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RETAIL BANKING | Cesar Tordesillas, Indonesia
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Bank Mandiri targets more low cost funds

Bank Mandiri will focus on increasing its share of low-cost third-party funds such as savings and current accounts to 70 percent.

The bank hopes to push down its lending rate with the move.

The nation’s commercial banks often offer their best customers lending rates of about 7 percent to 16 percent.

Mortgages can be taken out for as low as 7 percent.

“Our low-cost funds target approximately 68 percent of total deposits this year; currently they’re still at 66 percent,” said Budi Gunadi Sadikin, Mandiri’s director of micro and retail banking.

“Clearly we expect low-cost funds to reach 70 percent or more, like at the other big banks," he added.

The ratio of low-cost funds to total funds at Bank Central Asia was about 77 percent last year.

Budi said most Indonesian banks relied on major depositors to accumulate funds. This type of customer, he said,

was sensitive to changes in interest rate and very likely to move funds to other banks, “while savings andcurrent account owners tend to be very loyal.


Mandiri accumulated Rp 403.5 trillion in third-party funds during the first quarter, a 13 percent increase from Rp 356.7 trillion in the same period a year earlier. Of that amount, savings rose 24 percent to Rp 163.9trillion, while current accounts rose to Rp 80.4 trillion.

“If we can increase the savings and current accounts, we can have cheap funds and also fee-based income,” Budi said. Mandiri’s fee-based income last year was Rp 2.74 trillion, or 30 percent of its revenue.

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