UPDATE 2-Indonesia Mandiri Q1 net jumps on fee income

Published: 25 Apr 2010 17:37:20 PST

* Q1 net profit up 43.1 percent to 2.003 trillion rupiah

* Q1 loan growth of 14.2 percent y/y

* FY loan growth seen at 15-18 percent

* Aims for 22-25 percent increase in 2010 fee-based income

* May use sub-debt funding instead of rights issue

JAKARTA, April 23 - Indonesia's PT Bank Mandiri said it aimed to continue increasing its fee income this year after a rise in that revenue combined with a fall in loan provisions led to a a jump in first-quarter net profit.

State-controlled Mandiri, the country's largest lender by assets, said lending grew 14.2 percent in the first quarter and it expected full-year loan growth of 15 to 18 percent, thanks to the combination of record low interest rates and strong consumer demand in Southeast Asia's biggest economy.

"One of the main reasons for the growth is that we managed to increase our fee-based income," said Agus Martowardojo, Mandiri's president director, adding the bank "will focus on increasing our fee-based income up to 22 to 25 percent this year."

The bank said in a statement its provisions fell almost 50 percent in the first three months to 692 billion rupiah, from 1.375 trillion rupiah a year earlier.

Martowardojo also said that Mandiri's planned rights issue, aimed at raising 6 trillion to 7 trillion rupiah in the second half, was still on track, pending approval from the government and the parliament.

"But if the market is too crowded and it's not possible for us to do that, then we will issue 3 trillion rupiah in subordinated debt this year or early next year," he said.

Several Indonesian companies have rushed to announce IPOs, share sales and rights issues as the benchmark stock index hovered around an all-time high.

Before obtaining support from the state-owned enterprises ministry for a rights issue, Mandiri had said in January that it planned to raise $200-$300 million from an issue of subordinated debt this year.

Mandiri has said that it needs to increase its capital in order to sustain credit growth of up about 20 percent a year until 2014, while maintaining its capital adequacy ratio at about 16 percent.

First-quarter net profit rose 43.1 percent to 2.003 trillion rupiah ($222.3 million). Net interest income rose 5.5 percent to 4.634 trillion rupiah in the same period, while other operating income jumped 22.6 percent to 1.409 trillion rupiah.

Analysts have forecast 2010 net profit of 8.528 trillion rupiah, according to Thomson Reuters I/B/E/S, an increase of about a fifth from last year.

The state-owned lender last month reported 2009 net profit of 7.155 trillion rupiah, up 35.6 percent from 2008.

Bank Mandiri shares closed down 0.93 percent on Friday, while the broader index was down 0.06 percent. (Editing by Sara Webb and Karen Foster)