BMRI Retail's Credit Costs Tripled, Treasury's Margin Nearly Vanished - Profit Still Rose 25%

Corporate, Commercial, and Government Institutional Carried Retail and Treasury This Half

Bank Mandiri's consolidated numbers this half look like more of the same steady growth story - but for the first time in this backfill, the filing actually breaks the book apart by segment, and it's a genuinely different read on the business than the headline suggests.

This is Mandiri's H1 2023 published financial statement (period ended June 30, 2023). The Q1 2023 post closed with the bank still described, like the FY2022 post before it, as "a single consolidated banking entity" with no disclosed business segments - this quarter's filing changes that, breaking the consolidated book into nine internally reported segments: Corporate Banking, Commercial Banking, Government Institutional, Retail Banking, Treasury & International Banking, Head Office, and three subsidiary groupings (Sharia, Insurance, and other subsidiaries).

The headline itself looks like more of the same: consolidated net income attributable to owners rose 24.9% YoY to Rp25.23 trillion, again outrunning net interest, sharia and premium income's more modest 11.7% growth. But the segment table shows that growth wasn't broad-based - it was concentrated almost entirely in Corporate Banking (+4.6%), Commercial Banking (+75.0%), Government Institutional (+80.8%), and the subsidiaries (Sharia +31.2%, Insurance +15.0%, other subsidiaries +55.8%). Retail Banking - the single largest profit contributor at Rp12.40 trillion - actually fell 20.7% YoY, and Treasury & International Banking collapsed 73.9% YoY to just Rp2.18 trillion. Two of Mandiri's largest lines of business are moving backwards, and a reader looking only at the consolidated number would never know it (see Corporate, Commercial and Government Institutional Banking below for what's actually driving Retail's and Treasury's declines).

The Prescription

Mandiri's edge, as the FY2022 and Q1 2023 posts argued, is balance-sheet scale funding a corporate and state-linked book - but this quarter's segment disclosure shows that edge is currently propping up two much weaker lines rather than compounding on top of them. The operational move worth making explicit: Mandiri should keep disclosing this segment breakdown every quarter going forward (it wasn't available for either of the first two quarters in this backfill) and use it internally to re-price Treasury & International Banking's funding book - a segment whose net interest income fell 83.6% YoY because its interest expense grew nearly six times as fast as its interest income is a segment whose internal transfer-pricing model isn't keeping pace with the rate-hiking cycle, and that's a fixable pricing problem, not a demand problem.

What it should stop doing: letting Retail Banking's credit-cost line move without comment. Retail's impairment charge nearly quadrupled YoY (from Rp3.55 trillion to Rp13.38 trillion) even as the bank's headline consolidated NPL ratio kept improving - a reader relying on the consolidated asset-quality ratios alone would miss that the segment actually originating most of the bank's retail risk is provisioning far more aggressively than a year ago, and that detail belongs in the investor narrative, not just the segment footnote.

Key Financial Metrics

H1 2023 vs H1 2022 (P&L, consolidated), and June 30, 2023 vs December 31, 2022 (balance sheet, consolidated)

FX: IDR 14,992.50 = USD 1 (June 30, 2023 close, per the report's own year-end reference rate disclosure); IDR 15,567.50 = USD 1 (December 31, 2022 close, same disclosure); IDR 14,921.90 = USD 1 (June 30, 2022 close).

Metric	H1 2023 (IDR)	H1 2023 (USD)	H1 2022 (IDR)	YoY
Net interest, sharia & premium income, net ("Net Revenue" equivalent)	Rp48,252,517M	~$3.22B	Rp43,207,579M	✅ +11.7%
Non-interest operating expense, net	Rp24,553,571M	~$1.64B	Rp23,928,195M	⚠️ +2.6%
Operating Income	Rp34,417,893M	~$2.30B	Rp27,727,525M	✅ +24.1%
Net Income (attributable to owners)	Rp25,231,887M	~$1.68B	Rp20,209,210M	✅ +24.9%
EPS (basic, six-month period)	Rp360.46	~$0.024	Rp433.20	⚠️ -16.8%

EPS fell despite net income rising - see Beyond the Usual below for why that's a share-count mechanic, not a performance problem.

Balance sheet metric	Jun 30, 2023 (IDR)	Jun 30, 2023 (USD)	Dec 31, 2022 (IDR)	H1 change
Total Assets	Rp1,963,987,471M	~$131.0B	Rp1,992,544,687M	⚠️ -1.4%
Loans (gross, Kredit)	Rp1,238,806,037M	~$82.6B	Rp1,172,599,882M	✅ +5.7%
Total Deposits (Giro + Tabungan + Deposito, incl. sharia)	Rp1,430,129,596M	~$95.4B	Rp1,490,844,592M	⚠️ -4.1%
Total Liabilities	Rp1,516,625,484M	~$101.2B	Rp1,544,096,631M	➖ -1.8%
Total Equity (attributable to owners)	Rp231,009,494M	~$15.4B	Rp229,678,786M	➖ +0.6%

Operating cash flow this half was negative Rp106.25 trillion (~-$7.08B; against Rp0.94 trillion of fixed- and intangible-asset capex) - a much larger negative swing than H1 2022's modest +Rp0.36 trillion, driven by the same kind of deposit-outflow mechanics flagged in the Q1 2023 post (demand deposits alone fell Rp43.27 trillion in the operating cash flow walk this half, on top of loan growth funded from the balance sheet). Total cash at period-end is Rp192,805,705M (~$12.86B), down from Rp274,889,544M at the start of the period. Total equity attributable to owners grew just 0.6% despite Rp25.2 trillion of profit added, almost entirely because the FY2022 dividend flagged as accrued-but-unpaid in the Q1 2023 post was actually paid out in cash this half - Rp24.70 trillion, per the cash flow statement - nearly offsetting the half's entire profit contribution to equity.

A bank whose consolidated profit rose a healthy 24.9% while its two biggest segments both went backwards isn't the same story as a bank growing broadly - see the segment breakdown below for where the growth (and the offsetting weakness) actually sits.

Key Operational Metrics

Consolidated ratios from the bank's own H1 2023 results presentation, except where marked bank-only (computed directly from the filed statements)

Liquidity

• Loan-to-Deposit Ratio (LDR) - consolidated: 88.4%, up from 85.7% a year earlier (per the bank's own H1 2023 presentation). Bank-only (computed directly from the filed parent-entity balance sheet): 86.30%, up sharply from 78.17% at December 31, 2022 - continuing the deposit-outflow-driven LDR climb the Q1 2023 post first flagged (77.61% → 84.90% → 86.30% across the three quarters backfilled so far).
• CASA^» ratio - consolidated: 73.4%, up from 70.8% a year earlier (a 2.7-point increase, per the bank's own H1 2023 presentation). Bank-only: 78.22%, up modestly from 77.64% at December 31, 2022.

Credit Quality

• NPL^» ratio - gross: consolidated 1.64% (down from 2.42% a year earlier); bank-only 1.53% (down from 1.88% at December 31, 2022) - continuing the improvement flagged in both prior posts.
• NPL ratio - net: consolidated 0.35% (up from 0.31% a year earlier); bank-only 0.29% (up from 0.26% at December 31, 2022) - a small tick up even as the gross ratio keeps improving, worth watching (see Beyond the Usual).
• NPL Coverage: consolidated 304%, up from 253% a year earlier - coverage strengthened even as net NPL ticked up, consistent with a bank still building reserves conservatively rather than releasing them against a worsening book.
• Loan at Risk^» (LaR) ratio: 10.3%, down from 14.6% a year earlier - the broadest asset-quality measure (adds special-mention and Category 1 restructured loans to NPLs) continuing its multi-quarter improvement.
• Restructured Covid-era loans (consolidated, since this quarter's disclosure only breaks the schedule out on that basis): Rp108.06 trillion, 8.72% of the consolidated loan book, down from 10.71% at December 31, 2022 on the same consolidated basis - continuing the improvement the FY2022 and Q1 2023 posts tracked on a bank-only basis (10.9% → 10.0%), though the basis switch means it isn't strictly apples-to-apples with those earlier figures.

Capital

• CAR (capital adequacy)^»: consolidated 20.70%, up from 18.23% a year earlier; bank-only 19.96% (up from 19.46% at December 31, 2022) - still built mostly from CET1 with a small Tier 2 layer.
• Off-balance-sheet commitments and contingencies: approximately Rp367.27 trillion (consolidated), about 18.70% of total consolidated assets, up from roughly 17.61% at December 31, 2022 using the same methodology as the FY2022 and Q1 2023 posts (17.5% and 18.44% respectively) - a routine metric update rather than a fresh finding at this point, tracked here going forward rather than as its own Beyond the Usual item.

Profitability & Efficiency

• NIM^» - consolidated: 5.56%, up from 5.37% a year earlier. Not separately disclosed as bank-only in this filing.
• ROA - after tax: consolidated 2.55% (annualized), up from 2.30% a year earlier.
• ROE - after tax: consolidated 21.9% (annualized; PATMI over average equity excluding minority interest, per the bank's own formula), up from 19.9% a year earlier. Not directly comparable to the OJK regulatory-formula ROE quoted in the FY2022 and Q1 2023 posts, which used a different base.
• Cost-to-Income Ratio^» (CIR): consolidated 36.8%, improved from 40.3% a year earlier.
• Cost of Credit: 1.19% (annualized), improved from 1.42% a year earlier - consistent with the consolidated NPL ratio's improvement, even as Retail Banking's own segment-level credit cost moved sharply in the other direction (see the segment section below).

Not available in this filing: bank-only NIM, ROA, ROE, BOPO and CIR (only consolidated figures are disclosed in this quarter's presentation; the granular bank-only ratio table used implicitly in earlier posts isn't part of this document), and no earnings call transcript was issued alongside this quarter's results.

Nine Segments, But Two Are Doing the Heavy Lifting on Risk

Mandiri now discloses nine internally reported segments: Corporate Banking, Commercial Banking, Government Institutional, Retail Banking, Treasury & International Banking, Head Office, and three subsidiary groupings (Sharia, Insurance, other subsidiaries). By gross loans, Corporate Banking is the largest at 30.3% of the book, followed by Retail Banking (27.1%), the Sharia subsidiary - Bank Syariah Indonesia (17.8%), Commercial Banking (17.4%), other subsidiaries (3.1%), Government Institutional (4.1%), and Treasury & International Banking (a marginal 0.5%, since Treasury doesn't originate customer loans in the same way). By net income, Retail Banking is still the single largest contributor despite this half's decline.

Retail Banking: Revenue Grew, But Credit Costs Grew Faster

Retail Banking's net interest and sharia income actually rose a healthy 34.6% YoY (Rp16.55 trillion → Rp22.27 trillion H1) - this isn't a segment losing customers or pricing power. What sank its net income 20.7% YoY (Rp15.64 trillion → Rp12.40 trillion) is the allowance line: the segment's impairment charge on financial assets went from Rp3.55 trillion in H1 2022 to Rp13.38 trillion in H1 2023, a 276.7% increase that swallowed all of the segment's revenue growth and then some. Since the bank's consolidated gross NPL ratio kept improving over the same period, this reads as Mandiri front-loading provisions against retail risk (consumer, mortgage, and SME lending) rather than reacting to an actual deterioration already showing up in delinquencies - a conservative posture, but one that makes Retail look like a shrinking business in the segment table when the underlying revenue trend says otherwise.

Treasury & International Banking: A Funding-Cost Squeeze, Not a Demand Problem

Treasury & International Banking's net income fell 73.9% YoY (Rp8.32 trillion → Rp2.18 trillion) - the sharpest move of any segment. The mechanism is a funding-cost squeeze: segment interest income actually rose 40.4% YoY (Rp8.31 trillion → Rp11.67 trillion), but segment interest expense rose 460.1% YoY (Rp1.89 trillion → Rp10.62 trillion) over the same six months, wiping out nearly all of the segment's net interest income (down 83.6% YoY, to just Rp1.05 trillion). Treasury & International Banking is the segment that carries the bank's wholesale, interbank, and internal transfer-pricing funding book - as benchmark rates rose through the hiking cycle that began in 2022, the cost of that funding rose far faster than what Treasury earns on its own book, while the segments that actually lend to customers (Corporate, Commercial, Retail) get their funding priced from Treasury and keep more of their own spread. It's a genuine margin-compression story sitting entirely inside one segment, invisible in the consolidated NIM figure, which actually improved this half.

Corporate, Commercial, and Government Institutional Banking

The three segments that cover Mandiri's core wholesale and public-sector lending relationships all grew net income well ahead of the consolidated average: Corporate Banking +4.6% (Rp7.32 trillion → Rp7.66 trillion), Commercial Banking +75.0% (Rp2.04 trillion → Rp3.56 trillion), and Government Institutional +80.8% (Rp0.80 trillion → Rp1.45 trillion). None of the three carries Treasury's funding-cost exposure or Retail's provisioning load, and all three benefited from segment-level impairment charges that were flat-to-favorable YoY rather than sharply higher. Head Office's segment loss also narrowed substantially (from -Rp12.90 trillion to -Rp3.54 trillion) - it absorbs centralized costs, tax expense, and elimination entries rather than representing a standalone business, so a shrinking loss there is mostly a base-effect and cost-allocation artifact, not a new profit center.

Segment Comparison

Segment	Gross Loans, Jun 30 2023	% of Loan Book	Net Income H1 2023	Net Income H1 2022	YoY
Corporate Banking	Rp375.68T	30.3%	Rp7,655,468M	Rp7,321,067M	✅ +4.6%
Retail Banking	Rp336.13T	27.1%	Rp12,395,146M	Rp15,638,129M	⚠️ -20.7%
Subsidiary - Sharia (BSI)	Rp220.28T	17.8%	Rp2,781,965M	Rp2,120,608M	✅ +31.2%
Commercial Banking	Rp215.70T	17.4%	Rp3,561,412M	Rp2,035,418M	✅ +75.0%
Other Subsidiaries	Rp38.91T	3.1%	Rp1,704,385M	Rp1,094,190M	✅ +55.8%
Government Institutional	Rp50.80T	4.1%	Rp1,445,562M	Rp799,579M	✅ +80.8%
Treasury & International Banking	Rp6.37T	0.5%	Rp2,176,170M	Rp8,321,076M	⚠️ -73.9%
Subsidiary - Insurance	-	0.0%	Rp779,700M	Rp678,132M	✅ +15.0%
Head Office	~Rp0	0.0%	-Rp3,540,510M	-Rp12,901,060M	Loss narrowed
Elimination	-Rp5.07T	-	-Rp1,255,697M	-Rp3,062,831M	-
Total (pre-NCI split)	Rp1,238.81T	100%	Rp27,703,601M	Rp22,044,308M	✅ +25.7%

The two segments actually originating the most customer credit risk and carrying the bank's funding book - Retail and Treasury, together still 27.6% of gross loans - are the ones that shrank. The four segments and subsidiary groups that grew fastest (Commercial, Government Institutional, Sharia, other subsidiaries) together are still less than a quarter of the loan book. That's a lopsided growth mix worth tracking every quarter now that it's actually disclosed.

Mandiri Shares Extended Their Run, But This Half's Own Move Was Modest

Bank Mandiri's FY2022 post already covered the bulk of the 2021-2022 recovery rally in detail. On a post-split-adjusted basis (see the note below), shares closed at approximately Rp5,200 on June 27, 2023 - the last trading day of the half, since the Indonesia Stock Exchange was closed June 28-30, 2023 for the Idul Adha holiday period. That's a +4.8% move from the split-adjusted Rp4,962.5 close on December 30, 2022 (matching the bank's own investor presentation, which shows the same +4.8% YTD figure against the Jakarta Composite Index's -2.8% over the same window) - a modest, unremarkable move for the half taken on its own.

The two-year window is a different story: from roughly Rp2,950 (split-adjusted) in June 2021 to Rp5,200 in June 2023 is a +76.3% move, continuing the same post-pandemic profit-recovery re-rating the FY2022 post already explained rather than anything new this half. (Nominal-price note: shares actually traded around Rp10,325-10,400 through the December 2022-March 2023 period before Bank Mandiri's 1:2 stock split took effect April 6, 2023 - see Beyond the Usual for what that split did to the EPS comparison above. All prices in this section are shown on a consistent post-split basis so the percentages are comparable across the window; only the June 2023 price is the actual nominal price quoted on the exchange, since no further split has occurred since.)

Beyond the Usual

"Related-party lending" is a much bigger number than the earlier posts' framing suggested - and it overturns what two prior posts called a rounding error

The FY2022 and Q1 2023 posts both described loans to related parties as "a rounding error" - roughly 0.42% and then 0.51% of the bank-only loan book. This quarter's filing discloses a far larger figure under the exact same "related party" heading: Rp217.15 trillion of consolidated loans to related parties, 17.53% of the total loan book, and total related-party assets of Rp576.41 trillion, 29.35% of total consolidated assets - a jump of more than 40x versus what the earlier posts reported. That gap isn't a data error and it isn't a real quarter-over-quarter change in Mandiri's lending behavior - it's a definitional one. Bank Mandiri's related-party disclosure follows the accounting standard's broad definition (any entity under common control), which for a majority state-owned bank sweeps in every other Indonesian state-owned enterprise, not just management-affiliated entities, pension funds, and true corporate affiliates. The narrower figure the earlier posts cited was almost certainly the small affiliate/pension-fund subset, not the full related-party population this filing discloses under the same note number. For a bank whose controlling shareholder is the state, a large related-party book by this definition is structurally normal rather than alarming - but it means the "rounding error" framing in both the FY2022 and Q1 2023 posts understated the true scale of related-party exposure by an order of magnitude, and a reader comparing "related-party exposure" across quarters needs to know which definition is being used, since the two numbers differ by more than 40x. This correction is worth carrying forward: any future reference to Mandiri's related-party lending should default to the broader, consolidated BUMN-wide figure unless the narrower bank-only basis is explicitly flagged (see the 9M 2023 post for how this plays out the next time the narrow figure surfaces alone).

Net NPL ticked up even as gross NPL kept improving

Bank-only net NPL rose slightly to 0.29% (from 0.26% at December 31, 2022) even as bank-only gross NPL improved to 1.53% (from 1.88%) - the same small divergence shows up at the consolidated level (net NPL 0.35% vs 0.31% a year earlier, gross NPL 1.64% vs 2.42%). NPL coverage still strengthened over the same period (304% vs 253% consolidated), so this isn't evidence of under-reserving - but it's the first quarter in this backfill where the net and gross NPL trends point in slightly different directions, and worth checking again next quarter to see if it's noise or the start of a pattern.

EPS fell 16.8% on higher profit - a stock-split mechanic, not a performance problem

Basic EPS fell from Rp433.20 (H1 2022) to Rp360.46 (H1 2023) even though net income attributable to owners rose 24.9% over the same period. The reason is entirely mechanical: Bank Mandiri's 1:2 stock split took effect April 6, 2023, roughly halfway through this six-month period, and the bank's own accounting policy note discloses the weighted-average share count used for EPS as 69,999,999,999 for H1 2023 versus 46,651,357,241 for H1 2022 - a 50% jump in the share base used to divide profit, timed almost exactly to when the split actually happened rather than applied retroactively to the comparative period. A reader skimming EPS alone would see a declining number attached to a bank whose actual profit grew by a quarter; the share count, not the business, is what moved.

A Rp5 trillion sustainability bond priced just after the quarter closed

Four days after this reporting period ended, on July 4, 2023, Bank Mandiri issued the first phase of a "Sustainable Environmental Continuous Bond" - Rp5 trillion split into a 3-year tranche (Rp1.95 trillion at 5.80%) and a 5-year tranche (Rp3.05 trillion at 6.10%). It's a genuinely interesting funding-mix detail for a bank this size to be tapping a labeled sustainability-bond format at scale, and sits alongside a smaller Rp691.7 billion bond issued by subsidiary PT Mandiri Tunas Finance a week later - both priced too late to affect this quarter's own numbers, but worth knowing as context for the next one.

Board and key-personnel pay is a disclosed, small slice of the cost base

Total gross salaries, allowances, bonuses, tantiem, and long-term benefits for the Boards of Commissioners and Directors, the Audit and Risk Oversight Committees, the Sharia Supervisory Board, and senior executives came to Rp788.36 billion for the half, or 3.21% of total consolidated other operating expenses (versus Rp761.00 billion, 3.18%, a year earlier) - the bank's own footnote discloses this figure explicitly every period. It's a small, stable share of the cost base for a bank this size, and worth having on record as a baseline before comparing it to a future quarter.

Target Valuation Range

Market cap Rp485.33 trillion (~$32.37B), ~2.1x P/B, ~10.5x P/E. Bottom line: Mandiri still looks fairly to attractively valued against its own profitability - a trailing P/E of roughly 10.5x and P/B of roughly 2.1x for a bank running a 21.9% annualized consolidated ROE is essentially unchanged from the FY2022 and Q1 2023 reads once the stock split is accounted for, and still sits below what a bank this profitable would command with a cleaner ownership structure.

Using trailing-twelve-month net income (FY2022's Rp41.17 trillion, less H1 2022's Rp20.21 trillion, plus this half's Rp25.23 trillion, for TTM net income of Rp46.19 trillion) and the post-split share count of 93,333,333,332:

Market cap → book value	Q2 2023
Share price (period-end)	Rp5,200
Shares outstanding	93,333,333,332
Market capitalization	Rp485.33 trillion (~$32.37B)
Total equity (book value)	Rp231,009,494M
Book value per share	Rp2,475

Peer-multiple sanity check	Q1 2023	Q2 2023	Change
P/B	2.2x	2.1x	down
P/E	11.0x	10.5x	down

P/E (TTM): ~10.5x, using TTM EPS of approximately Rp494.93, against the Rp5,200 close on June 27, 2023. P/B: ~2.1x, using book value per share of approximately Rp2,475 (Rp231,009,494M total equity attributable to owners ÷ 93,333,333,332 shares) - roughly half the FY2022 and Q1 2023 posts' per-share figures purely because the share count doubled, not because book value fell. Market capitalization: approximately Rp485.33 trillion (~$32.37B). These multiples are close to the bank's own investor presentation, which shows a trailing 11.1x P/E and 2.22x P/B for the same period using its own EPS methodology - the small gap is a methodology difference (their trailing EPS calculation versus a strict last-twelve-months figure), not a disagreement about the underlying business. Both readings remain well below BBCA's historical multiples on a similar ROE profile (~18x P/E, ~3.3x P/B in its earliest backfilled quarters - see BCA's Q1 2016 post, directional context rather than a same-period read). A full DCF still isn't included here - three quarters of Mandiri's own trailing data (FY2022, Q1 2023, H1 2023) still isn't enough to responsibly model a multi-year loan growth, margin, and cost-of-equity trajectory, especially with this quarter's segment data showing two major lines moving in different directions. The peer-multiple read remains the honest valuation lens until more of that trend is on record.

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