JAKARTA (Reuters) - Indonesia’s largest bank by assets, PT Bank Mandiri Tbk (BMRI.JK), plans to open a full branch in Singapore as it makes a push into private banking in the city-state by targeting freshly declared wealth under Indonesia’s tax amnesty scheme.
Most of the offshore assets declared by Indonesian taxpayers during the amnesty program, which ended on March 31, were kept in Singapore. The assets that were previously hidden there were valued at 741.6 trillion rupiah ($55.7 billion).
Singapore and Indonesia said last week that they were ready to share financial data automatically for tax purposes. Both countries are signatories to the Automatic Exchange of Financial Account Information (AEOI) led by the Organisation for Economic Cooperation and Development.
Mandiri is eyeing Indonesian clients who have businesses in the country but opted for private banking services in Singapore, Chief Executive Kartika Wirjoatmodjo said, adding that it had recently hired two wealth managers in the city-state.
“With the tax amnesty and AEOI, everything is open and transparent now,” Wirjoatmodjo said. “Our hope is they don’t have to put their money in Singapore banks any more, but rather in national banks.”
Mandiri currently has a branch in Singapore that helps Singapore and Indonesia-related companies with their working capital and project finance requirements, according to its website.
The lender will talk to Singapore authorities about converting it into a “full branch” offering a wider range of services, said Corporate Secretary Rohan Hafas.
Mandiri reported a 34 percent rise in first-half net profit on Wednesday, supported by an increase in fee-based income and a decline in non-performing loans (NPL).
The state-controlled lender posted a net profit of 9.5 trillion rupiah ($713.4 million) for the six months ended June 30, up from 7.1 trillion rupiah a year earlier.
Mandiri has seen “good loan growth” in the oil palm plantations, construction, as well as food and beverage sectors, said Ahmad Siddik Badruddin, director of risk management and compliance.
But it has been more selective in the metal trading and textile sectors, Badruddin added.
Reporting by Cindy Silviana and Eveline Danubrata; Additional reporting by Hidayat Setiaji; Editing by Muralikumar Anantharaman and Adrian Croft