Indonesia's Syariah Mandiri gets $31-M capital boost

Bank Mandiri injected US$31 million or Rp 300 billionto its Islamic unit. Bank Syariah Mandiri.

The additional funds will boost Bank Syariah Mandiri’s capital to Rp 4.2 trillion.

The Islamic bank is aiming to lift its capital to Rp 5 trillion by the end of this year using retained earnings, said Yuslam Fauzi, Syariah Mandiri’s managing director.

Yuslam said that Rp 5 trillion in capital would allow Syariah Mandiri to conduct the broader banking activities permitted under the central bank’s new multi-license rule. Bank Indonesia now allows institutions to conduct

banking activities in line with the size of their capital.

“Hopefully by the end of 2013 we can reach BUKU 3,” said Yuslam, referring to the second highest banking tier in the new multi-license regulation.

BUKU 3 banks can handle transactions and give foreign currency loans. Yuslam said that the lender was also considering establishing a trust business division should it reach the level.

Its financing rose 23 percent to Rp 41.8 trillion in the first nine months last year from Rp 34 trillion in the same period a year earlier. Syariah Mandiri disbursed 74 percent of its total financing to small and medium enterprises last year, Yuslam said, adding that the bank aims to increase the portion to 95 percent of the total financing this year.

To achieve these targets, Syariah Mandiri will use some of its capital to establish more outlets specifically catering to SMEs, Yuslam said. Currently Syariah Mandiri has 720 such outlets across Indonesia.

For more.