (IBank) the

nation’s sole Shariah bank

MALAYSIA

• Islamic Banking Asset: USD159,691M• Market Share: 21.3% of Banking System• CAGR (2010-2015): 14.3%

INDONESIA

• Islamic Banking Asset: USD21,492M• Market Share: 4.8% of Banking System• CAGR (2010-2015): 24.9%

22

Benchmark: Islamic Banking Development in South East Asia• Islamic banking is

fairly entrenched in Moslem-majority countries such as Malaysia, Indonesia and Brunei

• Malaysia's Islamic banking is the largest in ASEAN with market share more than 20%

• Indonesia is 2nd

largest Islamic banking in ASEAN, but has strong potential growth in banking to support growing economic activity

Source: BI

Islamic Financial in Indonesia: Number of Players

Source: OJK

23

Rp billion

24

Source: OJK

Islamic Financial in Indonesia: AssetsRp billion

25

Source: OJK

Type of Islamic Bank in Indonesia

Islamic Bank

Full Fledge Islamic Commercial Bank

Islamic Business Unit of a

Conventional Bank

Independent Islamic Bank

Islamic Bank owned by Conventional

Bank

Islamic Rural Bank

Islamic Banking in Indonesia: Number of Bank

3 3 35 6

11 11 11 11 12 12 12

19 20

26 2725

23 24 24 23 22 22 22

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1 2016

Islamic Commercial Bank Islamic Business UnitNumber of banks

92 105 114131 138 150 155 158 163 163 163 163

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q12016

Islamic Rural Bank

1. The Islamic banking industry currently consists of 12 Islamic Commercial Banks, 22 Islamic Business Units and 163 Islamic Rural Banks. The number of Islamic banks increase especially after the issuance of Islamic banking regulation (UU Perbankan Syariah)

2. There was 1 Islamic Business Unit closed (HSBC) in 2013

3. There was 1 Islamic Business Unit spin off to Islamic Commercial Bank (BTPN Syariah) in 2014

26

Source: OJK

98145

195242 272 296 298

2010 2011 2012 2013 2014 2015 Mar-16

2,9113,507 4,068

4,7125,343 5,836 5,870

2010 2011 2012 2013 2014 2015 Mar-16

68103

148184 199 213 213

2010 2011 2012 2013 2014 2015 Mar-16

Islamic Banking in Indonesia: PerformanceIslamic banking growth two times higher than the growth of conventional banking.

Islamic Banking

Conventional Banking

FinancingCAGR

25.6%

Third Party FundsCAGR

24.9%

Asset

CAGR

24.9%

CAGR

17.8%

Financing

CAGR

13.0%

Third Party FundsCAGR

Asset

76115

148184

218 231 233

2010 2011 2012 2013 2014 2015 Mar-16

1,6982,097

2,5603,109

3,4753,845 3,787

2010 2011 2012 2013 2014 2015 Mar-16

2,263 2,669 3,078 3,480 3,897 4,182 4,236

2010 2011 2012 2013 2014 2015 Mar-16

CAGR periode 2010-2015 27Source: OJK

14.9%

Rp Triliun

Rp Triliun

Rp Triliun

Rp Triliun Rp Triliun

Rp Triliun

9 11 1218 19

22 24

2010 2011 2012 2013 2014 2015 Mar-16

320428

513605

703 790 812

2010 2011 2012 2013 2014 2015 Mar-16

Overview Indonesia Islamic Banking: Performance

Capital Adequacy Ratio (CAR) Financing to Deposit Ratio (FDR)

Islamic Banking

Conventional Banking

(%)

Equity

(%)

(%)

(%)

Rp Triliun20.4%

19.8%

Islamic banking CAR at 15.02% decline compared to Dec 2014, which reached 15.74%. CAR decline mainly due to the implementation of regulation about capital charge for operational risk in 2015

16.25 16.63 14.13 14.42 15.74 15.02 14.90

2010 2011 2012 2013 2014 2015 Mar-16

89.67 88.94100.00

100.3291.50 92.14 91.76

2010 2011 2012 2013 2014 2015 Mar-16

Rp Triliun

17.18 16.05 17.43 18.13 19.57 21.39 22.00

2010 2011 2012 2013 2014 2015 Mar-16

75.21 78.77 83.58 89.70 89.42 92.11 89.60

2010 2011 2012 2013 2014 2015 Mar-16

28Source: OJK

Capital Adequacy Ratio (CAR) Financing to Deposit Ratio (FDR)Equity

Islamic Banking in Indonesia: Market Share

Bank Syariah Mandiri is:

• the largest islamic banking in Indonesia. In March 2016 asset BSM reached Rp71.55 trillion with market share 24.03%

• ranked 19th among 119 national banks

• ranked 9th among ASEAN islamicbank

• the only Islamic banking in Indonesia that can operate in Asia’s region based on regulatory capital (Bank BUKU III)

5.869,9895.17%

Others226,2275,97%

BSM71,55

24,03%

Islamic Banks297,774,83%

Rp trillion

3.786,97 94,66%

Others, 162,92 76,31%

BSM,50,57

23,69%

Islamic Banks 213,485,34%

Asset

Financing

4.236,30 94,79% Others 169,50

72,85%

BSM63,16

27,15%

Islamic Banks 232,665,21%

Deposits

Conventional Banks

Conventional Banks

Conventional Banks

March 2016

29Source: OJK

Islamic Insurance Industry in Indonesia: Number of Players

5 5 5 58 9

38 4044 44 45 46

2011 2012 2013 2014 2015 Q1 2016

Full Fledge Business Unit 1. The Islamic Insurance industry currently consists of 9 Full Fledge and 46 Business Units.

2. There was 24 Islamic Life Insurance, 20 Islami Non-Life Insurance and 3 Islamic Re-Insurance.

20 20 20 2124 24

2022

26 25 2628

3 3 3 3 3 3

2011 2012 2013 2014 2015 Q1 2016

Inslamic Life Insurance Islamic Non-Life Insurance Islamic Reinsurance

Source: OJK 30

Islamic Insurance Industry in Indonesia: Assets

9,202 13,239

16,648

22,365 26,519

28,967

2011 2012 2013 2014 2015 Q1 2016

Assets of the Islamic Insurance industry currently are Rp28,97 trillion, with a market share of 3.32%

Assets Rp billion Market ShareIslamic

Insurance Industry3.32%

Conventional Insurance Industry96.68%

7,275 10,016

12,804

18,052

21,614 23,618

1,927 3,223 3,844 4,313 4,313 4,313

2011 2012 2013 2014 2015 Q1 2016

Inslamic Life Insurance Islamic Non-Life Insurance & Re-Insurance Rp billion

Source: OJK31

4,295

22,664 24,639 23,768

22,350 25,453

2011 2012 2013 2014 2015 Q1 2016

Islamic Financing Industry in Indonesia

2 2 2 3 3 3

12

32

42 4137 37

2011 2012 2013 2014 2015 Q1 2016

Full Fledge Business Unit 1. The Islamic Financing industry currently consists of 3 Full Fledge and 37 Business Units.

2. Assets the Islamic Financing industry currently are Rp28,97 trillion, with a market share of 2.92%

Islamic Financing Industry2.93%

Conventional Financing Industry97.07%

Number of Players

AssetsRp billion

32Source: OJK

Market Share




33


a. Determine strategy and direction of Islamic banking development in National Medium Term Development Plan (RPJPM)• Encourage the placement of government funds in Islamic Banking. • Encourage the government financial transactions through Islamic Banking such as

payment of salaries • Increasing investment to develop Islamic Finance human resource• Encourage innovation in Islamic Finance included products and services innovation

through research and study that conducted by Committee, Government, Regulators and industry.

b. Appointing Islamic Banking to:• Implement Hajj Deposit Beneficiary Bank (Bank Penerima Setoran Haji) and manage hajj

fund• facilitate the salaries payment of civil servant, TNI & POLRI. If there are two or three

banks appointed as payment bank, one of them must Islamic Banking. • become government partner in financing program• open Islamic Banking Outlet in parent company. It is make network expansion efficient

Government Support Is The Key Of Islamic Banking Development Through Policy and Strategy (1/2)

Policy &

Strategy

34

c. Determine liquidity instrument for Islamic Banking such as Bank Indonesia ShariaCertificate (SBIS), Bank Indonesia Sharia Deposit Facility (FASBIS), Term Deposit, Repurchase Order, Mudharabah Interbank Investment Certificate (SIMA)

d. Providing technical program assistance of high value activity, priorities, and strategic sector for islamic banking

e. Establishing National Islamic Financial Committee (KNKS) in early 2016. The committee is to be led by President with Governor of Central Bank, several ministers and representative of national sharia council as members. KNKS function is to:• harmonize legislation with other relevant rules• increase Islamic financial literacy, and • develop all things needed for economic development and Islamic finance at the macro

level

f. Issuing Codification Product. It is giving easiness for Islamic Banking to release new product and activities as listed in codification such as Hedging

35

Government Support Is The Key Of Islamic Banking Development Through Policy and Strategy (2/2)

Policy &

Strategy

Ratify regulation:

a. Islamic banking Law. It is making Islamic Banking equal with Conventional Banking and increasing the number of Islamic bank, from 5 to 11 in less than 2 years

b. Islamic Government Securities Law. It is an effort to increase share of Indonesia development financing that using sharia scheme

c. Taxation Law. Eliminating regulation double taxation of murabahah transaction

Law

Conducting Islamic banking campaign for islamic financial and islamic products education

Public

Education

36

.. And also support through Law and Public Education




37


BSM is the biggest sharia bank in Indonesia

38

The Biggest Sharia Bank in Indonesia Large Operational Network Throughout Indonesia

Deposit:Rp 63.79 Trillion

ATM:1.015 Unit

Asset:Rp72.02 Trillion

Financing:Rp52.70 Trillion

Outlet:136 KC, 432 KCP, 60 KK,145 PP dan 50 KLG

RO 3 Jabodetabek

RO 4 Jabar, Jateng, DIY

RO 5 Jatim, Bali

RO 6 Kalsel, Kaltim, Kalbar

RO 7

RO 1 Aceh, Sumut, Riau

RO 2 Sumsel, Sumbar, Jambi, Lampung

Sulsel, Sulteng, Jayapura

7 Regional Office

June 2016

BSM leads the market share of Islamic banking

39

Such as Islamic banking industry that grow twotimes faster than conventional banks, BSM has aCAGR of 16.72%.With their current asset, BSM is the market leaderin the Islamic banking industry in Indonesia withmarket share amounted

BSM total financing reached Rp50.78 trillion

Financing has increased from year to year. BSMmarket share of the finance portfolio amounted23.69%

CAGR of financing by BSM in the last 5 yearsamounted to 16.34%

Rp Trillion

Total deposits reached Rp63.16 millionWith a market share in deposits amounted to27.15%

CAGR of deposits in BSM in the last 5 yearsamounted to 16.46%

22.0432.48

48.67 54.2363.97 66.96 70.37 71.55

2009 2010 2011 2012 2013 2014 2015 Mar-16

16.0623.97

36.6644.75 50.46 49.13 51.09 50.78

2009 2010 2011 2012 2013 2014 2015 Mar-16

19.3429.00

42.62 47.4156.46 59.82 62.11 63.16

2009 2010 2011 2012 2013 2014 2015 Mar-16

BSM leads the market share in Asset, Financing and Funding

Asset

Financing

Funding

40

Bank Syariah Mandiri has New Vision and Mission

1. Achieving sustainable growth and profit exceeding industry average

2. Improving the quality of products and services based on technology that exceeds customers expectation

3. Prioritizing low-cost fund collection and finance disbursement on Micro and SME segment

4. Developing business based on universal sharia values.5. Developing talent management and sound working environment6. Increasing awareness towards the society and environment

Vision

Mission

The Leading and Modern Sharia Bank

41

5 Priority Products

BSM Priority Products

1. Gold Installment and Pawning

3. Griya BSM (BSM Mortgage)

2. Mabrur Junior & BSM Saving

5. Micro financing (Consumptive & productive)

4. Pension financing

42

Several Awards that BSM achieved in 2016

Service Excellence (MRI):- The Best Service Overall- The Best Teller- The Best ATM- The Best Telepon- The 2nd Best CS- The 2nd Satpam

Triple A Islamic Award (The Asset):- The Best Islamic Bank- The Best Islamic Retail Bank- The Best Islamic Trade Finance Bank

Digital Brand (Infobank):- BSM Card: Full Fledge Islamic Bank Debit Card Category- Tabungan BSM: Saving Account Product for Full Fledge Islamic

Bank Category- Bank Syariah Mandiri: Full Fledge Islamic Bank Category

43

One of BSM Strengths is Strategic Alliance and Integrate with Mandiri Group

Strengthening HR Professional

The Support Strategy of Bank Mandiri to BSM not only for business development, but also focusing on 3 main enablers, i.e:

• Assignment for Directors, Commissioner, Senior Management and several Advisor are selected from BM to BSM;

• Education program and training for BSM employees in Mandiri University

• Join employees selection and recruitment processes with MandiriGroup

• Internship Program for BSM employees in Bank Mandiri

• Participation of BSM employees in Bank Mandiri Culture Program (Mandiri Excellence Award)

• Joint procurement for office equipment and vehicles

• Leasing and rent Bank Mandiri’sbuilding

• BSM Debit Card printing via Electronic Channel Group Bank Mandiri

• Preparation of guidelines, socialization, both Key Risk Indicator(KRI) and Loss Event Database (LED)

• Application Development Corsys to manage Risk Control Self Assessment(RCSA) and LED

• Integration of ATM BSM and EDC BSM into ATM and EDC Bank Mandiri

• Sharia Banking Services in Bank Mandiri outlet, such as account opening and transaction;

• Co-branding of Bank Mandiri e-Money

• Marketing BSM Gadai Emas via opening Kantor Layanan Gadai (KLG) BSM in Bank Mandiri outlets

• Gold Pawning selling through banchless banking agent (LakuPandai) Bank Mandiri

• Credit Asset Purchase, Referal, Club deal with Wholesale Banking customer of Bank Mandiri

• Participate in sector solution for Bank Mandiri customer

Operational Excellence Business Development

44

Bank Syariah Mandiri shows a good financial achievement

Items June 2015 June 2016 Growth YoY

Nominal %

1. Assets 66,954 72,023 5,069 7.57%

2. Financing 50,443 52,706 2,264 4.49%

3. Funding 59,164 63,792 4,628 7.82%

a. Current Account 6,686 7,104 418 6.25%

b. Saving 22,046 24,527 2,481 11.25%

c. Time Deposits 30,433 32,162 1,729 5.68%

% CASA 48.56% 49.58%

4. Total Equity 5,073 5,782 710 13.99%

Rp Billion

45

Also a better performance in financial ratios

Ratios June 2015 June 2016

1. ROA 0.56% 0.62%2. ROE 5.32% 6.14%3. Net Revenue (~NIM) 6.34% 6.54%4. Fee Based Ratio 14.51% 12.03%5. BO/PO 94.56% 93.63%6. Cost to Income Ratio 69.87% 63.78%7. Cost of Fund (DPK) 4.26% 3.73%8. FDR 85.26% 82.31%

9. NPF Absolut - (Miliar Rp) 3,355 2,930

10. NPF Nett - (%) 4.70% 3.74%

11. Financing Cash Provision 45.60% 59.58%

12. PPAP Ratio 103.02% 106.74%

13. CAR 11.97% 13.69%

Thank You

46

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