PT Bank Syariah Mandiri Sustainable Healthy, Distributing ... AR 2017 - ENG - Lap... · FRONT BROSUR BACK gunakan mandiri syariah debit ... kartu mandiri syariah debit adalah produk

Rp

GrowingSustainable Healthy,Distributing Blessingsto the Nation

Annual Report 2017

PT Bank Syariah Mandiri

DisclaimerThis annual report contains statements of financial conditions, operation results, projections, plans, strategies, policies, and the Company’s objectives, which are classified as a forward-looking statements based on prevailing law and regulations except those that are historical. Those statements are subject to known and unknown risk prospects, uncertainties, and causing of actual results by dissimilar material reported. The prospective statements in this annual report based on assumptions on the current and future conditions of the Company and also the business environment in which the company runs its business activities. The Company has no obligation to guarantee that all assumptions and projections presented will bring specific results as expected. This report also contains the word of “Bank Syariah Mandiri”, “BSM”, or the “Company” which is defined as PT Bank Syariah Mandiri as the Company that engages in banking business with sharia principles.

Growing Sustainable Healthy, Distributing Blessings

to the NationAll praise is due to Allah, Bank Syariah Mandiri still showed a positive performance growth in 2017 that enabled the Bank to continuously contribute in developing the Country’s economy and distributing blessing for people. Team spirit and harmony in our plan to record best achievement in the Company, transformation effort, and accurate strategy had driven a result to the Company in 2017. That achievement was shown from both financial and non-financial aspects.

Contribution to develop the Country’s economy and distribute blessing for people, was shown with our partnership on SME financing. In 2017, SME financing that comprises of Small and Micro segment had portfolio of 21.77% (above OJK provision of SME financing). Composition of Micro segment financing grew by 2.78% (year on year) to RP4,297 million. Small/Business Banking Segment financing to Rp8,927 million. This segment is focused on consolidated quality improvement.

On the other side, Bank continuously showing its commitment and social as well as environmental responsibility initiative through a series of Corporate Social Responsibility (CSR) program. In CSR implementation, BSM synergizes with Lembaga Amil Zakat (Laznas) BSM/partner institution in distributing the Company’s zakat fund and implementing humanity programs. BSM CSR implementation is based on 3 (three) pillars of: 1) Spirituality (Character Building) in the form of assistance in mosque/mushalla construction and its supporting facilities, assistance of da’wah and religious activities, and others. 2)

National Contribution in the form of scholarship to students in need, assistance of school/boarding school construction, natural disaster donation, and so on. 3) Economic Empowerment in the form of capital assistance, competency improvement, and entrepreneurship building. For example: BSM Culinary Area, small enterprise training and capital assistance, and others.

In 2017, BSM had successfully distributed CSR fund from zakat fund amounted to RP24.64 billion and social fund distributed amounted to Rp21.35 billion. That CSR fund distribution was taken through the programs of Mitra Umat, Simpati Umat and Didik Umat. Bank Syariah Mandiri continuously manages to maximize its profit in line with the aim to provide the greatest benefits for people and planet.

Some of CSR programs were also focused on religious facility (mosque) activity as a religious place that has to be clean and convenient. Therefore, the Management expects that each mosque located near the branch offices of Bank Syariah Mandiri should be clean and well maintained. As of September 2017, Bank Syariah Mandiri had disbursed BSM Program of Distributing Blessing budget amounted to Rp20 billion that was distributed to more than 412 outlets of Bank Syariah Mandiri spread throughout Indonesia. Therefore, BSM is present as sharia bank that grows and distributes blessing to the nation.

1PT Bank Syariah Mandiri Annual Report 2017

Theme Continuity

Strengthening Foundation,Growing Sustainably

BSM is committed to become a sustainable growing company. Therefore, the foundation of spirit, objective, and goals of BSM becomes the roots that could not be ignored. That fundamental element resulted on corporate culture that became the working spirit in its performance and brought BSM to consistently perform and contribute to Indonesia.

2014 2015

Laporan Tahunan 2015

PT Bank Syar iah Mandi r i

Spirit of Transformationto Win

After strengthening the foundation to keep growing sustainably as the theme of Annual Report 2014, then in Annual Report 2015, Bank decided the theme of “ Spirit of Transformation to Win”.


2016

2017

Rp

Tumbuh SehatBerkelanjutan,Mengalirkan Berkahuntuk Negeri

Laporan Tahunan 2017

PT Bank Syariah Mandiri

Grow with Quality

Management in 2016 was committed to grow the business with quality and sustainability. This theme was chosen after in 2015, BSM included the Company’s transformation principles related to Corporate Plan 2016-2020 implementation.

Grow with Quality was taken by maintaining business and operational process transparency in accordance with prevailing provisions including supervision on the aspects of corporate governance, prudentiality, legality, and sharia principles.

By growing with quality, BSM was able to strengthen its contribution to the nation’s economic development especially on society welfare improvement through bank business and also Corporate Social Responsibility (CSR) activities.

Growing Sustainable Healthy,Distributing Blessing to the Nation

All praise is due to Allah, Bank Syariah Mandiri still showed a positive performance growth in 2017 that enabled the Bank to continuously contribute in developing the Country’s economy and distributing blessing for people.


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POSISIONING

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Tabungan

POSITIONING

The Company’s Excellence in 2017

A BThe Largest Sharia Market SharePresence in 1999, currently Bank Syariah Mandiri is a sharia bank with the largest market share in sharia bank industry. That market share covers assets, third party fund, and loans. Assets market share as of December 2017 was 20.73%, Third Party Fund 23.27% and Loans 21.24%.

Survey to public showed the image of Bank Syariah Mandiri as hajj (services) bank. The survey result taken by Frontier in 2017 was strengthened with market share of BSM regular hajj register on Integrated Hajj Computerized System (siskohat) that reached 23% or total pilgrims that earned hajj portion reached 134,605 people out of total pilgrims that obtained portion around 590,368 people.

To strengthen hajj services in 2017, Bank Syariah Mandiri together with strategic partner organized special umrah program for customers. This program was held since 2016 with total pilgrims of 2,028 and in 2017 increased to 6,266 pilgrims.

Bank also established Hajj and Umrah Special Task Force to docus in hak and umrah services development.

Non BSM225,03 T;78,76%

Market Share BSM by Loans 2017

BSM60,70 T;21,24%

Market Share BSM by Assets 2017

BSM87,94 T;20,73%

Non BSM336,24 T;79,27%

Market Share BSM by DPK 2017

BSM77,90 T;23,27%

Non BSM256,82 T;76,73%

CDeposit, Loan and Third Party Fund Rating of BSMWith total deposit amounted to Rp29,238 billion, Deposit of Bank Syariah Mandiri in terms of volume was on 9th position out of all banks in Indonesia.

In terms of cost of fund, Bank Syariah Mandiri is relatively competitive since BSM’s cost of fund as of December 2017 was 3.55%, decreased compared to 4.17% as of December 2016.

BSM Hajj Service

17. BSM; Rp87.94T

14. BSM; Rp77.90T

9. BSM; Rp31.39T


DBSM Distributes Blessing

As part of awareness to surrounding environment, Bank Syariah Mandiri organized BSM Mengalirkan Berkah program. This program returns profit earned or each branch office of BSM to surrounding society. This program was established in the form of social fund donation that refers to scholarship providence and religious place renovation or religious place maintenance cost. The calculation of social fund providence was based on contribution margin (CM) of each outlet.

Until December 2017, the allocation of social budget for BSM Mengalirkan Berkah program was Rp20.38 billion.

Mosque on sand “Al-Amin” Syariah Mandiri Pertilasan Mbah Maridjan, Kinahrejo – Yogyakarta.

CSR assistance of BSM Mengalirkan Berkah program for Al Fitroh Mosque, Yogyakarta on January 29, 2017.

Soka Crab Empowerment ProgramKaliwlingi, Brebes, October 21, 2017.

Mushalla above the Cloud of 2680 mdpl Bromo.

Assistance of Madrasah Ibtidaiyah (MI) “Wathoniyah” Building Construction, Pondok Pesantren Buntet, Cirebon, April 13, 2017.

Soka Crab Empowerment Program Launching and Mangrove planting in Kaliwingi Village, Brebes, October 21, 2017.


FRONT

BROSUR

BACK

gunakanmandiri syariah debitGPN dan Visa

kartu mandiri syariah debit untuk kenyamanan dan keleluasaan Anda bertransaksi, dimanapun dan kapanpun

kartu mandiri syariah debit adalah produk kartu menggunakan tekhnologi chip yang diterbitkan oleh Bank Syariah Mandiri bekerjasama dengan jaringan Gerbang Pembayaran Nasional (GPN) dan Visa International yang memiliki fungsi utama sebagai kartu ATM dan kartu debit yang dapat digunakan di seluruh mesin ATM dan EDC domestik dan luar negeri.

A. Manfaat • Akses transaksi sangat luas di semua mesin ATM dan EDC yang dilengkapi dengan logo GPN dan Visa. • Lebih aman karena dilengkapi dengan chip.

B. Peruntukan Nasabah yang telah cakap hukum dan berusia > 17 tahun.

C. Fitur kartu mandiri syariah debit visa: • Dapat Transaksi di semua mesin ATM yang berlogo GPN, Visa dan Plus. • Dapat Transaksi belanja di semua mesin EDC yang berlogo GPN dan Visa. • Sebagai kartu discount pada merchant tertentu • Sebagai kartu co-branding D. Limit Transaksi

E. Biaya • Biaya bulanan kartu 1. GPN : Gratis 2. Silver Debit : Gratis 3. Gold Debit : Rp.2.000 4. Priority : Rp.2.000 5. Platinum : Gratis

• Biaya transaksi di jaringan Visa (international) 1. Tarik Tunai : Rp 25.000 2. Cek Saldo : Rp 3.000 3. Gagal Transaksi : Rp 5.000

Untuk informasi lebih lanjut, dapat menghubungi Cabang Mandiri Syariah Terdekat atau mandiri syariah call 14040

GPN

Silver Debit

Gold Debit

Priority

Platinum

5 Juta

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sesuai saldo

sesuai saldo

Tarik tunai Transfer antar rekening

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New Products and Services in 2017In 2017, BSM launched new products as follows:

1. Financing Project Loan Product This investment loan product is to fulfill the market

needs during the development project process in which the debtor only needs to pay the margin. After the completion of the project, the loan can be paid by installment. Financing Project Loan Product can be used to finance infrastructure project or new plantation that requires time prior actively producing.

2. Zakat EDC Service It is payment service of zakat/infaq/shadaqoh

through zakat amil institution after cooperating with BSM by using EDC machine.

3. Visa Card In 2017, BSM had upgraded its ATM card with Visa to

enable the customers as BSM debit card holder to conduct transaction (withdraw money and conduct transaction) abroad.

4. Sharia Hedging Activities taken to mitigate risk or protect assets

value or underlying obligation to currency value of fluctuation risk in the future based on sharia principle.


Awards and Certification in 2017AwARDS OF BSM IN 2017 (DOMESTIC)

The Most Trusted Company Based on Corporate Governance Perception Index (CGPI) Award.Good Corporate Governance Award 2017SWA Magazine and The Indonesian Institute for Corporate Governance (IICG) – December 19, 2017

Top 2 of SR-009 Year 2017 Retail Sukuk Seller Agent Award.SR-009 Retail Sukuk Seller Agent AwardMinistry of Finance of the Republic of Indonesia – December 18, 2017

Sharia Bank with Best Performance Category of Sharia Bank 2-3 Business Grade with Assets above Rp30 Trillion.Anugerah Syariah RepublikaHarian Republika – December 6, 2017

Top 5 Best Consumer Choice Islamic Bank & Top 3 Trusted Management Bank.Indonesia Best Banking Brand AwardWarta Ekonomi – November 29, 2017

Good Financial Performance Category of Islamic Bank.Indonesia Best Banking Brand AwardWarta Ekonomi – November 29, 2017

The Best Bank in Digital Services.Indonesia Banking AwardIndonesia Banking School & Tempo Media Group – September 13, 2017


The Best CSR Special Award.BAZNAS AwardBAZNAS – August 25, 2017

Bank with “Excellent” predicate on Financial Performance throughout 2016.Infobank AwardsInfobank Magazine – August 10, 2017

The Best Supporting Controller of Sharia Monetary.Bank Indonesia Awards 2017Bank Indonesia – July 18, 2017

Awards on Best Full – Fledge Bank Category.Indonesia Sharia Finance Award 2017Warta Ekonomi Magazine – June 14, 2017

Awards on Consumer Choice Full – Fledge Bank.Indonesia Sharia Finance Award 2017Warta Ekonomi Magazine – June 14, 2017

Awards on Best Digital Full – Fledge Bank Category.Indonesia Sharia Finance Award 2017Warta Ekonomi Magazine – June 14, 2017


Awards on Best Performance Full – Fledge Bank Category.Indonesia Sharia Finance Award 2017Warta Ekonomi Magazine – June 14, 2017

Banking Service Excellence Award 2017 – June 8, 2017. Awards of:1. Best Overall Performance.2. Best Customer Service.3. Best Physical.4. Best ATM.5. Best Phone.6. Best Security.Infobank Magazine together with Marketing Research Indonesia (MRI)

Bronze Award The Most Promising Company for Campaign & Branding Subsidiary Category.BUMN Marketeers Award 2017Markplus – May 3, 2017

TOP CSR Improvement 2017 Category.TOP CSR Award 2017Business News Indonesia Magazine, National Committee of Governance Policy (KNKG) and CSR Indonesia Society – April 5, 2017

Bank Syariah Mandiri: for sharia commercial bank category 2012 – 2016.Rank I Digital Brand Sharia Commercial BankInfobank Magazine together with Isentia Research – March 3, 2017

First winner Gold Award The Most Promising Company for Marketing V3.0 Subsidiary Category.BUMN Marketeers Award 2017Markplus – May 3, 2017


BSM Saving Account: for sharia commercial bank saving account category 2012 – 2016.Rank I Digital Brand Sharia Commercial Bank Saving AccountInfobank Magazine together with Isentia Research – March 3, 2017

Performance achievement in 2016 in customer complaint handling.The Most Improved Performance in Complaint HandlingPT Rintis Sejahtera – March 14, 2017

Rank 1 on Private Bank – Non Public Company category.Indonesia CSR AwardEconomic Review – February 24, 2017

The Net Promoter Score (NPS) Leader for Sharia Banking category Awards.Customer Loyalty AwardSWA Magazine together with Hachiko research institution – February 9, 2017

Indonesia Employee Engagement Award Financial Services Industry.Indonesia Employee Engagement AwardIndonesia Banking Development Institution – March 1, 2017

Time Deposits: for sharia commercial bank time deposits category.Rank I Digital Brand Sharia Commercial Bank Time DespositsInfobank Magazine together with Isentia Research – March 3, 2017


Strongest Islamic Retail Bank in Asia Pacific 2017.Islamic Retail Banking Awards 2017Cambridge Analytica Islamic Finance – November 14, 2017

Sharia Bank in Indonesia with Excellent Predicate on financial performance in 2016.Islamic Bank of The Year AwardThe Asset Asian Hong Kong – July 11, 2017

Sharia Bank in Indonesia with Excellent Predicate on financial performance in 2016.Best Islamic Retail Bank AwardThe Asset Asian Hong Kong – July 11, 2017

Sharia Bank in Indonesia with Excellent Predicate on financial performance in 2016.Best Islamic Trade Finance Bank AwardThe Asset Asian Hong Kong – July 11, 2017

Strongest Islamic Retail Bank in Indonesia 2017.Islamic Retail Banking Awards 2017Cambridge Analytica Islamic Finance – November 14, 2017

AwARDS OF BSM IN 2017 (INTERNATIONAL)


Table of Contents1 Theme Definition2 Theme Continuity4 The Company’s Excellence in 20176 New Products and Services in 20177 Awards and Certification in 2017

KEY HIGHLIGHTS16 Performance Highlights of the Company’s Profit and

Loss16 Performance Highlights of Financial Position18 Performance Highlights of Financial Ratio19 Operational Highlights (Non Financial)20 Stock Highlights20 Bonds, Sukuk or Conversion Bonds Highlights

MANAGEMENT REPORT24 Board of Commissioners’ Report34 Sharia Supervisory Board’s Report38 Board of Directors’ Report50 Signature of the Board of Commissioners and

Directors’ Members

COMPANY PROFILE54 Corporate Identity55 Company in Brief56 Milestone56 Name Changes57 Logo Definition58 Business Field60 BSM Products/Services66 Organization Structure68 Profile of Executive Officer71 Vision, Mission, and Core Values73 Statement on Corporate Culture74 Composition and Profile of the Board of

Commissioners78 Composition and Profile of the Sharia Supervisory

Board80 Composition and Profile of the Board of Directors

and SEVP89 Total Employee Competency Development92 Group Structure92 Mandiri Group Synergy94 Composition of Shareholders94 List of Subsidiary/Associates96 Chronology of Share Listing97 Chronology of Other Securities Listing99 Corporate Supporting Institution and Professional100 BSM Operation Area and Network Address108 Corporate Website

HUMAN RESOURCES DEVELOPMENT114 Employee Profile116 Recruitment118 Organization and Position118 Remuneration System120 Talent Management 121 Leadership Development Program121 Reward and Punishment Policy121 Training

MANAGEMENT ANALYSIS AND DISCUSSION 124 Economic Review and Banking Industry124 Global Economy125 National Economy127 National Banking Industry127 Sharia Banking Industry128 Market Share130 Business Prospect131 Focus of Banking Business Development

Strategy in 2017

132 Operations Review Per Business Segment132 Business Development in 2017135 Business Segmentation135 Retail Banking Business Segment139 Wholesale Banking Business Segment142 Operations Performance Per Economic Sector

144 Financial Performance Review144 Financial Position Statements Performance148 Comprehensive Profit and Loss Statements

Performance151 Equity Changes Report152 Cash Flow Report154 Key Financial Ratios Report156 Opinion from Public Accountant on Annual

Financial Statements157 Commitment and Contingency Report (SE OJK

No. 10/2017)158 Other Financial Performance Information (SE

OJK No. 10/2017)


196 Other Financial Information Review196 The Company’s Productive Assets Collectability

Level196 Capital Structure and Management Policy on

Capital Structure198 Material Relations for Capital Goods in 2017198 Capital Goods Investment in 2017 198 Comparison of RBB Target 2017 and

Achievement 2017, and Projection of 2018199 Information and Material Facts Occurred After

Accountant Reporting Date199 Dividend Policy 200 Share Ownership Program by Employee and/or

Management (ESOP/MSOP)200 Realization of Public Offering Proceeds Usage 200 Material Transaction with Conflict of Interest

and/or Transaction with Affiliates203 Changes on Laws and Regulations 203 Changes on Accounting Policy 204 Information of Business Sustainability

CORPORATE GOVERNANCE208 Introduction208 Objectives of GCG Implementation208 Legal Basis of GCG Implementation 209 Commitment of Sustainable Governance

Implementation209 Integrated Governance with Main Entity210 Quality Standard of GCG Implementation210 Self-Assessment of GCG Implementation215 GCG Ratings – CGPI Award215 Quality Improvement Plan of Corporate

Governance Implementation 216 Corporate Governance Structure217 Corporate Governance Mechanism218 General Meeting of Shareholders 221 Board of Commissioners233 Board of Directors246 Committees under the Board of Directors247 Sharia Supervisory Board (DPS)249 Audit Committee257 Risk Monitoring Committee262 Remuneration and Nomination Committee264 Share Ownership in Bank264 Remuneration and Other Facilities

270 Internal Control System272 Implementation of Internal Audit279 Compliance Work Unit 285 Management of Conflict of Interests286 Corporate Secretary291 Public Accountant292 Risk Management304 Important Lawsuits in 2017305 Access of Information and Company Data306 Press Release 306 Code of Conduct308 Whistleblowing System300 Information Technology Report312 Fund Donation for Social and/or Political Activities 312 Non-Halal Income and its Usage

CORPORATE SOCIAL RESPONSIBILITY (CSR)316 Basis of CSR Implementation317 Concept of BSM CSR318 Structure of CSR Management 318 CSR Together With LAZNAS BSM321 CSR Related to Environment322 CSR Related to Employment, Health, and

Occupational Safety323 CSR Related to Social Community Development324 CSR Related to Responsibilities to Consumers

CONSOLIDATED FINANCIAL STATEMENTS

Criteria Reference of Annual Report Award 2017 or OJK Criteria


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Performance of Profit or Loss and other Comprehensive Income Statements Description(In Billion Rupiah) 2013 2014 2015 2016 2017 Growth

2017:2016 (%)1 Operating Income 6,640 6,503 6,913 7,331 7,493 2.21%

Income from Fund Management by Bank as Mudharib

5,438 5,487 5,960 6,468 7,286 12.65%

Fee Based Income 1,193 1,002 939 860 943 9.65%2 Operating Expenses 5,118 5,544 5,577 5,732 4,457 -22.24%

Profit Sharing Expenses 2,249 2,613 2,551 2,444 2,645 8.22%Overhead Expenses 2,615 2,908 2,932 3,272 3,280 0.24%

3 Operating Income (Not including PPAP)

1,767 968 1,416 1,612 2,304 42.93%

4 PPAP Expenses of Productive and Non Productive Assets

871 1,004 1,047 1,169 1,834 56.89%

4 Income 898 (36) 370 443 470 6.09%5 Non-Operating Income (Expenses) 9 14 14 3 29 866.67%6 Zakat 23 3 10 11 12 9.09%7 Income Tax 233 19 85 109 121 11.01%8 Net Income 651 (45) 290 325 365 12.31%

Attributable to Equity Holders of the Parent Entity

651 (45) 290 325 365 12.31%

Attributable to Non-Controlling Interests

- - - - -

9 Comprehensive Income 651 (49) 682 279 422 51.25%Attributable to Equity Holders of the Parent Entity

651 (49) 682 279 422 51.25%

Attributable to Non-Controlling Interests

- - - - -

10 Basic Earnings Per Share 2,232 (150) 946 818 734 -10.27%

Performance of Financial Position StatementsDescription(In Billion Rupiah) 2013 2014 2015 2016 2017 Growth

2017:2016 (%)1 Assets 63,965 66,956 70,370 78,832 87,940 11.552 Productive Assets 58,947 61,766 65,087 72,968 79,737 9.28 3 SBIS, FASBIS, Reverse Repo SBSN &

Term Deposits Valas BII placements5,918 10,302 5,408 9,968 8,647 (13.25)

4 Financing 50,460 49,133 51,090 55,580 60,584 9.00 5 Liabilities 11,030 8,663 9,883 11,233 13,531 20.46 6 Temporary Syirkah Funds 47,574 53,175 54,373 60,831 66,719 9.68 7 Subordinated Notes Issued 500 500 500 375 375 - 8 Third Party Funds 56,461 59,821 62,113 69,950 77,903 11.37 a. Current Account 7,525 5,200 5,830 6,930 8,601 24.11 b. Saving Account 22,101 22,685 24,995 27,751 29,424 6.03 c. Time Deposits 26,834 31,936 31,288 35,269 36,036 2.17 9 Equity 4,862 4,617 5,614 6,392 7,314 14.42 10 Total Investment to associates - - - - - -

12.31%iNCoME FoR THE YEAR

11.55%ASSETS

Income for the Year (Net Income) of Bank in 2017 amounted to Rp365 Billion, increased by 12.31% from income for the year (net income in 2016 amounted to Rp325 Billion.

Total Assets of Bank in 2017 amounted to Rp87,940 Billion, increased by 11.55% from Total Assets in 2016 amounted to Rp78,832 Billion.


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Financial Highlights Chart

Operating IncomeIn Billion Rupiah

AssetsIn Billion Rupiah

EquityIn Billion Rupiah

Third Party FundsIn Billion Rupiah

LiabilitiesIn Billion Rupiah

Net IncomeNet Income

Operating ExpensesIn Billion Rupiah

Operating Income Before PPAP ExpensesIn Billion Rupiah

2013

2013

2013 2013

2013

2013

2013

2013

2014

2014

2014 2014

2014

2014

2014

2014

2016

2016

2016 2016

2016

2016

2016

2016

2015

2015

2015 2015

2015

2015

2015

2015

2017

2017

2017 2017

2017

2017

2017

2017

6,640

63,965

4,862 56,461

11,030

651

5,118

1,767

6,503

66,956

4,61759,821

8,663

-45

5,544

968

6,913

70,370

5,61462,113

9,883

290

5,577

1,416

7,331

78,832

6,39269,950

11,233

325

5,732

1,612

7,493

87,940

7,314 77,903

13,531

365

4,457

2,304

2.21%

12.31%

11.55%

14.42%

20.46%

11.37%

42.93%

22.24%


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Performance of Key Financial Ratios

Ratio 2013 2014 2015 2016 2017 Growth2017:2016 (%)

1 Capital Adequacy Ratio (CAR) 14.10% 14.12% 12.85% 14.01% 15.89% 13.20%2 Non performing productive assets

and non performing non productive assets to total productive assets and non productive assets

3.91% 5.66% 5.28% 4.00% 3.65% -8.75%

3 Non performing productive assets to total productive assets

3.93% 3.06% 5.08% 4.03% 3.50% -13.15%

4 Provision for Impairment Losses (PPAP) on Financial Assets to productive assets

2.84% 3.04% 3.12% 2.76% 2.46% -10.87%

5 NPF gross 4.31% 6.83% 6.06% 4.92% 4.53% -7.93%6 NPF net 2.28% 4.29% 4.05% 3.13% 2.71% -13.42%7 Return On Assets (ROA) 1.52% -0.03% 0.56% 0.59% 0.59% 0.00%8 Return On Equity (ROE) 44.58% -3% 5.92% 5.81% 5.72% -1.55%9 Net Margin 7.25% 6.22% 6.54% 6.75% 7.35% 12.39%10 Net Operating Margin (NOM) 1.54% -0.07% 0.58% 0.64% 0.61% -4.69%11 Operating Costs to Operating Income

(BOPO)84.02% 100.6% 94.78% 94.12% 94.44% 0.34%

12 Profit Sharing Financing to total financing

22.05% 26.47% 29.43% 34.44% 17.02%

13 Financing to Deposit Ratio (FDR) 89.37% 82.13% 81.99% 79.19% 77.66% -1.93%

Financial Ratio Chart

Capital Adequacy Ratio (CAR)

Net Margin

2013

2013

2014

2014

2016

2016

2015

2015

2017

2017

14.10%

7.25%

14.12%

6.22%

12.85%

6.54%

14.01%

6.75%

15.89%

7.35%

13.20%

12.39%

NPF Gross

2013 2014 20162015 2017

4.31%

6.83%6.06%

4.92%

4.53%

7.93%

NPF Net

2013 2014 20162015 2017

2.28%

4.29%

4.05%

3.13%2.71%

13.42%


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oPERATioNAl HigHligHTS (NoN FiNANCiAl)

DescriptionRatio 2013 2014 2015 2016 2017 Growth

2017:2016 (%)1 Office Network 853 865 865 765 765 0.00 2 Employee 16,945 16,892 16,926 16,170 15,659 (3.16)3 ATM Network (BSM, Bank

Mandiri, ATM Bersama, ATM Prima, MEPS)

144,865 164,737 169,399 206,055 287,113 39.34

4 Funding and Financing Customer

4,835,889 5,569,887 6,675,895 6,726,752 7,610,973 13.14

Operational Performance Chart

Office Network Employee

ATM Network ATM Network

2013 2013

2013 2013

2014 2014

2014 2014

2016 2016

2016 2016

2015 2015

2015 2015

2017 2017

2017 2017

85316,945

144,865

4,835,889

865 16,892

164,737

5,569,887

865 16,926

169,399

6,675,895

765

16,170

206,055

6,726,752

765

15,659

287,113

7,610,973

0.00%

39.34%

3.16%

13.14%


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SToCk HigHligHTS

BoNDS, SUkUk oR CoNVERSioN BoNDS HigHligHTS

Until the end of 2017 and 2016, PT Bank Syariah Mandiri (BSM) had not conducted any stock trading activities in Indonesia Stock Exchange, therefore quarterly information in both years are not available, concerning:(1) Total outstanding shares;(2) Market capitalization;(3) Highest, lowest, and closing stock price; and(4) Trading volume.

Subordinated notes (subnotes) mudharabah Bank Syariah Mandiri in 2016 amounted to Rp375,000 that was notes issued by Bank on December 22, 2016 in the form of long-term notes and will be matured within 7 years. This Subordinated Notes Mudharabah will be matured on December 22, 2023.

Based on the latest rating report published on December 2016 and 2017, Sukuk Mudharabah Subordinated BSM Year 2016 had idAA- (Double A minus Sharia) rating from share rating agency, PT Pefindo.

Terms and conditions:- Profit sharing is calculated based on the profit sharing

rate (nisbah) of the subnotes’ holders multiplied with unaudited amount of distributable income as stated in the last quarter financial statements of the Bank which has been approved by the Board of Directors at least 10 (ten) working days before the payment date of its profit sharing.

- Distributable income for profit sharing is calculated from the Bank’s income generated from the Rupiah financing

portfolio (blended) amounting to 7 (seven) times of Sukuk Mudharabah Subordinated Funds in Rupiah owned by the issuer, earned during (one) quarter as stated in the unaudited financial statements of the Bank.

- Sharing rate (nisbah) provided to subnotes holder is 27.07% per annum from distributable income which paid every quarter.

This subnotes are not secured by specific collateral and are not guaranteed by any third party. It is also not guaranteed by the Republic of Indonesia and not included in the Bank Guarantee Program provided by the Indonesia Deposit Insurance Agency (LPS) or its successor in accordance with the prevailing laws and follow the OJK Regulation No. 21/POJK.03/2014 of Article 17 paragraph (1) letter f. The subnotes were subordinated liabilities of the Bank.

During the period of Sukuk Mudharabah Subordinated BSM year 2016 and prior the redemption all principal

Subordinated Notes Mudharabah Bank Syariah Mandiri 2016 dan 2017

Table of Subordinated Notes Mudharabah Bank Syariah Mandiri 2016 and 2017 (in million Rupiah)

Description 2017 2016

Third Parties 112,000 112,000

Related Parties 263,000 263,000

Total subordinated notes issued 375,000 375,000


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and profit sharing, the Bank is obliged to: (i) maintain the CAR (Capital Adequacy Ratio) of not less than 12% (twelve percent); (ii) ensure that the Sukuk Mudharabah Subordinated year 2016 will not be owned by more than 50 (fifty) investors; (iii) submit to the monitoring agent as follows: the annual financial statements (audited) no later than the end of the 4th month after the reports date, quarterly financial statements (unaudited) not later than the end of the 1st month after the reports date, financial statements used as the basis for the calculation of profit sharing, and reports on Bank’s saudness and self-assessment on the implementation of Good Corporate Governance to OJK.

The Bank without written approval from Monitoring Agent shall not undertake as follow: (i) reduce issued and paid-up capital; (ii) change the main business; (iii) conduct mergers or business combinations or reorganization, except due to Government or Bank Indonesia’s regulation; (iv) conduct merger, consolidation, acquisition with other entity which lead to dissolution of the Bank.

Sharia Supervisory Board (SSB) of the Bank has issued an opinion through its letter number 18/13/DPS/X/2016 dated 1 November 2016 stating that the mudharabah sharia subordinated notes is in accordance with DSN Fatwa on sharia bonds and mudharabah sharia bonds (DSN-MUI Fatwa- No. 32/DSN-MUI/IX/2002 and No. 33/DSN-MUI/IX/2002). Profit sharing given to the holders of subordinated notes was taken from the portion of the Bank.

PT Bank Mandiri (Persero) Tbk is the trustee of the Subordinated Notes Mudharabah Bank Syariah Mandiri 2016.

LIST OF BONDS HOLDER List of Private Placement Bonds Holder (In million Rp)

No Investor Nominal %

1 Bank 155,000 41.33

2 Foundation 74,000 19.73

3 Insurance 19,000 5.07

4 Securities 118,000 31.47

5 Others 9,000 2.4

Total 375,000 100.00


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MANAGeMeNT RePoRT

02

BoARD oF CoMMiSSioNeRS’ RePoRT

Mulya effendi SiregarPresident Commissioner


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Assalamu’alaikum warahmatullahi wabarakatuhDear Honored Stakeholders and Shareholders,

F irst of all, please allow me to praise our gratitude to Allah SWT with the guidance given, Bank Syariah Mandiri (BSM) is able to maintain its business sustainability throughout the year

2017. BSM was still able to provide positive contribution and performance. Those are part of hardwork and cooperation from all BSM elements, starting from top level management to staff level.

Allow me to represent the Board of Commissioners to present supervision and advice providence implementation report on the corporate management taken by the Board of Directors throughout 2017.

ASSESSMENT OF THE BOARD OF DIRECTORS’ PERFORMANCE IN 2017 The Board of Commissioners assessed that the Board of Directors’ performance in 2017 had been well carried out. This can be seen from various positive achievements occurred in 2017.

Throughout 2017, BSM settled non performing financing and strengthening several aspects including business refocusing, fixing the fundamental (organization structure

adjustment, refining business process, productivity and efficiency improvement, etc.) and strengthening enablers (information technology, human capital, and integration with Mandiri Group).

BSM faced challenging conditions both from internal and external. Challenges from internal involves financing portfolio quality improvement, good quality of financing growth, human resources quantity and capability fulfillment, Information Technology project settlement, internal control strengthening (1st, 2nd, and 3rd lines of defense) to create zero fraud, and so on. Meanwhile challenges from external involves macro economic conditions that was relatively stagnant, as shown on economic growth in 2017 of 5.07% (y.o.y), inflation of 3.61% (y.o.y) and rupiah exchange rate to US Dollar that was at the level of Rp13,250,- to Rp13,550,-. On the other side, rapid financial technology development occurred and Regulator issued several new regulations concerning financial technology, sustainable finance, etc.

The Board of Commissioners assessed that BSM performance in 2017 showed a satisfactory progress. This can be seen from the achievement of BSM key financial indicators such as assets growth, financing and third


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parties funds, low cost fund, income, equity, return on equity (ROE), etc. In addition, BSM was also able to lower NPF Gross ratio by 0.39%, which as of December 2016 was at 4.92% to 4.53% as of December 31, 2017. BSM was also able to increase provision for impairment losses (PPAP) cash to 70.33% (position as of December 31, 2016 was 67.25%), contributed from write off customer recovery amounted to Rp694 billion. Liquidity was at the excellent position, which Statutory Reserve Minimum (GWM) of 8.05% and Net Foreign Exchange Position of 3.16%, Financing to Debt Ratio (FDR) of 79.40% with secondary reserve amounted to Rp18.65 trillion. Related to capital, BSM CAR was 15.86%.

Until December 2017, market share of BSM to Sharia Banking based on assets, financing, and third party funds was still the biggest which amounted to 20.73%, 21.24%, and 23.27% respectively. In addition, BSM was on the 17th, 14th, 9th, and 16th position in National Banking based on total assets, third party funds, saving accounts, and financing.

Bank Health Level1. Implementasi Good Corporate Governance (GCG). The Board of Commissioners always provides advice to the Board of Directors and SEVP to continuously

conducting evaluation and strengthening GCG practices in performing BSM business activities, so BSM is expected to grow accelerate, healthy, and sustainable. The Board of Commissioners also concerned to the approval fulfillment from Financial Services Authority on 2 (two) members of the Board of Directors and 1 (one) member of the Board of Commissioners, to be able to perform their functions, duties and responsibilities.

Based on self-assessment on BSM GCG implementation as of December 31, 2017 was at 1st level. This is reflected on the appropriateness of GCG principles implementation.

2. Risk Profile. As of December 31, 2017, inherent risk predicate of the bank was Low to Moderate with bank risk management

implementation quality of Satisfactory so the bank’s composite risk predicate in overall was 2.

The Board of Commissioners considers that the performance of BSM 2017 shows encouraging progress. This is reflected in the realization of BSM’s key financial indicators including asset growth, third party financing and funding, low-cost funds, revenues, equity, return on equity (RoE), etc.


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No Risk Type Inherent RiskRisk Management Implementation Quality

Composite Risk Predicate

1 Credit Risk Moderate Satisfactory 2

2 Market Risk Low Satisfactory 1

3 Liquidity Risk Low Satisfactory 1

4 Operational Risk Moderate Satisfactory 2

5 Legal Risk Low Satisfactory 1

6 Reputation Risk Low Satisfactory 1

7 Strategic Risk Moderate Satisfactory 2

8 Compliance Risk Low to Moderate Satisfactory 2

9 Investment Risk Moderate Satisfactory 2

10 Return Risk Low to Moderate Satisfactory 2

Bank’s Composite Risk Predicate in Overall Low to Moderate Satisfactory 2

3. Capital BSM capital level based on self-assessment of Bank health level was 2 (satisfactory), that showed BSM had

satisfactory capital towards Bank’s risk profile.

In 2017, BSM obtained additional Capital from Bank Mandiri amounted to Rp500 billion. On the other side, BSM conducted financing distribution that focused on Corporate customers with low ATMR and BS< also conducted rating towards several existing Corporate customers to increase CAR to 15.86% or 106.60% compared to target of 14.88%.

4. Rentability BSM Rentability level based on self-assessment was 3 (adequate) which showed that BSM income was good,

apart the pressure occurred on profit performance however was still able to support the Bank’s capital growth.a) The Company’s Profit Profit achievement as of December 31, 2017 amounted to Rp365 billion or 105.60% compared to target

amounted to Rp346 billion.b) Return On Asset (ROA) ROA as of December 31, 2017 was 0.59% or 96.98% compared to target December 2017 amounted to

0.61%.c) Return on Equity (ROE) ROE as of December 2017 was 5.68% or 104.38% compared to target December 2017 amounted to

5.44%.

OVERVIEw ON BUSINESS PROSPECTUntil the end of 2017, the Indonesia economic with the economic growth improvement, apart the inflation pressure, and depreciation of rupiah exchange rate to United States of America Dollar faced. Those factors influenced the banking industry sustainability.

In 2017, based on The Central Bureau of Statistics (BPS), the Indonesia economic grew by 5.07% (year on year/yoy), strengthened compared to 2016 that was 5.02%.


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Economic growth in 2018 will increase which supported by the improving Indonesia export in line with commodity prices that increased in 2017 and issuance of various monetary and macro prudential policies that increase the investment appetite and maintain its climate in Indonesia. Therefore the investment is expected to be inflow to infrastructure projects that will also improve the private investment (capital inflow).

With the above conditions, the Board of Commissioners believes that BSM till has high optimism to win the banking business competition. This was due to sharia banking industry that is believed to have long-term prospect up to the next decade. Currently, Indonesia is becoming a new qibla for sharia financial industry in the work. This was based on the Indonesia society structure that has the largest number of moslem population.

CORPORATE GOVERNANCE IMPLEMENTATIONIn accordance to Law No. 21 year 2008 concerning Sharia Banking and Regulation of Bank Indonesia No. 11/33/PBI/2009 concerning GCG Implementation to Sharia Commercial Bank and Sharia Business Unit, the Board of Commissioners had continuously performed its duties and responsibilities professionally and independently based on good corporate governance.

The Board of Commissioners is a company’s organ that is collectively in charge and responsible conduct supervision and provide advice to the Board of Directors as well as ensure that PT Bank Syariah Mandiri (Bank) conducts Good Corporate Governance (GCG) in all levels of the organization.

The Board of Commissioners has clear authorities and responsibilities in accordance to its functions as stated in Articles of Associations and prevailing rules and regulations. The Board of Commissioners also has board manual that is evaluated and updated regularly.

The Board of Commissioners is responsible to General Meeting of Shareholders (GMS). The accountability of the Board of Commissioners to GMS is part of its supervision

accountability on the corporate management to implement GCG principles.

In performing its duties and responsibilities, the Board of Commissioners is supported by supporting Committees including Audit Committee, Risk Monitoring Committee, and Remuneration and Nomination Committee. Effectiveness of the Board of Commissioners’ duties and responsibilities is taken both in written or oral in formal forums such as Meeting or informal. Meetings organized are Board of Commissioners’ Meeting (Rakom), joint meeting between the Board of commissioners and Directors as well as SEVP (Rakomdir), joint meeting betweel the Board of Commissioners, Directors, SEVP and Sharia Supervisory Board (Ragab), and Committee’s Meeting. Throughout 2017, those meeting implementation was organized amounted to 88 (eighty eight) meetings or >100% if compared to the obligation to organize meeting and attendance level of the Board of Commissioners as stipulated on PBI No. 11/33/PBI/2009 concerning Good Corporate Governance implementation for Sharia Commercial Bank. The meetings discussed on regular evaluation to achievement realization of RBB year 2017 target, discussion on developed issues, challenges faced, strategy/action plan that will be taken, and so on.

SUPERVISION TO HR MANAGEMENTThe Board of Commissioners concerned on Human Capital management as an important factor in developing the Company in accordance to BSM corporate plan. Therefore, the Board of Commissioners requested the Board of Directors and SEVP to evaluate the task division of the Board of Directors and SEVP especially to supervise BSM HR management and development to be more focus and optimum. In addition, the Board of Commissioners also requested the Board of Directors and SEVP to prepare BSM future leader candidate from BSM internal, to fulfill HR needs both from quantity or capability, improve efficiency and productivity of employee, conduct rotation and mutation, provide fast and accurate reward and punishment, etc.

Following up the guidance from the Board of Commissioners, in 2017 there was a change on BSM


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organization structure, in which specific Directorate was added to handle HR management and development of BSM. In addition, there was an improvement on education and training program to BSM employee with the ratio of education and training fund in 2017 amounted to 3.16% (or increased from 2016 position that was only 1.64% from work force cost).

Education and training program held by the Board of Directors and SEVP were regular education and training program dedicated to all BSM employees and special program for talent employees to participate education program both domestic and/or overseas as part of preparing future BSM leader candidate from BSM internal.

SUPERVISION TOwARDS SHARIA PRINCIPLE IMPLEMENTATION AND COMPLIANCE PERFORMANCEThe Board of Commissioners concerned towards BSM compliance in implementing sharia principles. One of the Board of Commissioners’ concerns was by initiating the implementation of joint meeting (ragab) between the Board of Commissioners, Directors, and Sharia Supervisory Board (DPS) with aim to optimize synergy among those three functions to unite the overview to improve BSM business growth in accordance with sharia principle.

The Board of Commissioners requested the Board of Directors and SEVP to ensure that contracts made had complied with sharia principles. In addition, the Board of Commissioners also requested the Board of Directors and SEVP to increase financing distribution that use contracts scheme other than murabahah, communicate with DPS to create product innovation and new unique activities with sharia characteristic, as well as ensure the new product and activities of BSM obtain sharia opinion first prior to the implementation.

From the compliance performance, the Board of Commissioners also conducted regular supervision and monitoring to BSM compliance function among others through meeting and compliance report submitted by compliance work unit. The Board of Commissioners

provides advice to the Board of Directors and SEVP to improve capability of BSM employees and improve strong control function so there will be no violation to Regulator’s provisions (zero tolerance), ensure the updates of BSM internal provisions in accordance to regulations issued by Regulator and/or Government, conduct automation and/or determine workflow accompanied by strong internal control related to Bank report submission obligation especially to Regulator to ensure the report submitted is accurate, valid and on time.

Various efforts have been taken by the Board of Directors and SEVP to create compliance culture, such as disseminate new provisions published by Regulator, actively participate in revision to Bank’s internal provision, ensure the compliance to financing distribution, etc.

SUPERVISION TOwARDS INFORMATION TECHNOLOGY MANAGEMENTThe Board of Commissioners realizes that information technology is important matter in supporting all business activities of BSM. Therefore, the Board of Commissioners regularly conducts meeting with the Board of Directors to monitor the progress of IT development projects settlement and request to the Board of Directors, among others to immediately complete iBSM core banking system project and support system projects (such as workflow integrated system engine/WISE), determine charter project for each project, optimize project committee to the Board of Directors’ level and develop digital banking services.

Taking into account the above Board of Commissioners’ advice, in 2017 the Board of Directors had conducted core banking improvement, branch network management, 24x7 monitoring program implementation as part of early warning system, server and network capability improvement, new system implementation and existing system enhancement (such as cash management, WISE, mobile banking, etc.), national payment gateway (NPG) program development, and digital banking work unit establishment.


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PERFORMANCE ASSESSMENT OF BOARD OF COMMISSIONERS’ COMMITTEEIn performing its function and responsibilities, the Board of Commissioners is supported by supporting Committees such as Audit Committee, Risk Monitoring Committee, and Remuneration and Nomination Committee. Effectiveness of the Board of Commissioners’ duties and responsibilities implementation was taken both in written or oral in formal forum such as Meeting or informal. Meetings organized are the Board of Commissioners and Directors’ Meeting (Rakomdir), Joint Meeting of the Board of Commissioners, Directors and Sharia Supervisory Board (Ragab), and Committees’ Meeting. The Board of Commissioners assessed that those three Committees of the Board of Commissioners had performed their functions and duties well.

CHANGES ON THE COMPOSITION OF THE BOARD OF COMMISSIONERS There were some changes on the composition of the Board of Commissioners in2 017, as described below:

Period of January 31, 2017 to April 10, 2017, as follows:

Name Position

Ventje Rahardjo President Commissioner

Ramzi A. Zuhdi Independent Commissioner

Agus Fuad Commissioner

Bambang Widianto Independent Commissioner

Zulkifli Djaelani Independent Commissioner

Perid of Aprl 10, 2017 up to present, as follows:

Name Position

Mulya Effendi Siregar President Commissioner/Independent

Ramzi A. Zuhdi Independent Commissioner

Bambang Widianto President Commissioner

Dikdik Yustandi* Commissioner

*) Waiting for OJK approval

The Board of Commissioners has expertise to perform mandated responsibilities. The Board of Commissioners has adequate understanding and competency to face any issues arise in BSM business activities, make decision independently, encourage BSM performance improvement, and effectively review and provide constructive advice towards the Board of Directors’ performance.


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wabillahi taufik wal hidayah wassalamualaikum warahmatullahi wabarakatuhOn behald of the Board of Commissioners,

Mulya Effendi SiregarPresident Commissioner

OUR APPRECIATIONWe would like to express our highest appreciation and gratitude to shareholders and stakeholders on the trust and support given so far. In addition we would like to extend our gratitude to sharia supervisory board on the guidance and direction given to ensure BSM always operates within the sharia corridor.

We would like to express our appreciation to the Board of Directors, employees and business partners who participate and support BSM to keep growing and developing. May Allah SWT always gives mercy and blessing to all of us in realizing our hopers together. Amin YRA.


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Board of Commissioners


Ramzi A. ZuhdiIndependent Commissioner

Dikdik YustandiCommissioner

Bambang widiantoIndependent Commissioner

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SHARiA SUPERViSoRYBoARD’S RePoRT

Prof. Dr (HC). K.H Ma'ruf Amin Head of Sharia Supervisory Board


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Assalamu’alaikum warahmatullahi wabarakatuhBismillaahirrahmaanirrahiim

A ll praise to Allah SWT who is all-sufficient. Shalawat and salam to Prophet Muhammad SAW. Hopefully the taufiq and hidayah of Allah SWT always bless us all. Please allow

me to represent Sharia Supervisory Board to present the supervision implementation report towards Bank’s activities throughout 2017.

SHARIA SUPERVISORY BOARD ACTIVITIES IMPLEMENTATION IN 2017In accordance to PBI No. 11/33/PBI/2009 and SE BI No. 12/13/DPbS, the Sharia Supervisory Board conducts supervision towards Bank’s activities in:1. Analyzing report submitted by the Board of Directors,

internal audit function and or compliance function to acknowledge the quality of Sharia Principle fulfillment implementation on fund collection and fund distribution as well as Bank’s services activities.

On several quotation tests implementation, DPS of BSM conducted coordination with Audit Internal and Compliance work units to collect data and information on particular branches, prior to the implementation of quotation tests. This was taken to ensure that DPS already

had a complete information on the branch, to be more focused during the quotation tests implementation.

2. Determining total quotation (sample) tests of transaction that will be investigated by taking into account the quality of Sharia Principle fulfillment implementation from each activity. At the beginning of each year, DPS of BSM conducts DPS internal meeting to determine several branches that will be sampled.

3. Investigating sampled transaction documents to acknowledge Sharia Principle fulfillment as required by prevailing Bank’s internal provision. Focus of BSM’s DPS investigation is to fulfillment of sharia aspects/sharia compliance. Including:a) In accordance to the contracts used,b) Fulfillment the contracts aspects on a financing

scheme,c) Investigation to SP3, financing analysis note (SAP),

contract, and notary deed.

4. Conducting inspection, monitoring, request of explanation and/or confirmation to Bank’s employee and/or customer to strengthen the document investigation result;


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5. Reviewing the prevailing internal provision related to sharia aspect if there is any indication on incompatibility to Sharia Principle fulfillment implementation;

6. Providing sharia input on fund collection and fund distribution as well as Bank’s services activities. DPS Sharia opinion specifically for this matter becomes a requirement that must be fulfilled by BSM to fulfill the annual financial statements audit process requirement of BSM by KAP.

7. Reporting the Sharia Supervisory Board supervision result to the Board of Directors and Commissioners. This report contains DPS activities’ documentation that is prepared in semesters, which consists of, among others:

a) Supervision result on Bank’s new product development process including objectives, characteristics, contract in product, its in accordance to DSN-MUI Fatwa, review system and new product procedure.

b) Supervision result on bank’s activities including fund collection, fund distribution, as well as Bank’s services. The form of supervision is, Internal Audit Result Report analysis, determination and investigation of total quotation tests transaction, review towards SOP related to Sharia aspect.

c) DPS General opinion towards Bank’s operations per period. Period I starts from January 1, 2017 to June 30, 2017 and Period II starts from July 1, 2017 to December 31, 2017.

d) DPS opinion towards fund collection, dung distribution, and Bank’s services. By presenting data such as total Circular Letter (SE), financing data and DPS opinion on Bank’s new product. In 2017 .DS published 9 Sharia Opinion, including: 1) BSM Product and Operational in 2016; 2) Follow Up of Sell Down Financing Transaction in PT BSM; 3) Plan of Insurance Acquisition Cost Acknowledgment Plan as Bank’s Income; 4) BSM Debit Card Activities Development with International Visa Network; 5) Financing Supplier Product; 6) Financing Project Product for Agriculture Sector; 7) Social Fund Management; 8) Wakalah Agreement Usage in Hajj Departure Cost

(BPIH) Management Authorities; 9) Contract usage in Makmur Saving Account Laku Pandai Program.

e) Methodology and technique on investigation sample testing. In 2017, DPS had conducted sample test/direct supervision to 8 (eight) Branch Offices and 4 (four) BSM area offices consisting: Batam Area, Banda Aceh Area, Makasar Area, Bogor Area, Cimahi, Bogor Branch Office, Purwokerto Branch Office, Cilegon Branch Office, Mataram Branch Office, Kediri Branch Office, Purwakarta Branch Office and JKT-Warung Buncit Branch Office.

With sample test concentration on transaction document of funding, financing with agreement-based of: 1) Murabahah. 2) Mudharabah. 3) Musyarakah, including Musyarakah Mutanaqisah. 4) Ijarah. 5) Take Over Case. 6) Refinancing Case. 7) Financing to cooperative.

To complete investigation process, DPS also requests and learns the Internal Audit & Anti Fraud Group (IAG) findings result from each sampled Branch Office.

8. Improving Understanding on Sharia Banking Practice.

Other important matter is during Sample Test, DPS of BSM conducts dialogue with branch office’s leaders and employees, to analyze deeper the business challenges and branch operational related to sharia aspect to ensure in accordance with sharia principle.

In addition, DPS also provides guidance and matters strengthening on “Sharia Banking Agreement and Product” to branch office’s staff, by organizing Sharia Clinic Forum to answer complaint as well as receive input to improve the quality of sharia aspect fulfillment.

This aimed so that all branch offices’ officials could understand and re-acknowledge sharia banking products and services. Including the standard agreements used in funding, financing and services products. So that business aspect could grow and from sharia aspect could be fulfilled.

To support all of the above achievements, DPS morally and spiritually has obligation to give motivation and guidance to all officers and employees of branch offices to always emphasizing on Islamic attitude/ethics in


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performing all duties and responsibilities as mandated by the Company. Because this becomes added values and fundamental strengths for Bank Syariah Mandiri, moreover Bank Syariah Mandiri has Corplan 2018-2020, that is strengthened with Confident, Enthusiast, and Spirit (PAS) culture internalization, insya Allah Bank Syariah Mandiri will be able to become a “Leading, Modern, and Safety” bank.

CHANGES ON SHARIA SUPERVISORY BOARD’S COMPOSITION During 2017, there was no changes in the composition of Sharia Supervisory Board. Thus, the composition of Sharia Supervisory Board in 2017 is as follows:

No. Name Position

1 Prof. Dr (HC). K.H Ma’ruf Amin Head

2 Dr. H. Muhammad Syafii Antonio, M.Ec Member

3 Dr. H. Mohamad Hidayat, MBA, MH Member

Herewith the report of Sharia Supervisory Board for 2017. Sharia Supervisory Board always reminds all BSM Management to keep maintaining compliance to sharia principles and compliance on prevailing rules and constitutions, so BSM can well achieve its vision and missions.

Wassalaamu’alaikum Wr. Wb. On behalf of the Sharia Supervisory Board,

Prof. Dr (HC). K.H Ma'ruf Amin Head of Sharia Supervisory Board


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BoARD oF DiRECToRS’RePoRT

Toni e. B. SubariPresident Director


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Assalamu’alaikum warahmatullahi wabarakatuhDear Honored Stakeholders and Shareholders,

A ll praise to Allah SWT for the blessing and deign, we could book positive corporate performance and Bank Syariah Mandiri could continuously contribute to develop the nation economic

and distribute blessing for people.

Team spirit and synergy in performing the best achievement plan in the Company, transformation effort, and the right strategy had provided result to the Company in 2017. Such achievement is shown from both aspects financial and non-financial.

Please allow me to represent the Board of Directors to present Bank management implementation report and performance achievement set in 2017.

BANK STRATEGY IN 2017The success of Bank Syariah Mandiri in 2017 was part of the implementation of 3 Pillars of Strategy and 5 Key focuses of Bank Syariah Mandiri. Those three strategy pillars comprise of (1) Business Refocusing which we conduct business refocusing with main core in Retail segment on Consumer financing in the form of Housing, Pension, Payroll, Automotive, Fiduciary and Micro Financing. Then the second core is only

corporate that focus in SOEs companies and bofide private, in addition to strengthen cross selling through integrated sales strategy. (2) Fixing Fundamental. We conduct business process simplification to increase process speed to improve customer satisfaction. (3) Strengthen Enabler. Strategy in this pillar including IT improvement as backbone for retail business of Bank Syariah Mandiri to keep strengthening integration with Mandiri Group for business growth.

Meanwhile from implementation aspect, there are 5 main focuses that were taken in 2017 which comprise of (1) Healthy and sustainable business growth, (2) Financing Quality, (3) Fee Based Income, (4) Productivity and Efficiency, and (5) Contribution Margin. Those five main focuses are continuously disseminated to all of Bank’s employees to be more focused.

ANALYSIS OF PERFORMANCE REALIZATION wITH TARGET IN 2017Financial PerformanceIn the midst of economic condition that relatively not conducive, assets of Bank Syariah Mandiri grew by 11.55% (yoy) from Rp78.83 trillion to Rp87.94 trillion. Meanwhile realization of total assets in 2017 reached 104.83% to


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RBB target of assets in 2017 amounted to Rp83.89 trillion. Financing grew by 9.20% (yoy) from Rp55.58 trillion to Rp60.70 trillion. Financing growth was better compared to previous year. Achievement of BSM financing in 2017 was recorded 100.01% to RBB target for financing in 2017 amounted to Rp60.58 trillion. Third Party Fund grew by 11.37% (yoy) from Rp69.95 trillion to Rp77.90 trillion with Low Cost Fund amounted to Rp40.36 trillion or 51.80% from total DPK collected. Bank successfully collected third party funds (DPK) by 105.19% to RBB target of DPK in 2017 amounted to Rp74.06 trillion.

AssetIn Rupiah

83.89 T

87.94 T

78.83 T

Target 2017 Realization 2017 Realization 2016

Retail segment financing reached 56.52% or Rp34.31 trillion or grew by 11.48% (yoy) compared to its original position of Rp30.78 trillion. Retail segment financing is supported by consumer financing with products such as BSM Griya, BSM Oto, Pawning, Small and Micro-banking, as well as Hajj and Umrah Services.

FinancingIn Rupiah

60.58 T 60.58 T

55.58 T


Financing growth in this Retail segment was in line with corporate policy to focus on Retail segment. This segment is the most appropriate to become sharia bank business target since sharia concept attached on each individual. In addition,

Retail segment will also provide impact on Indonesia society economic that was majority supported by SMEs industry.

The Company was still taking into account SMEs Segment financing. In 2017, SMEs financing comprises of Small and Micro segment had portfolio of 21.77% (above OJK provision of SMEs financing). The composition of Micro segment financing grew by 2.78% (year on year) to Rp4.30 trillion. Small/Business Banking Segment financing grew negative by 8.83% to Rp8.93 trillion. This segment was focused to consolidate quality improvement.

Commercial Banking Segment financing grew by 5.72% (year on year) to Rp5,891 million from Rp5.57 trillion related to refocusing taken. Meanwhile Corporate Banking Segment financing grew by 5.44% (year on year) from Rp19.20 trillion to Rp20.24 trillion that was in line with BSM strategy to enter pure corporate. In total the Commercial and Corporate Banking segment grew by 5.5% from Rp24.27 trillion to Rp26.13 trillion.

Financing growth was in line with quality improvement. Apart some challenges on macro economy conditions, we continuously sharpen the segment target, improve business model and our services quality. We are also grateful to have parent entity that allows us to synergize in penetrating market with quality.

Bank Syariah Mandiri also conducted Alliance with Mandiri Group. God Fiduciary distribution through Mandiri Group reached Rp55.71 billion. Gold installment: Rp7.22 billion. Bank sold AXA Mandiri product amounted to Rp184.21 billion (Annual Premium Equivalent) and Mandiri Investasi amounted to Rp16.12 billion (asset Under Management).

We also collaborate on car financing with Mandiri Tunas Finance and obtained good respond with portfolio reaching Rp212.78 billion.

Quality improvement could be seen from Net Performing Financing indicator. Gross NPF Ratio reached 4.53%, improved by 0.39% compared to previous period of 4.92%. Net NPF ratio reached 2.71%, improved by 0.42% compared to previous period of 3.13%. This NPF ratio improvement was supported by three pillars strengthening, target market focus and discipline in implementing Risk Acceptance Criteria (RAC).


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From funding aspect, until December 2017, Third Party Fund (DPK) successfully collected by Bank Syariah Mandiri reached Rp77.904 trillion or grew by 11.37% (year on year) from Rp69.95 trillion previously, with growth of each product as follows: (1) Saving Account grew by 13.13% or increased by Rp3.64 trillion to Rp31.50 trillion from Rp27.75 trillion. (2) Current Account grew by 29.31% (year on year) or increased by Rp2,031 trillion to Rp8.96 trillion. (3) Time deposits annually grew by 6.46% or increased by Rp2.28 trillion to Rp37.55 trillion.


DPKIn Rupiah

74.06 T

77.90 T

69.95 T

Low-cost fund grew by Rp5.67 trillion or increased by 16.36% (yoy). Composition of low-cost fund increased from 49.58% on December 2016 to 51.80% on December 2017.

In 2017, BSM recorded Fund Management income by Bank as Mudharib amounted to Rp7.27 trillion, increased by Rp818.78 billion or 12.66% compared to Fund Management income by Bank as Mudharib in 2016 amounted to Rp6.47 trillion. Realization of fund management income by Bank as Mudharib in 2017 reached 103.49% to Bank Business Plan (RBB) target of 2017 for fund management income by Bank as Mudharib amounted to Rp7.04 trillion.

Income for the year realization in 2017 reached Rp365.17 billion, increased by Rp39.76 billion or 12.22% compared to income for the year realization in 2016 amounted to Rp325.41 billion. Bank successfully recorded income for the year 2017 of 105.60% to Bank Business Plan (RBB) target of 2017 for income for the year amounted to Rp345.80 billion.

Fund Management Income by Bank as MudharibIn Rupiah

74.06 T

77.90 T

69.95 T


Income for the YearIn Rupiah

345.80 M

365.17 M

325.41 M


Fund collection strategy in the future is by improving composition of Retail fund and low-cost fund of saving account and current account to lower the cost of fund.

From ratios aspect, we present the followings:- Net Revenue Margin Ratio reached 7.33% or increased

by 0.58% compared to previous period of 6.75%, which is in line with NPF improvement and Cost of Fund lowering.

- Cost to Income Ratio reached 52.84% decreased by 8.35% compared to previous period of 61.19%, due to a decrease in overhead cost and on the other side there was an increase in operating income.

- FDR ratio reached 79.40%, decreased by 1.60% compared to previous period of 81.00%.

- Gross NPF ratio reached 4.53%, improved by 0.39% compared to previous period of 4.93%.

- Net NPF Ratio reached 2.71%, improved by 0.42% compared to previous period of 3.13%.


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- CAR ratio reached 15.86%, increased by 1.85% compared to previous period of 14.01%.

Non-Financial PerformanceIn addition to successfully recorded good performance, external party also recognized Bank Syariah Mandiri. That can be seen from the achievement of 29 awards from domestic and international as follows:• For 7 (seven) consecutive times Bank Syariah Mandiri was able to maintain achievement as

sharia bank with best performance from The Asset Asian Hongkong Award 2017;• For 4 consecutive times, Bank Syariah Mandiri was able to maintain achievement as bank with

the best services quality by obtaining Service Excellent Award 2017;• Bank Syariah Mandiri received awards from Bank Indonesia as the Best Sharia Monetary

Controlling Supporting Bank;• The strongest Islamic Retail Banking.

CHALLENGES FACED AND ITS SOLUTIONThroughout 2017, we as the management and all BSM employees have tried our best to improve our performance and achieve the target set in RBB. However, the success of BSM was attached with the business obstacles and challenges, and various solutions had been taken. Challenges that we faced were: 1. Limited number of Human Resources with skills and competency in sharia economy;2. E-commerce based business trend that requires IT system and services quality improvement;3. Tighter competition with conventional or sharia bank, the conversion of Bank BPD Aceh to

sharia bank that occurred and possibility of the event to be followed by BPD NTB and other BPD as well as merger plan between BTN Syariah with BNI Syariah;

4. Rapid growth of substitute product such as sukuk, sharia mutual funds, sharia insurance and sharia multi finance;

5. Consumer behavior trend in placing its idle fund from time deposits product to securities products such as mutual fund, stock, bonds and so on.

The solution and settlement strategy formulated by BSM are:1. Business Refocusing Strategy;2. Fixing the Fundamental Strategy;3. Strengthen Enablers Strategy.

On the above challenges, management and all of BSM employees continuously working harder to handle and lower the impact arise so that all targets set could be realized in a fast and right manner as well as generate added values for BSM.


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BUSINESS PROSPECT AND MARKET SHAREIn the midst of tight competition in banking industry, sharia banking especially, Bank Syariah Mandiri still owned the largest market share in 2017 from assets, third party funds, or financing aspects. On the scope of national banking, BSM placed 17th from assets aspect, 14th from DPK aspect and 9th from saving account aspect.

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POSISIONING

ASET

DPK

Tabungan

17. BSM; Rp87.94T

14. BSM; Rp77.90T

9. BSM; Rp31.39T

Market share of BSM in sharia bank industry from assets aspect in 2017 was 20.73%, decreased compared to 22.11% in 2016. Such decrease was the impact on the entrance of BPD Aceh and more robust growth of sharia business unit in 2017. Assets of sharia business unit grew by 33.07% meanwhile Sharia Commercial Bank grew by 13.31%.

On DPK segment, market share of BSM in industry in 2017 was 23.27% or decreased compared to 25.04% in 2016. From the financing aspect, market share of BSM was 21.24% or decreased compared to 22.41% in 2016.

Bank Syariah Mandiri was excellent in terms of Saving Account aspect. Market share of BSM Saving Account was 31.89%. Event the position of BSM Saving Account was on 9th place of national bank saving account. From the cost of fund aspect, BSM was also competitive with only 3.4%.

With those various matters, the Board of Directors assessed that BSM still has prospective business prospect. Therefore, the Board of Directors continuously conducting internal improvement, HR competency improvement, segmentation improvement and the right business focus especially in banking industry as well as other strategic plans.

POSITIONING


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GOOD CORPORATE GOVERNANCE IMPLEMENTATION BSM Management fully realizes the importance of Good Corporate Governance or GCG implementation for Bank’s performance achievement. GCG becomes important because it is basically designed to protect the interest of stakeholders or shareholders.

In addition, for Bank, GCG is important pillar of sustainable competitive advantage. Consistent GCG implementation will strengthen Bank’s competitive position, maximize Bank’s value, manage resources and risk to be more efficient and effective, that at the end will strengthen the trust of shareholders and stakeholders, so BSM could operate and grow sustainably in the long-term. BSM is fully committed to implement GCG in all organization levels by referring to various provisions and requirements related to GC G implementation.

Optimization of BSM GCG implementation is continuously conducted by strengthening infrastructure to achieve bet practices, test the reliability ad adjust the system and procedure in accordance to business development and regulation/provision to support more effective GCG implementation. Policy and SOP completion to support GCG implementation among others: Code of GCG, Code of Conduct, Board Manual, Audit Committee Charter, GCG Road Map, and other related SOPs.

In 2017, various efforts had been taken to strengthen GCG implementation through dissemination of Code of Conduct, Whistleblowing System and Ia risywah taken to all stakeholders. In addition, BSM also conducted GCG implementation measurement. On semester II 2017 the result of GCG implementation self-assessment was 1 or within “excellent” category. This proved that management commitment to make GCG as a system carried out with full commitment and consistency.

The Board of Commissioners and Directors are respect each other and understand each duties, responsibilities and authorities in accordance to rules and regulations as well as articles of associations. The Board of Commissioners and Directors must coordinate and cooperate to achieve Bank’s objectives and business sustainability in the long-term and become role model for the management under its supervision.

To perform work relations with the Board of Commissioners, the Board of Directors refers to Board Manual of the Board of Commissioners and Directors. Board Manual contains guidance on the works of the Board of Commissioners and Directors and explain the activities steps in a structured, systematic, easy to understand and able to consistently performed, become a reference for the Board of Commissioners and Directors in performing each duties to achieve Bank’s Vision and Mission, to achieve high work standard in line with GCG principles. Board Manual is prepared based on corporate law principles, Articles of Associations provision, prevailing rules and regulations, Shareholders direction and Good Corporate Governance best practices. Work relations between the Board of Commissioners and Directors are taken with principle of respecting each other.

Throughout 2017, the Board of Directors organized the Board of Directors’ internal meeting of 50 times. Decision taken in BSM’s Board of directors meeting had been recorded and documented well in Board of Directors’ minutes of meeting. Minutes of meeting is signed by head of meeting and distributed to all members of the Board of Directors who attended the meeting with reasons on any opinion disputes. In the Board of Directors’ meeting, progress detail from each Directorate is discussed, related to performance achievement of each Directorate. This is to ensure the achievement of Bank’s target and as a synergy platform and coordination among Directorates.

CORPORATE CULTURETo improve employee productivity and work culture, then in 2017 Musabahah was taken to review Shared Values. Review was conducted so that values from shared values could be easily understood and implemented by employees. Corporate Culture that is called as ETHIC with 5 (five) pillars of culture pillars (Culture of Excellence) are: Excellence: Bekerja Cerdas, Tuntas, Ikhlas, dan Sepenuh Hati untuk Hasil yang Terbaik - Excellence: Work Smart, Complete, Ikhlas, and Full

Commitment for the Best result- Teamwork: Actively Synergize for Together Success- Humanity: care, Praise, and Distribute Blessing for the

nation- Integrity: Honest, Trusted and Responsible- Customer Focus: oriented to sustainable customer

satisfaction and mutual relationship


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This becomes a belief system and reference values for all BSM employees, as well as BSM culture supporting pillar.

RESOURCES DEVELOPMENTProfessional human resources role is very significant in achieving the organization success. This becomes a concern for the Board of Directors in HR management to generate innovative, creative, leading excellent of employees in their skills.

Related to that matter, BSM is committed to develop human resources as one of the fundamental capital in facing competition. Throughout 2017, there were 250 new employees from regular channel.

From people aspect, Bank Syariah Mandiri has excellence in:1. Majority of employees who are below 35 years old. They

are also loyal so it is easy to be directed to joint objectives.2. Many HR come from well-known universities in Indonesia.

Which means that they are smart young generation with full potential to be developed.

We fully realize that competency improvement is an absolute matter in industry. This is to prepare human resources in facing the existing challenges lay ahead especially in performing strategic and routine works. In human resources development, in 2017 we focused to improve competency, career and leadership.

In 2017, total employee who participated training reached 9,035 employees, increased compared to 5,482 employees in 2016. In 2017, management for the first time send employees to participate training organized overseas to provide global knowledge and field deep understanding.

BSM also prepares Learning Program that is specially prepared to support Talent Management program through Talent Development Learning Program that was organized by Bank in 2017 based on banking academy amounted to 123 programs, 223 classes and 5,372 participants. BSM also prepares learning through e-learning that continuously developed to improve employee competency. Each employee currently could access various training modules through e-learning.

Related to the HR development, BSM had disbursed education and training costs throughout 2017 amounted to Rp45.10 billion.

In 2017, Bank Syariah Mandiri provided appreciation in form of:1. Training program includes sending 40 employees to

participate in overseas training.2. Master Degree Scholarship program for employee in

accordance to requirements and provisions.3. From benefit and welfare aspect, Management is still

able to allocate employee performance appreciation by providing annual bonus, THR and salary increase even in the difficult macro economic condition.

4. For the very first time, year 2017, Management dispatched its 300 best employees for umroh to Holy Land as appreciation on their performance.

5. Best Employee program that synergizes with Bank Mandiri, in which the management chose the best employee from Bank Syariah Mandiri and send him/her to Best Employee Mandiri Group program.

CSR AND BSM MENGALIRKAN BERKAH PROGRAMBank continuously showing its commitment and initiative in social and environmental responsibilities through a series of Corporate Social Responsibility (CSR) programs implementation. In implementing CSR, BSM creates synergy with Amil Zakat Laznas BSM Institution/partner institution in distributing corporate zakat fund and implementing humanity programs.

Bank believes that the Company, society and environment could create a synergy and hand in hand to achieve the same goals. Therefore, BSM places its CSR activities as core strategy and transform it as innovation and efficiency sources to improve competitive advantage of the Company. BSM CSR implementation is based on 3 (three) pillars as follows: 1) Spirituality (Character Bulding) in the form of mosque/mushalla construction donation and it supporting facilities, dakwah and religious activities donation, and others. 2) Nationalism (National Contribution) in the form of scholarship to less-fortunate students, school/boarding school construction donation, natural disaster donation, and others. 3) Welfare (Economic Empowerment) in the form of capital assistance, competency improvement, and entrepreneurship development. For example: BSM-isation of Culinary Area, training assistance and capital for small entrepreneurs, and others.

In 2017, BSM had successfully distributed CSR fund from zakat and charity fund. BSM zakat fund distribution through


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Laznas in 2017 amounted to Rp24.64 billion, and social fund distributed amounted to Rp21.35 billion. That CSR fund distribution was taken through Mitra Umat, Simpati Umat and Didik Umat programs.

Bank Syariah Mandiri continuously trying to maximize profit in line with its aim to provide the highest benefit for society (people) and environment (planet).

This year, Bank Syariah Mandiri, is conducting BSM Mengalirkan Berkah Program campaign in which Bank Mandiri Syariah invites all stakeholders including customers and employees to create added values in business so that added values could provide greater benefit for needed society.

The reason why CSR mostly focused on religious facilities activities is because the Management considers mosque, as worship place must be clean and convenient. Therefore, the Management expects in each nearest location with Bank Mandiri Syariah’s branch offices, mosques must be clean and well managed.

Up to September 2017, Bank Syariah Mandiri had disbursed BSM Mengalirkan Berkah Program budget amounted to Rp20 billion and distributed to more than 412 outlets of Bank Syariah Mandiri throughout Indonesia.

BSM Mengalirkan Berkah program is also part of Management appreciation to outlet with best performance (based on criteria). The presence of this program successfully driven the spirit of BSM employees to contribute better because they do not only provide blessing for themselves, family and the Company but also to stakeholders especially society. Outlet is given authority to choose the type and object of CSR in accordance to each environment’s needs.

CHANGES IN THE COMPOSITION OF THE BOARD OF DIRECTORSIn 2017, there were some changes in the composition of the Board of Directors. On April 10, 2017, GMS approved changes in management by dismissing with honor Mr. Agus Sudiarto and Mr. Fahmi Ridho on April 10, 2017 with assignment reason in Bank Mandiri. Therefore the composition of the Company’s Board of Directors became as follows:


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Wassalamualaikum Wr. WbOn behalf of the Board of Directors

Toni E. B. SubariPresident Director

No. Name Position Legal Basis Fit & Proper Test Pass

1. Toni Eko Boy Subari President Director Deed No. 01, GMS dated 2 May 2017 Kep-20/D.03/2018, February 15, 2018

2. Putu Rahwidhiyasa Director Deed No. 01, GMS dated 2 May 2017 Kep-100/D03/2014, October 10, 2014

3. Edwin Dwidjajanto Director Deed No. 01, GMS dated 2 May 2017 Kep-50/D-03/2015, August 24, 2015

4. Kusman Yandi Director Deed No. 01, GMS dated 2 May 2017 Kep-51/D-03/2015, August 24, 2015

5. Choirul Anwar Director Deed No. 01, GMS dated 2 May 2017 Kep-49/D-03/2015, August 24, 2015

6. Ade Cahyo Nugroho Director Deed No. 01, GMS dated 2 May 2017 Kep-2/D.03/2018, January 4, 2018

7. Achmad Syafii Director Deed No. 01, GMS dated 2 May 2017 Kep-21/D.03/2018, February 15, 2018

We would to express our gratitude for the Board of Directors who had given their contribution and performance in placing the foundation on BSM business in the long-term.

APPRECIATIONOn the above all achievements, we would like to express our highest appreciation on the dedication showed by the employees. We would like also to express our gratitude to the Board of Commissioners, Sharia Supervisory Board, shareholders, business partners, and customers on the trust given to us. That support meant a lot for the Company’s success in navigating the years filled with challenges in the future.

We fully realize that the upcoming years will be full with challenges but at the same time provide opportunities for the Bank to move forward, excellent and trusted. With the support and cooperation from the stakeholders, BSM is optimist will achieve better progress in realizing the Company’s vision, mission and goals.


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The Board of Directors & SeVP


Putu RahwidhiyasaDirector of Risk Management and Compliance

Edwin DwidjajantoDirector of Distribution & Service

Kusman YandiDirector of Wholesale Banking

Choirul AnwarDirector of Financing Risk and Recovery

Ade Cahyo NugrohoDirector of Finance and Strategy

Achmad SyafiiDirector of Technology & Operation

Niken AndonowarihSEVP of Retail Banking

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This Annual Report, including Corporate Governance Report, Financial Statement and other related information are the responsibilities of BSM Management and have been approved by all Board of Commissioners and Board of Directors through their respective signatories below:

Jakarta,March 2018

STATEMENT lETTER oN RESPoNSiBiliTiES FoR ACCURACY oF ANNUAl REPoRT CoNTENT PT BANk SYARiAH MANDiRi YEAR 2017




Bambang widiantoIndependent Commissioner

Dikdik YustandiCommissioner


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Board of Directors


Choirul AnwarDirector of Financing Risk and Recovery



Kusman YandiDirector of Wholesale Banking




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CoMPANy PRoFiLe

03

CoRPoRATE iDENTiTY

NamePT Bank Syariah Mandiri

AddressWisma Mandiri, I Jl. MH. Thamrin No. 5Jakarta 10340 – Indonesia

Phone Number(62-21) 2300 509, 3983 9000 (hunting)

Call CenterBSM Call 14040(021) 2953 4040

Fax Number(62-21) 3983 2989

Bank Code451

Swift CodeBSMDIDJA

websitewww.syariahmandiri.co.id

[email protected]

Social Media• Facebook : BankSyariahMandiri• Twitter : @syariahmandiri• Instagram : @BankSyariahMandiri• Youtube : BankSyariahMandiri

Establishment DateOctober 25, 1999

Operating DateNovember 1, 1999

Share Ownership: PT Bank Mandiri (Persero) Tbk 99.00000080%PT Mandiri Sekuritas 0.00000020%

Establishment Legal Basis:Law of Banking

Authorized CapitalRp3,000,000,000,-

Total Shares600,000,000 shares each with nominal value of Rp5,000.

Paid Up capitalRp2,989,021,935,- that consists of 597,804,387 shares, comprises of:• PTBankMandiri(Persero)Tbkamountedto

597,804,386 shares or with nominal value of Rp2,989,021,935,000,-

• PTMandiriSekuritasamountedto1(one)shareorwith nominal value of Rp5,000.

EquityRp7,314,241,000,000,-

Services Office765 offices (129 Branch Offices, 389 Sub-Branch Offices, 52 Cash offices, 145 Payment Points and 50 Pawning Service Office Outlets).

ATM NetworkBSM Card can be used in more than 100,000 ATM network that consists of:• ATMSyariahMandiri,1040units• ATMMandiri17,708units• ATMBERSAMA,77,401units• ATMPrima,109,089units,and• MalaysiaElectronicPaymentSystem(MEPS),9,722

units.

Total Employee15,659 employees that consist of:• 8,533PermanentEmployees• 341DefiniteEmployees• 6,785OutsourcingEmployees

RatingAA+ (idn), Pefindo 2017


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CoMPANY iN BRiEF

consolidated and established Sharia Banking Development team, aiming to develop Sharia Banking Service in PT Bank Mandiri (Persero) Tbk corporate group.

The Sharia Banking Development Team assumed that the implementation of the Law as a momentum to convert PT Bank Susila Bakti from a conventional bank to become a sharia bank. Therefore, the Sharia Banking Development Team immediately prepared its system and infrastructure that BSB business activity was transformed from Conventional bank to a Bank operated based on sharia-principle under the name of PT Bank Syariah Mandiri as stated on Notarial Deeds: Sutjipto, SH No. 23 dated 8 September 1999.

BSB business activity business transformation to sharia commercial bank was confirmed by the Governor of Bank of Indonesia under its Decree No. 1/24/KEP/BI/1999 dated 25 October 1999. Further, under the Decree of Senior Governor Deputy of Bank of Indonesia No. 1/1/KEP.DGS/1999, BI approved the change of name to be PT Bank Syariah Mandiri (BSM). Following the said confirmation and legal acknowledgement, PT Bank Syariah Mandiri started its operations legally As a bank Sharia as of Monday, 25 Rajab 1420 H or 1 November 1999.

PT Bank Syariah Mandiri came and presented with harmonization of business idealism and spiritual values. Bank Syariah Mandiri grew to be a bank that capable in harmonizing both of them, which underlying its operating activities. This harmonization between business idealism and spiritual values become one of strong points of Bank Syariah Mandiri in its performance in Indonesian banking industry.

Multi-dimensional crisis hampered Indonesia in 1997 – 1998 brought distinct blessing for the milestone of sharia banking system in Indonesia. When the conventional banks severed the economic crisis, a paradigm on new concept to save the economy from prolonged crisis was flourishing.

On the other hand, to recover economy generally, the Government took an initiative to merge 4 (four) Government owned banks, namely Bank Dagang Negara, Bank Bumi Daya, Bank Exim and Bapindo into one entity, a strong bank named PT Bank Mandiri (Persero) Tbk on 31 July 1999. The merger policy was also determined PT Bank Mandiri (Persero) Tbk as the majority shareholder of PT Bank Susila Bakti (BSB). PT BSB is a conventional bank owned by Employees Welfare Foundation (YKP) of PT Bank Dagang Negara and PT Mahkota Prestasi.

To recover from the economic crisis, PT BSB was also merged with several banks and invited foreign investors. As an action plan of Sharia Economy System Development initiative, the Government implemented Law No. 10 of 1998 that granted an opportunity for commercial banks to also serve sharia transactions (dual banking system). As a response, PT Bank Mandiri (Persero) Tbk


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MilESToNE

NAME CHANgES

PT BANK INDUSTRI NASIONAL (PT BINA)

PT BANK MARITIM INDONESIA

PT BANK SUSILA BAKTI

1955

1967

1973

1999

Establishment of PT Bank Industri Nasional (PT BINA)

Name change of PT BINA to be PT Bank Maritim Indonesia

Name change of PT Bank Maritim Indonesia to be PT Bank Susila Bakti

PT Bank Susila Bakti changed to PT Bank Syariah Sakinah Mandiri with sharia principles system, and then changed its name to PT Bank Syariah Mandiri


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logo DEFiNiTioN

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1. GENERAL MEANING:a. Small alphabets on the logo shows the proximity with customers while

maintaining humble attitude.b. Friendly to all business segments of any classifications.c. The two writings on the logo (“mandiri” and “syariah”) are a unity,

but may have a change in color when needed.

2. COLOR OF ALPHABETS:a. Green symbolizes prosperity, wealth and peacefulness.b. Green is also commonly used by Moslem to emphasize their identity.

3. LIQUID GOLD wAVE:a. Liquid gold wave symbolizes sustainable financial wealth, prosperity

and glory.b. Gold arch symbolizes the characters that are agile, progressive, visionary,

and excellent in facing any possibilities that may come.c. Gold (yellow-orange color): the color represents mightiness, dignity,

prosperity and wealth.


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liNE oF BUSiNESS

BUSINESS LINES ACCORDING TO THE LATEST AMENDMENT DEED AND BUSINESS LINES CARRIED OUT

The business lines of BSM based on the latest Amendment Deed No. 2 Dated 2 June 2014 as approved by the Minister of Law and Human Rights of the Republic of Indonesia under its Decree No. AHU- 12852.40.22.2014 Dated 10 June 2014, the Articles of Association of BSM, are as follows:

1. Collection of fund for savings in form of demand deposits, savings or other form considered the same based on wadi’ah contract or other contract that in line with sharia principles;

2. Collection of fund for investments in form of time deposits, savings or other form considered the same based on mudharabah contract or other contract that in line with sharia principles;

3. Channeling of profit sharing financing based on mudharabah contract, musyarakah contract, or other contract that in line with sharia principles;

4. Channeling of financing based on murabahah contract, salam contract, istishna contact, or other contract that in line with sharia principles;

5. Channeling of financing based on qardh contract or other contract that in line with sharia principles;

6. Channeling of financing to rent movable or immovable goods to the customers based on ijarah contract and/or purchase lease in form of ownership ijarah muntahiyabitta or other contract that in line with sharia principles;

7. Acquisition of debts based on hawalah contract or other contract that in line with sharia principles;

8. Debit card and/or financing card businesses based on sharia principles;9. Purchase, sale, or guarantee of own risks for third party securities issued based on real

transactions, such as ijarah, musyarakah, mudharabah, murabahah, kafalah, or hawalah contract;

10. Purchase of securities based on sharia principles issued by the government and/or Bank of Indonesia;

11. Receive of payment from claim of securities and calculate with third party or amongst third parties based on sharia principles;

12. Depository services for the interests of other party based on a contract in sharia-principles basis;

13. Provision of depository spaces for goods and securities based on sharia principles;14. Transfer of money, either for own needs or customers needs based on sharia principles;15. Trustee function based on wakalah contract;16. Provision of letter of credit or bank guarantee facility based on sharia principles;17. Other activities as commonly engaged in banking and social fields as long as those activities

in line with sharia principles and the prevailing law;18. Foreign currency activities based on sharia principles;19. Capital investment activities in sharia commercial bank or financial institution engaging in

business activities based on sharia principles;20. Temporary capital investment activities to manage financing failure based on sharia

principles, subject to recall of the investment;21. Establish and manage pension fund based on sharia principles;22. Capital market activities as long as in line with sharia principles and capital market law;


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23. Activities or products of the bank that based on sharia principles by using electronic means;24. Issuance, offering, and trading of short term securities based on sharia principles, either directly or

indirectly through money market;25. Issuance, offering, and trading of long term securities based on sharia principles, either directly or

indirectly through capital market;26. Provision of other products or business activities of sharia commercial bank based on sharia

principles.

There is total of 26 business lines that are carried out by BSM per

December 31, 2017.


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FUNDING PRODUCT BSM SavingSaving account in Rupiah currency under Mudharabah Mutlaqah contract with cash withdrawal facility on mutually approved conditions.

BSM Scheduled SavingTime saving account with progressive profit sharing and guarantee of predefined fund target achievement and complemented with insurance protection.

BSM Simpatik SavingSaving account based on wadiah principle, in which cash withdrawal can be made at any time based on the mutually agreed conditions.

BSM Mabrur SavingSaving account to assist adult customers in planning hajj & umrah.

BSM Mabrur Junior SavingSaving account to assist children customers in planning hajj & umrah.

BSM Dollar SavingDollar denominated saving account with ease of cash withdrawal and deposit transactions at any time or in accordance with BSM policy by using a withdrawal form.

BSM Investa Cendekia Saving (TIC)Time saving account for financial planning especially for children education plan.

BSM PRoDUCTS/SERViCES

BSM Corporate SavingSaving account that mainly made for collecting outstanding fund of demand deposits accounts owned by institutions / companies in legal entity form by using an auto-save feature.

BSM Pension SavingSaving Account in Rupiah currency in cooperation with PT Taspen for Indonesia civil servant pensioners.

BSM TabunganKu SavingIndividual saving account with easy and simple requirements, issued collectively by Indonesian banks to foster the saving habit and to improve society welfare.

BSM iB Student SavingSaving account for students, nationally launched by banks in Indonesia with easy and simple requirements and interesting features in pursuance of finance education and inclusion to promote a savings culture.

BSM Time DepositsTime deposits product which withdrawal can only be made on certain maturity period based on mutually agreed conditions.

BSM Foreign Currency Time DepositsTime deposits product in foreign currency; the withdrawal can only be made on certain maturity period based on mutually agreed conditions.

BSM Products/Services can be categorized to 3 (three) products/services as follows:

FUNDiNG PRoDUCT

FiNANCiNG PRoDUCT

SeRViCe PRoDUCT


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BSM Demand DepositsSaving facility which cash withdrawal can be made at any time by using cheque, promissory notes or other payment instrument under wadiah yaddhamanah principle.

BSM Foreign Currency Demand DepositsA USD-denominated saving account; the cash withdrawal can be made at any time management based on the wadiah yad dhamanah principle.

BSM Demand Deposits in Singapore DollarA Singapore Dollar denominated saving account; the cash withdrawal can be made at any time management based on the wadiah yad dhamanah principle.

BSM Demand Deposits in EuroA Euro denominated saving account; the cash withdrawal can be made at any time management based on the wadiah yad dhamanah principle.

FINANCING PRODUCTBSM Mudharabah FinancingFinancing facility where the whole working capital required by the customers is facilitated by the bank. Any revenue shall be shared in accordance with the mutually agreed profit sharing scheme.

BSM Musyarakah FinancingSpecial Financing for working capital, where the fund from the bank is a part of business capital of the customers and the revenue shall be shared based on the mutually agreed profit sharing scheme.

BSM Murabahah FinancingFinancing based on trading agreement between the bank and customers. The Bank shall purchase the goods required and resell them to the customers at basic price with additional mutually agreed profit margin. This product can be used for business requirements (investments, working capital) and consumers financing.

BSM Istishna FinancingFinancing for procurement of goods under Istishna scheme, which can be short, medium and long term


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financing to meet procurement requirements (istishna object). Installment period of this product shall exceed the goods procurement period (goods in process) and the bank shall acknowledge the income which becomes the bank’s share during the installment period, either when the procurement is based on shipping percentage of the goods or after the goods is ready.

Financing with IMBT (Ijarah Muntahiyah Bittamilk)Scheme Ijarah Muntahiyah Bittamilk financing is a financing facility under leasing scheme for a leased object between the bank and the customers during certain period that shall be ended with transfer of ownership of the goods to the customers.

Mudharabah Muqayyadah financing off balance sheetMudharabah Muqayyadah off Balance Sheet is the distribution of Mudharabah Muqayyadah funds. The Bank acts as an agent (channeling agent), so the bank does not bear the risk.

BSM Customer Network FinancingBSM Customer Network Financing (BSM-CNF) is a working capital financing facility provided to customers (agents, dealers, etc.) to purchase inventory of goods from partners (ATPM, producers / distributors, etc.) that cooperate with banks.

BSM warehouse Receipt FinancingBSM Warehouse Receipt Financing is the financing of commercial transactions of a widely traded commodity / product with a principal guarantee of commodities / products being financed and in an independent warehouse or place of control.

PKPAFinancing for Members of Cooperatives (PKPA) is financing for members of cooperative to fulfill the members’ consumer requirement (collective) who proposes financing to employees cooperative.

BSM ImplantIt is a consumer-financing product in Rupiah currency for permanent employees of the company or members of Employees Cooperative through collective application (in group) by company recommendation.

BSM Housing FinancingGriya BSM financing is short, medium, or long term financing to finance the purchase of residential houses (consumer), both new and used, in the developer environment with murabaha system.

BSM Pembiayaan Griya BSM BersubsidiGriya BSM Subsidized Financing is the financing for the ownership or purchase of a simple healthy house (RS Sehat / RSH) built by the developer with the support of a subsidized down payment facility from the government.

BSM Financing for Ownership of Rumah Sejahtera Syariah TapakBSM Financing for Ownership of Rumah Sejahtera Syariah Tapak is a financing supported by the Housing Financing Liquidity Facility (FLPP), managed by the Ministry of Public Housing and issued by the executing bank with sharia basis operations to the customers with low income to own Rumah Sejahtera Syariah Tapak that may be purchased from individuals and/or legal entity.

BSM PUMP-KB Housing FinancingBSM Housing Financing with Down Payment Loan – in Cooperation with Bank (PUMP-KB) is a financing supported by the funding from BPJS Employment to BSM for ownership or purchase of house to the members of BPJS Employment.

BSM Optimum House Ownership FinancingBSM Optimum House Ownership Financing is a financing for house ownership with additional benefit of additional financing facilities that can be disbursed by the customers at certain time within the validity period of securities that can still cover total financing and with calculation on debt to service ratio of the customers.

BSM PensionBSM Pension financing is a financing granted to retirees or employees who will retire in ≤ 6 months (pre-retirees) or widow’s pension and have received Employer Pension Notice.

BSM Financing for Medical EquipmentBSM Financing for Medical Equipment is a financing to purchase working capital o supporting equipment in medical works.


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BSM OtoFinancing for purchase of vehicles, either new or second-hand cars, in accordance with sharia principles.

BSM EdukaBSM Financing Eduka is a financing to meet education costs.

Revolving Fund FinancingFinancing facilities for working capital with musyarakah principle, which withdrawal can be made at any time depending on the real needs of the customers.

Umrah FinancingShort-term financing to facilitate the needs for umrah travel, such as travel tickets, accommodation, and other umrah costs with ijarah contract.

Secured Financing with Syariah Mandiri Tied InvestmentFinancing with cash collateral, in which the investor limits the bank on the place, manner, and object of investment.

BSM Micro Shop FinancingShort-term financing to be used to facilitate business needs as well as multi-uses with maximum financing up to IDR 100 million with murabahah and ijarah contracts.

BSM Pembiayaan Kendaraan Bermotor (PKB)Pembiayaan untuk pembelian kendaraan bermotor dengan sistem murabahah.

BSM Gold PawningFinancing on the basis of collateral in the form of gold as one Alternative to get cash quickly.

BSM Gold InstallmentFinancing to own gold in installment payments using Murabahah contract.

SERVICE PRODUCTBSM CardA facility to conduct transaction of fund withdrawal, payment, and transfer on BSM ATM, Mandiri ATM, ATM Bersama, ATM Prima or ATM MEPS (Malaysia). BSM card also serves as debit card that can be used for any shopping transaction in merchants that use Bank Mandiri EDC or Debit Prima (BCA).

BSM ATMIt refers to ATM Machines owned by BSM. BSM ATM are able to be used by the customers of BSM, customers of Prima banks, customers of ATM Bersama bank members, and customers of Bancard (Malaysia).

BSM CALL 14040Banking services by phone with access number of 14040 or 021 2953 4040, that can be used by the customers to obtain information on banking services.

BSM Mobile BankingIt is a banking service product through SMS technology that eases any banking transaction, anytime, anywhere.

BSM Mobile Banking MultiplatformIt is a distribution channel owned by BSM to access account owned by customer by using GPRS/EDGE/3G/BIS and WIFI technology through smartphone. Smartphone platforms that can be used are BB, Android, IOS and Symbian.

BSM Net BankingIt is a facility of banking services that can be used by the customers to conduct banking transactions (as determined by the bank) by Internet, by using computers or smart phones.

BSM NotificationIt is a service to provide immediate information of any mutation transaction of the customers in line with the type of transactions that are registered by the customers to be reported by SMS or email.


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=MBP (Multi Bank Payment)It is a service to ease any payment to certain institutions (namely education institutions, insurances, special entities, non-bank financial institutions) by overbooking menu in any bank ATM.

BPI (BSM Institution Payment)It is a service of payment with a direct connection to the relevant institution in real time on line.

BPR Host to HostIt is a cooperation form between BSM with BPR/BPRS that enables the customers of the BPR/BPRS to obtain ATM card that can be used in ATM BSM, ATM Bank Mandiri, ATM Bersama and ATM Prima.

BSM E-MoneyIt is a prepaid card with smart-card basis issued by Bank Mandiri in cooperation with BSM.

D.U.I.T TransferRemittance service from abroad to all banks and Post offices in Indonesia quickly and easily.

Foreign Exchange TransferForeign exchange transfer service among bank accounts in Indonesia or abroad in 130 currencies.

western UnionDomestic or in between countries remittance service with wide outlet networks and spread throughout the world.

Nusantara TransferRemittance service among domestic regions throughout the nation quickly and easily.

MultibillerIt is a billing payment admission service through BSMNet channel.


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E-Channel Features DevelopmentTo provide the best services to the customers, BSM is consistent in developing the technology by using E-Channel. The developed features are:- BSM Token, which is a secret code of One Time Password

(OTP), sent through SMS that is used for the customer’s transaction authorization in BSM Net Banking.

Zakat ServiceIt is a service that provides easiness for the customers to distribute zakat with application based.


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oRgANiZATioN STRUCTURE

BSM Organization Structure was determined as follows:

General Meetingof Shareholders

President DirectorToni Eko Boy Subari

Technology & OperationAchmad Syafii

IT Architecture, Strategy &

DevelopmentHikmat Dani Wijaya

Central Operations

Eny Maya Gustini

IT OperationsSyafid Hidayat

Financing Operations

Mahmud Syukri

Corporate Risk

Iyan Mohamad Ilyas

Commercial Risk

Mochamad Roem

Retail RiskAsnah Faekhah

Distribution Strategy

Gunawan Arief H

Business Banking

Sigit Suryawan

Pawning ManagementDian Faqihdien S.

Retail DepositDewa Bagus Ivan B.

Micro BankingOkky Fachrizal A.

Consumer Finance

Dien Lukita P.

Electronic Banking

Zul Ikbal

wholesale Financing RecoverySulistyo Budi

Hajj & UmraVita Andrianty

Retail Financing Recovery

Suryo Kuncoro

Region I–VII

Corporate Banking 1

Buyung I Lukman

Commercial Banking

Siti Nurdiana

Corporate Banking 2

Fiti Syam

Product & Transaction

BankingBudi Nugroho

Institutional Banking

Achmad Fauzi

EBO ERRO

EBO Digital Banking

Financing & Recovery

Choirul Anwar

Distribution & Service

Edwin DwijajantoRetail BankingNiken Andonowarih

wholesale Banking

Kusman Yandi

Board of Sharia Supervisory


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Audit Committee

Nomination & Remuneration Committee

Risk Monitoring Committee

Risk Management &

CompliancePutu Rahwidhiyasa

Finance & Strategy

Ade Cahyo NugrohoHuman Capital

Pjs.Putu Rahwidhiyasa

Risk Unit

Business Unit

Support Unit

Internal AuditSuharto

Human Capital Services

Andang Lukitomo

Strategy & Performance Management

Noor Anis

LegalIrfan Lesmana

Strategic Procurement

Fathia

Treasury & International

BankingAhmad Syukri

Corporate Secretary

Dharmawan P. Hadad

ComplianceKhoirul Huda S R

Policy & Procedure

Ana Nurul Khayati

Corporate Transformation

Mira Rozanna

Learning Center

Firman Jatnika

HC Policy & Culture

Taufik Marchrus

AccountingSuhendar

Enterprise Risk ManagementM. Fanny Fansyuri

Corporate Action



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PRoFilE oF ExECUTiVE oFFiCER

PRESIDENT DIRECTORATE:Suharto:Head of Internal Audit Group (IAG) (based on Decree Letter No. 19/007-KEP/DIR dated January 9, 2017). Was born in Indramayu, on March 20, 1966. Graduated from Faculty of Economy, Accounting Major, STIE Jagakarsa in 1996. Officially joined BSM on January 11, 2017.

wHOLESALE BANKING DIRECTORATE:Achmad Fauzi:Head of Institutional Banking Group (IBG) (based on Decree Letter No. 18/010-KEP/DIR dated January 12, 2016). Was born in Kuningan, on November 4, 1965. Graduated from Faculty of Economy, Universitas Krisnadwipayana in 1989 and Master of Business Law, Universitas Padjajaran, Bandung in 2002. Joined BSM since September 15, 2005.

Rahmat Syukri:Head of Treasury & International Banking Group (TIG) (based on Decree Letter No. 18/010-KEP/DIR dated January 12, 2016). Was born in Bukittinggi, on March 3, 1965. Graduated from Faculty of Accounting Economy, Universitas Andalas in 1990 and Master Degree from Faculty of Agribusiness Management, Institut Pertanian Bogor in 2003. Joined BSM since August 15, 2014.

Fiti Sayam:Head of Corporate Banking 2 Group Head (CB2) (based on Decree Letter No. 19/KEP-017/DIR dated January 20, 2017). Was born in Jakarta, on September 16, 1976.Graduated from Faculty of MIPA, Universitas Indonesia in 2000 and Master of Management, Universitas Indonesia in 2002. Joined BSM since September 3, 2002.

Buyung Ichman Lukman:Head of Corporate Banking 1 Group Head (CB1) (based on Decree Letter No. 19/185-KEP/DIR dated April 6, 2017). Was born in Yogyakarta, on July 21, 1967. Graduated from Faculty of Social Communication Science, Universitas Gadjah Mada in 1991 and Master of Finance & Banking Management, Unversitas Gadjah Mada in 1993. Joined BSM since April 6, 2017.

Siti Nurdiana:Head of Commercial Banking Group (CMG) (based on Decree Letter No. 18/1023-KEP/DIR dated November 9, 2016). Was born in Jakarta, on December 16, 1966. Graduated from

Faculty of Economy, Universitas Padjajaran in 1991. Joined BSM since November 1, 1999.

Budi Nugroho:Head of Product & Transaction Banking Group Head (PTG) (based on Decree Letter No. 19/007-KEP/DIR dated January 9, 2017). Was born in Kudus, on April 30, 1963. Graduated from Faculty of Accounting Economy, Universitas Airlangga in 1987 and Master of Business Administration from University at Buffalo in 1998. Joined BSM since January 9, 2017.

RETAIL BANKING DIRECTORATE:Dien Lukita Purnamasari:Head of Consumer Finance Group Head (CFG) (based on Decree Letter No. 19/444-KEP/DIR dated September 26, 2017). Was born in Jayapura, on May 10, 1974. Graduated from Faculty of Informatics Management, Unviersitas Gunadarma in 1996 and Master of Economy, Universitas Trisakti in 2008. Joined BSM since March 21, 2001.

Dian Faqihdien Suzabar:Head of Pawning Management Group (PWG) (based on Decree Letter No. 18/010-KEP/DIR dated January 12, 2016). Was born in Bandung on November 18, 2075. Graduated from Faculty of Architecture Engineering, Universitas Indonesia in 1999 and Master Degree from Faculty of Information Technology, Royal Melbourne Institute in 2002. Joined BSM since September 15, 2011.

Okky Fachrizal Achmad:Head of Micro Banking Group (MBG) (based on Decree Letter No. 18/010-KEP/DIR dated January 12, 2016). Was born in Surabaya on October 24, 1968. Graduated from Faculty of Economy and Development Study, Universitas Surabaya in 1995. Joined BSM since June 1, 2015.

DISTRIBUTION & SERVICE DIRECTORATE:Gunawan Arief Hartoyo:Head of Distribution Strategy Group (DSG) (based on Decree Letter No. 18/010-KEP/DIR dated January 12, 2016). Was born in Sukohardjo on March 26, 1971. Graduated from Faculty of Economy, Universitas Airlangga in 1995. Joined BSM since December 27, 1999.


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Vita Andrianty:Head of Hajj & Umra Group Head (HUG) (based on Decree Letter No. 19/444-KEP/DIR dated September 26, 2017). Was born in Tangerang on August 18, 1981. Graduated from Faculty of Engineering, Universitas Indonesia in 2003. Joined BSM since September 1, 2003.

Dewa Bagus Ivan Baruna:Head of Retail Deposit Group (RDG) (based on decree Letter No. 18/010-KEP/DIR dated January 12, 2016). Was born in Denpasar on September 29, 1965. Graduated from Faculty of Civil and Planning Engineering, Institut Sains dan Teknologi Nasional in 1990. Joined BSM since December 27, 1999.

Zul ikbal:Head of Electronic Banking Group (EBG) (based on Decree Letter No. 18/010-KEP/DIR dated January 12, 2016). Was born in Bukittinggi on Deceber 9, 1964. Graduated from Faculty of Economy, Universitas Padjajaran in 1988. Joined BSM since October 19, 2009.

FINANCING RISK & RECOVERY DIRECTORATE:Iyan Mochamad Ilyas:Head of Corporate Risk Group (WRG) (based on Decree Letter No. 18/600-KEP/DIR dated March 8, 2016). Was born in Kuningan on November 30, 1964. Graduated from Faculty of Economy, STIE YAI Jakarta in 1994. Joined BSM since April 1, 2016.

Suryo kuncoro:Head of Retail Financing Recovery Group Head (RFR). Was born in Gombong on September 7, 1973. Graduated from Faculty of Engineering, Universitas Krisnadwipayana in 2001 and Master of Business Administration, Institut Teknologi Bandung in 2015. Joined BSM since October 1, 2010.

Sulityo Budi:Head of Wholesale Financing Recovery Group (WFR) (based on Decree Letter No. 18/010-KEP/DIR dated January 12, 2016). Was born in Jember on January 14, 1963. Earned Bachelor and Master Degree from Faculty of Agriculture, Insitut PErtanian Bogor in 1985 and 2001 respectively. Joined BSM since August 1, 2007.

Asnah Faekhah:Head of Retail Risk Group (RRG) (based on Decree Letter No. 18/597-KEP/DIR dated March 7, 2016). Was born in Lampung

Tengah on February 26, 1969. Graduated from Faculty of Agriculture, Universitas Brawijaya in 1991 and Master of Management from Universitas Gadjah Mada in 1993. Joined BSm since April 1, 2016.

Mochammad Roem:Head of Commercial Risk Group Head (CMR) (based on Decree Letter Dir No.19/196-KEP/DIR dated April 21, 2017). Was born in Bandar Lampung on August 12, 1962. Graduated from Faculty of Agronomy, Universitas Lampunt in 1986. Joined BSM since July 1, 2001.

TECHNOLOGY & OPERATION DIRECTORATE:Syafid Hidayat:Head of Information IT Operations Group Head (IOG) (based on Decree Letter No. 18/010-KEP/DIR dated January 12, 2016). Was born in Palembang on December 1, 1972. Graduated from Faculty of Economy, Universitas Sriwijaya in 1996. Joined BSM since February 1, 2012.

Hikmat Dani wijaya:Head of IT Architecture & Strategy Group Head (ISG). Was born in Jayapura on September 22, 1964. Graduated from Master of Management, Sekolah Tinggi Manajemen Industri Indonesia in 2011. Joined BSM since September 1, 2017.

Eny Maya Gustini:Head of Central Operation Group (COG) (based on Decree Letter No. 18/010-KEP/DIR dated January 12, 2016). Was born in Muara Enim on August 29, 1968. Graduated from Faculty of Economy, Universitas Pancasila in 1990. Completed Master of Management in Universitas Trisakti in 2006. Joined BSM since April 21, 2003.

Mahmud Syukri:Head of Financing Operation Group (FOG) (based on Decree Letter No. 18/888-KEP/DIR dated August 8, 2016). Was born in Cirebon on August 24, 1969. Graduated from Faculty of Economy, Universitas Jenderal Soedirman in 1994. Joined BSM since August 11, 2016.

RISK MANAGEMENT & COMPLIANCE DIRECTORATE:Dharmawan P. Hadad:Head of Corporate Secretary Group (CSG) (based on Decree Letter No. 18/730-KEP/DIR dated April 06, 2016). Was born


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in Bekasi on March 17, 1966. Graduated from Faculty of Curriculum & Technology, IKIP Jakarta in 1991 and Master of Management, STIE IPWI in 2000. Joined BSM since March 1, 2015.

Khoirul Huda S Riyadi:Head of Compliance Group (CPG) (based on Decree Letter No. 18/396-KEP/DIR dated February 22, 2016). Was born in Jakarta on October 6, 1975. Graduated from Faculty of Agronomy, Institut Pertanian Bogor in 1999 and Master of Management, Universitas Budi Luhur in 2004. Joined BSM since September 1, 2003.

Irfan Lesmana:Head of Legal Group (LGG) (based on Decree Letter No. 18/868-KEP/DIR dated July 26, 2016). Was born in Jakarta on February 24, 1971. Graduated from Faculty of Law, Universitas Indonesia in 1995. Joined BSM since July 15, 2016.

Ana Nurul Khayati:Head of Policy & Procedure Group (PPG) (based on Decree Letter No. 18/010-KEP/DIR dated January 12, 2016). Was born in Madiun on March 26, 1972. Graduated from Faculty of Law, Universitas Gadjah Mada in 1997 and Master Degree from Faculty of Law, Universitas Indonesia in 2006. Joined BSM since January 13, 2000.

M. Fanny Fansyuri:Head of Enterprise Risk Management Group (ERM) (based on Decree Letter No. 18/010-KEP/DIR dated January 12, 2016). Was born in Bandung on April 14, 1967. Graduated from Faculty of Economy, Universitas Padjajaran in 1991. Joined BSM since November 1, 1999.

FINANCE & STRATEGY DIRECTORATE:Fathia:Head of Strategic Procurement Group Head (SCG) (based on Decree Letter No. 18/003/HCG-PKWT dated January 5, 2016). Was born in Jakarta on September 19, 1958. Graduated from Faculty of Accounting, Universitas YAI in 2001. Joined BSM since January 15, 2016.

Suhendar:Head of Accounting Group (ACG) (based on Decree Letter No. 18/010-KEP/DIR dated January 12, 2016). Was born in Jakarta on May 11, 1976. Graduated from Faculty of Economy, Universitas Indonesia in 2002. Joined BSM since August 26, 2004.

Noor Anis:Head of Strategy & Performance Management Group (SPM) (based on Decree Letter No. 18/020-KEP/DIR dated January 12, 2016). Was born in Kudus on August 11, 1964. Graduated from Faculty of Statistics Science, Institut Teknology Bandung in 1989. Joined BSM since January 26. 2015.

Mira Rozanna:Head of Corporate & Branch Transformation Group (CBT) (based on Decree Letter No. 18/010-KEP/DIR dated January 12, 2016). Was born in Palembang, October 25, 1966. Graduated from Faculty of General Economy, Universitas Negeri Lampung in 1989. Joined BSM since January 26, 2015.

HUMAN CAPITAL DIRECTORATE:Andang Lukitomo:Head of Human Capital Services Group Head (HCS) (based on Decree Letter No. 19/444-KEP/DIR dated September 26, 2017). Was born in Pekalongan on March 25, 1965. Graduated from Faculty of Industrial Psychology science, Universitas Gadjah Mada in 1992. Joined BSM since April 15, 2015.

Taufik Machrus:Head of Human Capital Policy & Culture Group Head (HCP) (based on Decree Letter No. 19/444-KEP/DIR dated September 26, 2017). Was born in Pasuruan on April 3, 1968. Graduated from Faculty of Economy, Universitas Airlangga in 1994. Joined BSM since June 1, 2001.

Firman Jatnika:Head of Learning Center Group (LCG) (based on Decree Letter No. 18/15182-3-HCMS/HCG dated August 11, 2016). Was born in Jakarta on February 26, 1970. Graduated from Faculty of Economy, Unversitas Padjajaran in 1995 and Master of Economy from Universitas Indonesia in 2005. Joined BSM since November 1, 1999.


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ViSioN, MiSSioN, AND CoRE VAlUES

The steps in preparing Vision, Mission and BSM Shared Values are as follows:1. The Board of Directors evaluated the performance achievement and internal power of BSM.2. The Board of Directors evaluated any external strategic changes and considered business opportunities in the

future.3. The Board of Directors evaluated and identified the expectation and requirements of the stakeholders4. By considering internal powers, external opportunities and the stakeholders’ expectation, the Board of Directors

prepared the Vision, Mission and BSM Shared Values.5. The Vision, Mission and BSM Shared Values were conveyed and evaluated by the Board of Commissioners and

then decided as well as agreed jointly by the Board of Commissioners and the Board of Directors.6. The Board of Directors decided the Vision, Mission and BSM Shared Values in the Company’s Long Term Plan.

FOR CUSTOMERSBSM is a preferred bank that

provides benefits, assurance, and prosperity. Therefore, BSM will

try to become a trusted bank and provide the best products and

services.

• TrustworthyBank• ProvidingtheBestProducts

andServices

FOR EMPLOYEESA bank that provides opportunity to uphold trust (amanah) as well as to

pursue a professional career.

• Professionalism• Integrity• TeamWork

FOR INVESTORA reliable Indonesian Islamic

financial institution, that persistently providing sustainable

value.

• Profit• Grow&Sustainable

“The Leading and Modern Sharia Bank”

VISION AND MISSION DETERMINATIONBSM Vision and Mission had been determined in Circular Letter No. 10/001/UMM dated January 30, 2008, that was renewed with SE No. 16/005/UMM, dated March 10, 2015 concerning The 7 (Seven) Fundamentals of BSM).

CORE VALUESTo realize BSM Vision and Mission, BSM individuals shall share for BSM under common values. BSM individuals have explored and agreed the values, which are then referred to BSM Shared Values. These BSM Shared Values consist of ETHIC (Excellence, Teamwork, Humanity, Integrity and Customer Focus).


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ExcellenceWork hard, smart, thoroughly with heart to provide the best result.

TeamworkActive, synergy for success together.

HumanityCare, sincere, provide benefits and distribute blessing for the nation

IntegrityHonest, comply, trusted, and responsible

Customer FocusSustainable customer satisfaction oriented and mutual relationship

Behavior:

Behavior:

Behavior:

Behavior:

Behavior:

• Enthusiastic,visionary,continuousimprovement,championmindset.• Discipline,focusandresultoriented.

• Activelyinvolveandsupportforpositivecontribution.• Developeffectivecommunicationandcoordination.

• Workasworshipmindset.• ProvidebenefitstoBankSyariahMandiri,society&environment.

• Think,speak,actproperlyandcommendable.• Committedtoperformdutiesandresponsibilitiesinaccordanceto

provision and decency.

• Proactivetofulfillcustomerneedsandsatisfaction.• Sustainableinnovationtoprovidesolutionthatexceedscustomer

expectation.

Corporate Culture is performed gradually and sustainably with work culture implementation Road Map of 2017-2022:

Implementation of corporate culture programs is performance-based and inseparable from daily activities of employee.

2017-2018

2019-2020

2021-2022

BuildingExcellenceProviding understanding and developing Excellence work culture behavior.

BoostingExcellence• Managing&strengtheningETHIC

to be more attached and not easily influenced by negative behavior.

• Encouragingperformanceimprovement. Employee is required to own related competency to support optimum performance achievement.

SustainingExcellence• ETHICworkculturehad

become in soul character and embedded to each employee.

• Managingsustainability.HRsystem and organization become a continuous learning platform for employee and continuous improvement.


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STATEMENT oN CoRPoRATE CUlTURE

One of the organization’s strategies to achieve BSM vision 2020 is to optimize corporate culture transformation. BSM realizes that it requires strong work culture to support business strategy implementation.

To strengthen Work Culture, Corporate Culture framework update is prepared as follows:

Aspirasi/Visi

Progran UtamaBudaya Kerja

Enab

ler

• Change Leaders

• Change Champions

• Change Agents

Role Model

The Leading and Modern Sharia Bank

SEHA

T

PEDU

LIPerformance,

Service & Sales Culture

Risk Culture Learning & Sharing Culture

E T H I C

TUM

BUH

Pertumbuhan bisnissehat & sustain

Kualitaspembiayaan

Fee Based Income

Produktifitasdan efesiensi

Contribution Margin

Excellence, Teamwork Integrity, Customer Focus Humanity

Dimensi/ Perspektif

Shared Values / Nilai Utama

Core ValuesCampaign/Komunikasi

Syst

em M

onito

ring

Kepala UnitMelaksanakan Fungsi

Agile & Adaptif pada perubahan

Capability Culture Performance

wORK CULTURE 20171. Grow Building collaboration and improving productivity, through sales culture and collaboration.2. Soundness Sustainable-balanced of growth and quality achievement, through risk culture & zero fraud. 3. Care Providing benefits to nation and society, through work as worship mindset and distribution blessings.

In 2017, muhasabah culture was implemented to sharpen core values and ETHIC behavior in accordance to banking industry update and stakeholders’ expectation to achieve “The Leading and Modern Sharia Bank”.

CARI

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CoMPoSiTioN AND PRoFilE oFTHE BoARD oF CoMMiSSioNERS

Composition and profile of the Board of Commissioners as of December 31, 2017 is as follows:

Citizen Indonesia

Place, Date of Birth Jakarta, 14 March 1957 (61 years)

Education Background 1. Doctor of Philosophy (PhD) from The Ohio State University in 1998.

2. Master of Science from The Ohio State University in 1989.

3. Studied Agricultural Social Economics at Bogor Agricultural University in 1980.

Position History

Appointment Legal Basis Keputusan RUPST 2017 Akta No. 01, tanggal 2 Mei 2017 dan Akta No. 85, tanggal 30 November 2017.Term Office: AGMS 2017 – AGMS 2020.

work Experience 1. Senior Researcher of Islamic Banking Research and Development Team (1999-2002).

2. Chairman of the Bank Indonesia’s Sharia Banking Research and Development Team (2002-2006).

3. Head of Bank Indonesia’s Sharia Banking Development and Regulatory Research Bureau (2006-2010).

4. Head of Bank Indonesia’s Sharia Banking Directorate (2010-2012).

5. Executive Director of Bank Indonesia DPNP (2012-2013)6. Acting Governor of Bank Indonesia (May 2013 - Dec

2013).7. Deputy Commissioner for Banking Supervision 1

Financial Services Authority (OJK) (2014-2017).

Dual Position -

Education and Training Attended

1. USMR Level 5, BSMR, October 6 2016.2. Leadership Program in USA (2014).3. Refreshment, BSMR, 1 July 2014.4. Cambridge Executive Education – ASEAN Global

Leadership Development Programme in England (2011).

5. iB Workshop on Leadership and Change Management in Jakarta (2009).

6. USMR Executive Program of the Board of Directors, BSMR, November 30, 2007.

7. Risk Management - Board of Directors Executive Program Level V in Jakarta (2007).

8. Financial Regulators Forum in Islamic Finance in Malaysia (2007).

9. International Conference on Islamic Banking: Risk Management, Regulation & Supervision di Jakarta (2003).

10. 5th Harvard University Forum on Islamic Finance di USA (2002).

11. Islamic Banking & Accounting Seminar in Jakarta (1999).

12. Seminar on Islamic Banking & Finance in Malaysia (1999).

13. 8th Intensive Orientation Seminar: Islamic Economic, Banking & Finance in England (1999).

Affiliate Relationship -

Currently Living in Jakarta

Mulya Effendi SiregarPresident Commissioner/Independent Commissioner


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Citizen Indonesia

Place, Date of Birth Jambi, 5 May 1952 (66 years)

Education Background 1. Obtained a Master’s Degree at Iowa State University in 1989

2. Studied at Gadjah Mada University in 1979

Position History

Appointment Legal Basis 2010 Annual GMS Decree, Deed No. 6 dated May 7, 2014, Term of Office: AGMS 2010 – AGMS 2018

work Experience 1. Bank Indonesia since 1980 - 2010.2. Director of Supervision of Sharia Banks, Bank Indonesia

since 2007 - 2010.3. Finance Director of PT Mekar Prana Indah (2010).4. Lecturer of the Islamic Middle Eastern Study Program

(PSTTI) in University of Indonesia.5. Chairman of the Financial Study Program.

Dual Position -


1. Refreshment Level 5, LSPP, 28 February 20172. US Assessor Competency, BNSP, February 23, 20173. Upgrading methodology Assessment for Assessor

Competency, LSPP, December 3, 20164. Refreshment Level 5, BARA, 28 November 20145. US Asessor Kompetensi, BNSP, 10 Desember 20136. Refreshment Level 5, BARA, 10 Juli 20127. Islamic Banking, Executive Program8. Leadership Program9. Risk Management Certification Refreshment Program10. Indonesia International Conference on Islamic Finance





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Citizen Indonesia

Place, Date of Birth Bogor, 23 February 1963 (55 years)

Education Background 1. Obtained a Master’s Degree from Satyagama University (1997)

2. Graduated from the Faculty of Fisheries, Bogor Agricultural University (1987).

Position History

Appointment Legal Basis 2017 Annual GMS Decree, Deed No. 01 dated May 2, 2017, Term of Office: AGMS 2017 – AGMS 2020

work Experience 1. Marketing and Distribution Director, Mandiri Inhealth, 2014-2016.

2. General Manager Hongkong Branch, Bank Mandiri, 2010-2014.

3. Head of RO VIII-Surabaya Regional Office at Bank Mandiri, 2009-2010.

4. Department Head Corporate Banking Bank Mandiri, 2005-2009.

5. Departement Head Structured Finance Bank Mandiri, 2003-2005.

6. Corporate Relationship Manager Bank Mandiri, 1999-2003.

7. Account Officer Bank BDN, 1990-1999.

Dual Position Group Head Corporate Banking II Bank Mandiri (2016-2017).


1. Legal for Corporate Banking (2016).2. Derivatif Instrument Special Project (2016).3. Refreshment USMR Level 4, Mandiri University, 23

September 2016.4. Refreshment USMR Level 4, BARA, 28 February 2014.5. USMR Level 4, LSPP, 28 July 2012.6. Level IV Risk Management Certificate (2012).7. Advance Service Excellence (2010).8. USMR Level 1, BSMR, 18 February 2006.


Currently Living in Tangerang, Banten


Dikdik Yustandi*Commissioner


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Citizen Indonesia

Place, Date of Birth Jakarta, 27 November 1959 (58 years)

Education Background 1. Obtained a PhD degree in Economics in 1995 from Northeastern University, Boston, USA

2. Received a Master of Art (MA) degree in Computer Science in 1990 from Boston University, Boston, USA and studied Economics in 1993 at Northeastern University-Boston USA

3. Industrial Engineering at Bandung Institute of Technology in 1984.

Position History

Appointment Legal Basis 2013 Annual GMS Decree, Deed No. 6 dated May 7, 2014, Term of Office: AGMS 2013 – 2018.

work Experience 1. Deputy Head of the Secretariat of the Vice President for Human Development and Equitable Development Policy Support

2. Deputy Secretary of the Vice President for People’s Welfare and Poverty Reduction

3. Lecturer in the Planning and Public Policy Masters Program - Faculty of Economics, University of Indonesia

4. Lecturer in the Planning and Public Policy Masters Program - Faculty of Economics, University of Indonesia

5. Commissioner of PT Pos Indonesia (Persero)6. President Commissioner of PT Barata Indonesia

(Persero)7. Members of the National Research and Wages Board

Dual Position Deputy Head of the Secretariat of the Vice President for Human Development and Equitable Development Policy Support


1. Refreshment Level 2, BARA, 24 March 2017.2. USMR Level 2, LSPP, 21 December 2013.3. USMR Level 1, LSPP, 14 December 2013.4. Level 2 Risk Management Certification.5. Executive Distance Learning on Islamic Banking

Training.



Bambang widianto Independent Commissioner


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CoMPoSiTioN AND PRoFilE oFTHE SHARiA SUPERViSoRY BoARD

Susunan dan Profil Dewan Pengawas Syariah per 31 Desember 2017 sebagai berikut:

Citizen Indonesia

Place, Date of Birth Tangerang, 11 March 1943 (74 years)

Education Background 1. Professor of Economics in Muamalat Syariah at Maulana Malik Ibrahim State Islamic University in May 2017

2. Honoris Causa Doctor of Sharia Economic Law from Post-Graduate State Islamic University Syarif Hidayatullah Jakarta in 2012

3. Graduated from Ushuluddin Faculty of Ibnu Kholdun University, Jakarta in 1967.

Position History

Appointment Legal Basis Deed No. 07 dated April 5, 2016 and OJK Decree: No. SR-6/PB.13/2017 dated March 3, 2017

work Experience 1. Chairman of Sharia Supervisory Board in several Sharia Financial Institutions (Sharia Banks, Sharia Insurance and Sharia Investment) in Indonesia;

2. Advisory Board of the President of the Republic of Indonesia in 2007-2009, 201-2012, 2012-2014;

3. Chairman of the Indonesian Ulema Council (MUI) in 2015-2020;

4. Chairman of the National Sharia Council of the Indonesian Ulema Council (DSN MUI) since December 2014 until now;

5. Speaker at the National and International Sharia Economic forums.

Dual Position 1. Chairman of BSM’s Sharia Supervisory Board (banking)2. Chairman of BMI’s Sharia Supervisory Board (banking)3. Chairman of BNI Syariah’s Sharia Supervisory Board

(banking)4. Chairman of Mega Syariah’s Sharia Supervisory Board

(banking)5. Chairman of BNI Life’s Sharia Supervisory Board

(insurance)


1. Ijtima’ Sanawi DPS LKS, OJK and DSN MUI, Jakarta, 2016.

2. Ijtima’ Sanawi DPS LKS, OJK and DSN MUI, Bandung, 2015.

3. DPS Certification Level I Financing Companies, OJK and DSN MUI, Jakarta, 2015.

4. DPS Certification for Islamic Insurance Level II, OJK and DSN MUI, Jakarta, 2014.

5. DPS Certification of Islamic Insurance Companies Level I, Year II, OJK and DSN MUI, Jakarta, 2013.


Currently Living in -

Prof. Dr (HC). K.H Ma'ruf AminChairman


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Citizen Indonesia

Place, Date of Birth Jakarta, 3 May 1967 (50 years)

Education Background 1. Obtained a PhD degree in Islamic Economics and Finance from Trisakti University, Jakarta in 2014

2. Obtained a Master’s Degree in Law Sciences from the Institute of Business, Legal, and Management (IBLAM) Jakarta in 2003

3. Obtained a Master’s Degree in Business Administration from IPWI Jakarta

4. Obtained a Bachelor’s Degree in Faculty of Sharia from IAIN Jakarta in 1991

Position History

Appointment Legal Basis Deed No. 07 dated April 5, 2016

work Experience 1. Executive Board of the National Sharia Board (BPH DSN) MUI

2. Islamic Economic Community Expert Board (MES)3. Lecturer at the Postgraduate Program of PSTTI at the

University of Indonesia4. Lecturer at the IEF Program at Trisakti University5. Active supervisor and advisor in several Islamic

financial/non-financial institutions6. Permanent Khotib at Presidential Palace’s Mosque and

at Vice Presidential Palace’s Mosque of the Republic of Indonesia

7. Book Author8. Chairman of the Al-Washiyyah Foundation

Dual Position 1. Member of BSM’s Sharia Supervisory Board (banking)2. Member of PT Asuransi Manulife’s Sharia Supervisory

Board (insurance)3. Member of PT Asuransi Allianz Syariah’s Sharia

Supervisory Board (insurance)4. Member of PT BRIngin Life Syariah’s Sharia Supervisory

Board5. Member of UUS BTN Syariah’s Sharia Supervisory Board

(banking)


1. Graduated with a doctorate degree in Islamic Economic and Finance from Trisakti University, Jakarta, in 2014.

2. Graduated with Master’s Degree from the Institute of Business Law & Legal Management (IBLAM) Jakarta in 2003.

3. Graduated with Master’s Degree in Business Administration from IPWI Jakarta.

4. Graduated from the Faculty of Sharia IAIN Jakarta in 1991.



Dr. H. Mohamad HidayatMember


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Citizen Indonesia

Place, Date of Birth Sukabumi, 12 May 1967 (50 years)

Education Background 1. Obtained a PhD in Micro Finance from University of Melbourne Australia in 2004

2. Obtained a Master’s Degree in Economics from International Islamic University (IIU) Malaysia in 1992

3. Obtained a Bachelor’s Degree in Sharia and Islamic Law from the University of Jordan

Position History

Appointment Legal Basis Deed No. 07 dated April 5, 2016

work Experience 1. Appointed as the member of the National Economic and Industrial Committee in 2016.

2. Appointed as a Member of the National Economic Committee by the President of Indonesia in 2010.

3. Member of the Sharia Banking Development Expert Committee at Bank Indonesia.

4. Member of the MUI National Sharia Board Executive Board.

5. Chancellor of Tazkia University College of Islamic Economics.

6. Served as a Global Shariah Advisor in Dubai.7. Member of the Sharia Banking Expert Committee in

Kuala Lumpur and Bank Indonesia.

Dual Position 1. Chairman of STEI Tazkia (consultant & education)2. Member of BSM’s Sharia Supervisory Board (banking)3. Member of Schroders Investment Management’s Sharia

Supervisory Board


1. Graduated with a PhD Degree in Micro Finance from the University of Melbourne, Australia in 2004.

2. Graduated with a Master’s Degree in Economics from Malaysia’s International Islamic University (IIU) in 1992.

3. Graduated with a Bachelor’s Degree in Sharia and Islamic Law from the University of Jordan.

4. Wrote 35 books about finance, banking, leadership, and management.



.

Dr. H. Muhammad Syafii Antonio, M. EcMember


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CoMPoSiTioN AND PRoFilE oFTHE BoARD oF DiRECToRS AND SEVP

Composition and profile of The Board of Directors and SEVP as of December 31, 2017 is as follows:

Citizen Indonesia

Place, Date of Birth Magetan, 31 December 1964 (53 years)

Education Background Faculty of Agricultural Industrial Technology, Bogor Agriculture Institute (1988).

Position History

Appointment Legal Basis GMS Decree dated April 10, 2017 as President Director, Term of Office: AGMS 2017 – AGMS 2020

work Experience 1. SEVP of Special Asset Management at Bank Mandiri (2016)

2. CEO of Sumatra Region 1 at Bank Mandiri (2016)3. GH of Business Banking 1 at Bank Mandiri (2014)4. Executive Business Officer of PKMK Commercial and

Business Banking at Bank Mandiri (2013)5. Bapindo in 1989

Dual Position -


1. Sharia Banking Basic Training (2017)2. Training for LSPP Risk Management Competency for

Banking Profession - Level 5 (2017)3. Risk management Certificate (2016)4. Senior Risk Forum Certificate (2016)5. Wholesale Banker Summit Certificate (2016)6. Transactional Banking Certificate (2013)7. Great Leader Program Training (2011)



Toni Eko Boy SubariPresident Director


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Citizen Indonesia

Place, Date of Birth Jakarta, 13 September 1964 (53 years)

Education Background 1. Obtained a Master of Business Administration degree in Finance & Strategic Management from the University of Illinois USA in 1995

2. Studied Agronomy in the Faculty of Agriculture, Bogor Agricultural University in 1986.

Position History

Appointment Legal Basis GMS Decree dated April 10, 2017 as Director, Term of Office: AGMS 2017 – AGMS 2020

work Experience 1. Director of Compliance & People Management BSM.2. Division Head Transformation Management &

Corporate Culture BSM (2010 – 2014).3. Head of BSM’s Pawnshop Division (2008 – 2010).4. Vice President Risk Management of Bank Mandiri (2004

– 2008).5. Assistant Vice President Human Capital of Bank Mandiri

(2001 – 2004).6. Assistant to the President Commissioner of Bank

Mandiri (1999-2000).7. Corporate Restructuring Team, Bank Exim8. International Banking, Bank Exim (1995-1998)9. MBA Education (1993-1995)10. System & Technology, Bank Exim (1987-1993)

Dual Position -


1. Seminar: BARa Risk Forum SOUND PRACTICES IN ICAAP IMPLEMENTATION: “How to Pinpoint the Weak Spots in the Business Strategic Plan and Risk Management”, Prague & Vienna (2017).

2. Revisited Enterprise and Risk Management and Learned Best Practice of Credit Risk Management (2016).

3. Indonesian Banking Forum Human Capital (2016).4. Prophetic Leadership and Management Wisdom (2016).5. Conference: “Indonesia International Conference on

Islamic Finance: Revitalizing Islamic Finance in the “Normal Era””. The Ritz Carlton Pacific Place, Jakarta (2016).

6. Macroeconomic Policies for Sustainable Growth with Equity in East Asia (2013).

7. Assessor of the Institute of Banking Professional Certification (Risk Management) (2011).

8. Workshop Certified International Project Manager (CIPM) di Hongkong (2011).

9. The InterACT Asia Pacific Shanghai Conference:Discover the Secret of Successful Retail Banks in Shanghai, China (2007).

10. Advanced Leadership Program, Executive Center for Global Leadership & Erasmus University (2006).





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Citizen Indonesia

Place, Date of Birth Bandung, 24 September 1962 (55 years)

Education Background Graduated from Bachelor Degree in Poultry, Faculty of Poultry, Bogor Agriculture Institute, in 1987.

Position History


work Experience 1. SEVP of Retail Directorate of BSM.2. Head of Region III/Jakarta Branch of Bank Mandiri

(2006-2007).3. Vice President of Region VI/Bandung Branch of Bank

Mandiri (2007-2010).4. Vice President of Region II/Palembang Branch of Bank

Mandiri (2010 - 2011).5. Senior Vice President of Region IX/Banjarmasin Branch

of Bank Mandiri (2011 - 2013).6. Senior Vice President of Region VIII/Surabaya Branch of

Bank Mandiri (2013-2014).

Dual Position -


1. International Risk Management Refreshment Program for Executives (2017).

2. Money Services Business Asia Pacific Conference 2017 Seminar (MAPC 2017) - Harnessing Innovation for the Sustainability of the Money Services Business Industry (2017).

3. Invitation for the international Conference on Islamic Finance “Revitalizing Islamic Finance in the New Normal Era”, Jakarta (2016).

4. 2017 Syariah Banking Outlook Workshop, Jakarta (2016).

5. Lean Six Sigma Green Belt Certification Training, Jakarta (2016).

6. Business Process Reengineering (BPR) Workshop, Jakarta (2016).

7. Prophetic Leadership and Management Wisdom, Bogor (2016).

8. Expand Leadership Program, Bali (2016).9. Executive Distance Learning on Islamic Banking

Training, Jakarta (2015).10. Risk Management Competency for Banking Profession

Level 5, Jakarta (2015).11. Coach 60 Hour APPR Certification Training, Jakarta

(2014).12. Workshop on Budget 2014 and Business Potential BA,

Jakarta (2014).13. Accounting field socialization, Malang (2013).14. Sespinbank class 57 (ranked the 2nd place), Jakarta

(2012).





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Citizen Indonesia

Place, Date of Birth Dumai, 1 May 1965 (53 years)

Education Background 1. Obtained a Master’s Degree in Business Administration from Gajah Mada University, Yogyakarta.

2. Obtained a Bachelor’s Degree in Accounting Study from the Faculty of Economics, Riau State University in 1989.

Position History

Appointment Legal Basis GMS Decree dated April 1, 2015 as Director, Term of Office: AGMS 2015 – AGMS 2018.

work Experience 1. Senior Executive Vice President of Wholesale, Treasury & International Banking, Bank Syariah Mandiri (2014-2015).

2. Executive Business Officer, Commercial & Business Banking, Bank Mandiri (2013 – 2014).

3. Vice President/CBC Manager, Commercial Banking Center, Jakarta Plaza Mandiri - Bank Mandiri (2010 –2013).

4. Vice President/CBC Manager, Commercial Banking Center, Jakarta Kelapa Gading - Bank Mandiri (2007 – 2010).

5. Vice President/CBC Manager, Commercial Banking Center, Bekasi - Bank Mandiri (2007).

Dual Position -


1. International Risk Management Refreshment Program for Executives (2017).

2. Sertifikasi Manajemen Resiko level V, Jakarta (2015).3. Training Risk Management Competency for Banking

Profession level V, Jakarta (2015).4. Sertifikasi Coach 60 Hour APPR (2014)5. Refreshment of Risk Management Certification by

BARa, Bandung (2014)6. Executive Distance Learning on Islamic Banking

Training, Jakarta (2014).7. Asia Banking Forum by J.P. Morgan (Chiang Mai)

Thailand (2013).8. Environmental Risk Analysis (2011).9. Great Leader Program Phase III (2011).10. Forum Creating Value to Keep Profitable (2009).11. Workshop Asuransi & Pembiayaan Kapal (2009).



Kusman YandiDirektur Wholesale Banking


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Citizen Indonesia

Place, Date of Birth Surabaya, 21 October 1964 (53 years)

Education Background 1. Master of Business Administration in Business Administration from the University of Arkansas, USA in 1996

2. Bachelor’s degree in the field of Agricultural Mechanization from the Faculty of Agriculture, Bogor Agricultural University in 1987

Position History


work Experience 1. Vice President of Corporate Banking of Bank Mandiri (2003-2005)

2. Senior Vice President of Agro Based Industries Group of Bank Mandiri (2005)

3. Member of Management Project of Office Corporate Secretary Group (2006-2009)

4. Micro Business Supervision Officer of Retail and Consumer Risk Management Group of Bank Mandiri (2009-2010)

5. Vice President of Retail Risk Group of Bank Mandiri (2010-2014)

6. Senior Vice President of Retail Risk Group of Bank Mandiri (2014-2015)

Dual Position -


1. BARa Risk Forum Seminar “Tapping Potential Opportunities in Indonesian Sustainable Palm Oil Industry” (2018)

2. BARa Risk Forum Seminar “Refocusing on Credit Risk Management, Credit Risk Model, Pricing and Being Prepared for Upcoming Regulations” (2017)

3. BARa Risk Forum Seminar “How to Pinpoint the Weak Spot in the Business Start Plan and Risk Management” (2017)

4. Seminar on IDB’s 2016 Annual Meeting Roadshow, Lombok (2016)

5. Inaugural CIBAFI Global Forum “Rethinking Values for Sustainable Growth”, Bahrain (2016)

6. IDB Seminar “Mitigating Trade and Investment Risk in Asia”, Jakarta (2016)

7. Invitation for the 2016 Indonesian International Conference on Islamic Finance, Jakarta (2016)

8. Training on Bank Risk Management Certification Level 5, Jakarta (2015)

9. Sharia Banking Certification, Jakarta (2015)10. Banking Risk Management Certification Level 5, Jakarta

(2015)11. International Seminar on “Sustainable Finance to

Support Sustainable Development Goals”, Jakarta (2015)

12. Level 4 Banking Risk Management Competency Certification, Jakarta (2014)



Choirul AnwarDirektur Financing Risk and Recovery


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Citizen Indonesia

Place, Date of Birth Jakarta, 19 March 1978 (40 years)

Education Background 1. Master’s degree in Business Administration from Rotterdam School of Management, Erasmus University, Netherlands, in 2011.

2. Bachelor’s degree in Accounting from the Faculty of Economics, University of Indonesia in 2002.

Position History


work Experience 1. Director - PT Mandiri Tunas Finance (2015-2016)2. Deputy Director - PT Mandiri Tunas Finance (2014-

2015)3. DH of Decision Support Consumer Finance - PT Bank

Mandiri (Persero) Tbk (2012-2014)4. Senior Manager of Strategic & Performance Group -

PT Bank Mandiri (Persero) Tbk (2007-2010)5. General Admin & Support Manager - Finance &

Strategy Directorate - PT Bank Mandiri (Persero) Tbk (2005-2007)

6. Officer Development Program - PT Bank Mandiri (Persero) Tbk (2003)

Dual Position -


1. Financial Strategies for Value Creation, London (2017)

2. Competency Test in the Field of Risk Management Level 5 (2017)

3. Sharia Banking Certification Training, Jakarta (2016)4. Expand Leadership Program, Kuta - Denpasar (2016)5. Risk Management Certification Training, Jakarta

(2016)6. Multi Finance Company Expertise Certification,

Jakarta (2015)7. Card Management Visa San Francisco, USA (2013)8. MBA Preparation, Cambridge - England (2010)9. Training for Trainers, Jakarta (2008)10. Corporate Valuation, Jakarta (2007)11. Mutual Fund Selling, Jakarta (2004)12. Treasury Training, Jakarta (2004)13. Bank Mandiri - ODP Management Trainee, Jakarta

(2003)





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Citizen Indonesia

Place, Date of Birth Brebes, 2 January 1967 (50 years)

Education Background 1. Obtained a Master’s Degree in Information Management from STMIK Budi Luhur in 2013.

2. Obtained a Bachelor’s Degree in Informatics & Computer Engineering from STMIK Budi Luhur in 2009.

Position History


work Experience 1. PJ Group Head Information and Technology Application Support Bank Mandiri (2016).

2. Departement Head IT Core Banking Support (2015).3. Departement Head Integration Hub Common

Application Services (2012).4. Departement Head IT Liability and Transactional (2007-

2008).

Dual Position -


1. EUT 8 Mandirian Unggul (2016).2. Enterprise Architecture Togaf 9.1 Founda (2015).3. Refreshment of Risk Management Certification (2014).4. Wholesale Bankers Summit (2014).5. 2014 State Budget Workshop and Business Potential

(2014).6. Risk Management Competency Certification (2012).


Currently Living in Tangerang, Banten



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Citizen Indonesia

Place, Date of Birth Langsa, 26 March 1969 (53 years)

Education Background Graduated from Bachelor Degree in Agronomy from Faculty of Agriculture, Bogor Agriculture Institute, in 1992.

Position History

Appointment Legal Basis Decree of the Board of Directors of PT Bank Syariah Mandiri No.18/859A-KEP/DIR dated July 21, 2016.

work Experience 1. Department Head Personal Loan Business Development (KTA) Jakarta - PT Bank Mandiri (Persero) Tbk (2014-2016).

2. Department Head Loan Business Development (Mortgage & KTA) Jakarta - PT Bank Mandiri (Persero) Tbk (2011-2014).

3. Department Head Automotive*) Jakarta - PT Bank Mandiri (Persero) Tbk (2011-2013).

4. Department Head Kredit Bebas Agunan (KTA) Jakarta - PT Bank Mandiri (Persero) Tbk (2006- 2011).

5. Product Manager KPR Jakarta - PT Bank Mandiri (Persero) Tbk (2004-2006).

6. Product Manager ATM Jakarta - PT Bank Mandiri (Persero) Tbk (2002-2004).

7. e-Channel Manager Jakarta - PT Bank Bali Tbk (2001- 2002).

8. Aqcuring Business Manager (EDC) Jakarta - PT Bank Bali Tbk (1999-2000).

Dual Position -


1. Risk Management Certification Refreshment Program, Bandung (2014).

2. Level 3 General Banking Competition, Jakarta (2014).3. BSMR Level 1-2 (Jakarta).4. BARA Level 3 (Jakarta).5. SESPIBANK 59, Jakarta (2013).6. Management Development Program (MDP), Jakarta

(1995).7. Officer Development Program (ODP), Jakarta (1993).


Currently Living in Depok (West Java)

Niken AndonowarihSEVP Retail Banking


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ToTAl EMPloYEE AND CoMPETENCY DEVEloPMENT

BSM TOTAL EMPLOYEE Until the end of 2017, total Bank’s employees were 15,659 employees, decreased by 3.16% from 16,170 employees at the end of 2016. There were organic employees in total of less than 300 employees, meanwhile outsourcing employees decreased by 211 employees compared to previous year. A decline in BSM total employee in 2017 was adjusted to Bank’s needs to improve the employee productivity.

Chart of total employee and growth

Total Employee by Position Level

Career Level 2015 2016 2017

Executive Vice President 3 2 1

Senior Vice President 24 23 23

Vice President 14 18 20

Assistant Vice President 26 31 34

General Manager 85 82 87

Assistant General Manager 116 137 171

Senior Manager 521 532 512

Manager 247 323 300

Deputy Manager 501 786 775

Assistant Manager 1,278 990 973

Associate Manager 931 846 690

Senior Executive 1170 1,248 1,281

Executive 2,082 1,973 1,813

Junior Executive 986 1,621 1,680

Assosiate Executive 1,525 517 470

Non Clerk 55 45 44

Outsource 7,362 6,996 6785

Total Employee 16,926 16,170 15,659


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Total Employee by Education Level

Education Level2015 2016 2017

BSM Outsource BSM Outsource BSM OutsourcePost Doctoral Degree 1 1

Master Degree 276 2 265 2 264 2

Bachelor Degree 8,136 1,855 7,837 1,774 7,595 1,636

Diploma Degree 1,059 343 999 418 947 429

Senior High School 85 4,962 67 4,652 61 4,710

Junior High School (others) 7 200 6 150 6 8

Total 9,564 7,362 9,174 6,996 8,874 6,785

Chart of employee composition by education level

1 1

9,991

1,402

5,047

207278

9,611

1,417

4,719

156267

9,231

1,376

4,771

14266

Post Doctoral Degree

Master Degree Bachelor Degree Diploma Degree Senior High School Junior High School (Others)

2015 2016 2017


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Total Employee by Employment Status

Employment Status 2015 2016 2017

BSM 9,564 9,174 8,874

Outsource 7,362 6,996 6,785

COMPETENCY DEVELOPMENT POLICY To answer tighter banking industry competition challenges, BSM understands that the main key success is human capital aspect. Therefore having human capital with the best and reliable competency, as well as how to develop it sustainable are matters. Each employee obtains equal opportunity in education and competency development, both male and female.


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gRoUP STRUCTURE

MANDiRi gRoUP SYNERgY

BSM is one of Subsidiary of PT Bank Mandiri (Persero) Tbk. PT Bank Mandiri has 11 (eleven) Subsidiaries as follows:

No. Name of Subsidiary Line of Business LocationOwnership Percentage

1 PT Bank Syariah Mandiri (BSM) Sharia Banking Service Jakarta 99.99%

2 PT Mandiri Sekuritas Investment Banking Service Jakarta 99.99%

3 PT Mandiri Tunas Finance (MTF)Vehicle and Multipurpose Financing Service

Jakarta 51%

4 PT Mandiri AXA General Insurance (MAGI)

Vehicle Insurance and Other Insurance Service

Jakarta 60%

5 PT AXA Mandiri Financial Services (AXA Mandiri)

Financial Planning Service through Insurance Product

Jakarta 51%

6 PT Bank Mandiri Taspen Pos Banking Service Denpasar 59.44%

7 Mandiri International Remittance Sdn. Bhd. (MIR)

Remittance Service Malaysia 100%

8 Bank Mandiri (Europe) Limited (BMEL)

Banking Service London100%

(Mandiri Sekuritas)

9 PT Asuransi Jiwa Inhealth Indone-sia (Mandiri Inhealth)

Health Insurance and Life Insurance Service

Jakarta 80%

10 PT Mandiri Utama Finance (MUF)Consumer particularly Vehicle Financing Service

Jakarta 51%

11 PT Mandiri Capital Indonesia (MCI) Ventur Capital Service Jakarta 99%

As of December 31, 2017, BSM did not have Subsidiary, Associate, Joint Venture and Special Purpose Vehicle (SPV).

99.99% 51% 59.44%99.99% 51%60% 100%

As part of the Mandiri Group, BSM has implemented synergy/alliance with Bank Mandiri as a holding company or other sister companies. The synergy/alliance is taken by:

SYNERGY/ALLIANCE wITH BANK MANDIRIBSM utilizes Customer Base of Bank Mandiri through:1. BSM obtains referrals from customers of Bank Mandiri who requiring wholesale and retail sharia financing.2. BSM participates in syndicated/clubdeal financing with Bank Mandiri.


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In addition, Bank Mandiri provides support so that BSM can utilize Bank Mandiri’s service network such as BSM can utilize outlet of Bank Mandiri to sell BSM retail products such as Gold Pawn and BSM Saving Account.

Other support from Bank Mandiri is utilization of infrastructure support including as follows:1. BSM utilizes infrastructure of Bank Mandiri on electronic banking such as ATM and EDC, so that BSM’s Customers

could use electronic banking features of Bank Mandiri. BSM also cooperates with Bank Mandiri by launching BSM e-money products to improve customer service and convenience in transactions.

2. BSM participates in Corporate Culture activities as part of Culture One Mandiri program at Bank Mandiri and gains sharing on strengthening corporate culture.

3. BSM obtains sharing of Human Resources infrastructure development and utilization at Bank Mandiri and conducts joint recruitment for Officer Development Program with Mandiri Group.

4. BSM obtains sharing and utilization of Bank Mandiri’s IT infrastructure.

SYNERGY/ALLIANCE wITH MANDIRI GROUPBSM also conducted synergy / alliances with Subsidiaries of Bank Mandiri among others:a. Increasing total account and total transaction of BSM saving account served in Bank Mandiri network.b. Creating higher business growth opportunity for Mandiri as a Group such as through low cost fund, fee based

income, and margin growth of Mandiri as a group.c. Improving effectiveness and efficiency of business activities as a whole through resources optimization owned,

including branch network and e-channel, IT system, customer database, and risk management.d. Optimizing customer base of Mandiri Group in selling specific and complementary products of BSM.e. Improving portfolio and fee base income from specific product offering of BSM to customers, employees and

subsidiaries of Bank Mandiri.f. Cost efficiency of Call Centre management through BSM Call service with existing infrastructure owned by Bank

Mandiri.g. Agent quality improvement in BSM operations and call centre service through best practice implemented by

contact center of Bank Mandiri.h. Joint event sponsorship.

1. Sharia Banking Service (LSB) in Bank Mandiri Network LSB had been taken in four Branch Offices of Bank Mandiri on August 2017. This implementation had impact on

the improvement of Bank Syariah Mandiri service network in Bank Mandiri network and cost efficiency of office expansion by using Mandiri outlet.

2. Sharia Product Cross-Sell and/or Referral with Mandiri Group This program aims to develop cross selling and referral business model & business process for Mandiri Group

customers and employees. On July 2017, joint marketing for gold installment and pawning had been taken to Bank Mandiri customers. Referral of gold installment product had been running for BM (branch and KP) through Bank

80%100% 99%51%


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Mandiri culture program. Position as of December 2017, this program achievement exceeded the target set.3. Call Centre Cooperation with Bank Mandiri Call Centre synergy with Bank Mandiri is leveraging infrastructure, Operational Excellence, and best practice

implementation. This synergy is cooperation in using Bank Mandiri contact center facility, with aim to improve cost efficiency and improve easiness and operational service quality. With this synergy, complaints received must be settled in less than 2 days.

4. OTO financing cooperation with Mandiri Tunas Finance (MTF) and Mandiri Utama Finance (MUF). Synergy of Bank Syariah Mandiri with MTF and MUF aims to reach sharia business potential especially in motor

vehicle financing that had not been explored by BSM network. This is expected to improve market share of BSM, MTF and MUF as Mandiri Group. BSM synergy with MTF and MUF will be taken with the concept of working capital financing, corporate fleet, and joint financing. The aims of the synergy are as follows:a. Optimizing Customer Based of Bank Mandiri Group through optimization of customer based owned by BSM

as the biggest Sharia Bank in Indonesia, MTF as one of experienced Key Players in multi finance industry in Indonesia and MUF is a new multi finance company in Indonesia that had successfully earned profit in the short period.

b. Increasing business growth and profit to create sustainable and high quality financing business growth to generate profit for each subsidiary

c. Reaching sharia financing potential in Indonesia that is currently not optimally explored by BSM5. BSM Fee Based Income Improvement through Bank Mandiri Network Optimization Synergy in terms of Fee Based Income improvement by optimizing Bank Mandiri network is as follows:

No. Synergy Activity Realization in 2017

1 BSM utilizing BM network to participate in BM EDC Acquisition in BSM Merchant, BSM Co-branding E-Money

Had been implemented in several regional offices of Bank Mandiri.

2 Synergy of w-channel host-to-host connection and Unified Bill Payment

Had been implemented for TM host-to-host, and UBP development. Features addition and biller in all channels will continue.

3 Pawning Service Counter (KLG) of BSM in Bank Mandiri Branch Office

Implementation in 8 branch offices of Bank Mandiri, including KFO Mitra Mandiri Kembang Jepun, Bandar Lampung WR, Supratman, Mataram Cakranegara, Sulawesi Makassar, Pekanbaru Ahmad Yani, Bone Watampone, Pasar Baru, and Aneka Tambang.

4 Bank Mandiri as Trustee of Sukuk issued by BSM Had been implemented since 2016.

6. Productivity Improvement through business process improvement by adopting BPR Bank Mandiri


1 Improvement of distribution strategy and transformation of BSM branch and network.

Reclassification of BSM branch is adjusted with reclassification of Bank Mandiri branch.

2 Joint handling of non performing financing for customers of BSM and Bank Mandiri.

Joint billing and case handling throughout 2017.

7. Process Effectiveness and price Efficiency in BSM through joint procurement with Bank Mandiri


1 Operational Vehicle Lease Procurement. Had been realized for new vehicle procurement in 2017.

2 ATK Zero Stock. Had been implemented in work unit SPO.

3 Procurement of Debit Card and magnetic stripe/NSICCS card.

Had been implemented in 2017 amounted to 375,000 cards.


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8. Cost Efficiency by optimizing Infrastructure Utilization owned by Bank Mandiri


1 Bank Mandiri e-Auction system implementation in BSM locations for effectiveness of Goods & Services Procurement Negotiation.

Implementation on November 1, 2017.

2 Utilization of Bank Mandiri Web Auction to market BSM customers’ collateral assets.

Implementation since 2017.

3 Control Testing tools establishment for RCSA tools. Developing Corsys application to manage Risk Control Self Assessment (RCSA) and LED.

4 Risk Control Metrics Operational and Loss Incident. Had been implemented in work unit SPO.

5 Member of Retail Business Committee Monitoring of Retail Financing Performance, Current Issue and Action Plan (once a week).

6 Member of Retail Risk Committee Dashboard portfolio of Retail financing (once a month).

7 FOG integration to CRO of Bank Mandiri Related to Compliance Review of Loan Agreement & Disbursement and SID Report Preparation and Policy.

8 Disaster Recovery Center & Data Center. Implementation in Plaza Mandiri and Rempoa since 2012.

9 Cooperation in utilizing BM Call Center facility BSM Call Center service had utilized Bank Mandiri Call center as of January 2017.

10 Cash Pooling. Implementation in all CCPC of Bank Mandiri.

11 Synergy in utilizing facility, infrastructure of Mandiri University.

Implementation in all BSM events and training.

9. Infrastructure Improvement Synergy of BSM Head Office Building


1 Installation of Bank Syariah Mandiri Logo as BSM Head Office’s identity in Wisma Mandiri 1 Building, on top and left side of the Building.

Had been completed and inaugurated on December 6, 2017.

10. Employee capability improvement of BSM through transfer knowledge, on the job training

No. Realization in 2017

1 Transfer Knowledge to prepare Procurement SPO & PTO and BSM Asset Management SPO & PTO.

2 In the Job Training of goods/service procurement Owner Estimate (HPS) and transfer knowledge of partner accredited BM database to be used by BM.

3 Utilization of BM source for analysis in BSM.


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CoMPoSiTioN oF SHAREHolDERS

BSM share ownership structure as of December 31, 2017 is as follows:• PTBankMandiri(Persero)Tbk.owned99.999999985%ofBankshares.oramountedto597,804,386shares.• PTMandiriSekuritasowned0.0000000015%ofBankshares.oramountedto5,000shares.

No Shareholder Total Share Nominal %

1 PT Bank Mandiri (Persero) Tbk 597,804,386 2,989,021,930,000 99.999999983

2 PT Mandiri Sekuritas 1 5,000 0.0000000017

Total 597,804,387 2,989,021,935,000 100%

COMPOSITION OF THE LARGEST 20 SHAREHOLDERSPT Bank Mandiri (Persero) Tbk is the largest shareholder.

COMPOSITION OF THE BIGGEST 20 SHAREHOLDERSPT Bank Mandiri (Persero) Tbk is a shareholder with more than 5% shares.

SHARE OwNERSHIP OF THE BOARD OF COMMISSIONERS AND DIRECTORSAs of December 31, 2017 there was no share ownership of the Board of Commissioners and Directors.

liST oF SUBSiDiARY/ASSoCiATESAs of December 31, 2017, BSM did not have Subsidiary/Associate therefore, information on these issues are not available: Name of subsidiary and/or associate; share ownership percentage; description on subsidiary and/or associate’s line of business; and description of subsidiary and/or associate’s operations status (operating or not operating).

CHRoNologY oF SHARE liSTiNgBSM is a private company who do not sell its shares to public, therefore information on Chronology of Share Listing and types of corporate action that caused any changes on that total share are not available.


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CHRoNologY oF oTHER SECURiTiES liSTiNg

BSM is a private company who do not sell its shares to public, therefore information on Chronology of Other Securities Listing and types of corporate action that caused any changes on that total share are not available. However, there is information related to Subordinated Notes Mudharabah of Bank Syariah Mandiri as follows:

SUBORDINATED NOTES MUDHARABAH OF BANK SYARIAH MANDIRI IN 2016 AND 2017Table of Subordinated Notes Mudharabah of Bank Syariah Mandiri in 2016 and 2017(in million Rupiah)


Third Parties 112,000 112,000

Related Parties 263,000 263,000

Total subordinated notes issued 375,000 375,000

Subordinated notes (subnotes) mudharabah Bank Syariah Mandiri in 2016 amounted to Rp375,000 that was notes issued by Bank on December 22, 2016 in the form of long-term notes and will be matured within 7 years. This Subordinated Notes Mudharabah will be matured on December 22, 2023.

Based on the latest rating report published on December 2016 and 2017, Sukuk Mudharabah Subordinated BSM Year 2016 had idAA- (Double A minus Sharia) rating from share rating agency, PT Pefindo.

Terms and conditions:- Profit sharing is calculated based on the profit sharing rate (nisbah) of the subnotes’ holders

multiplied with unaudited amount of distributable income as stated in the last quarter financial statements of the Bank which has been approved by the Board of Directors at least 10 (ten) working days before the payment date of its profit sharing.

- Distributable income for profit sharing is calculated from the Bank’s income generated from the Rupiah financing portfolio (blended) amounting to 7 (seven) times of Sukuk Mudharabah Subordinated Funds in Rupiah owned by the issuer, earned during (one) quarter as stated in the unaudited financial statements of the Bank.

- Sharing rate (nisbah) provided to subnotes holder is 27.07% per annum from distributable income which paid every quarter.

This subnotes are not secured by specific collateral and are not guaranteed by any third party. It is also not guaranteed by the Republic of Indonesia and not included in the Bank Guarantee Program provided by the Indonesia Deposit Insurance Agency (LPS) or its successor in accordance with the prevailing laws and follow the OJK Regulation No. 21/POJK.03/2014 of Article 17 paragraph (1) letter f. The subnotes were subordinated liabilities of the Bank.


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During the period of Sukuk Mudharabah Subordinated BSM year 2016 and prior the redemption all principal and profit sharing, the Bank is obliged to: (i) maintain the CAR (Capital Adequacy Ratio) of not less than 12% (twelve percent); (ii) ensure that the Sukuk Mudharabah Subordinated year 2016 will not be owned by more than 50 (fifty) investors; (iii) submit to the monitoring agent as follows: the annual financial statements (audited) no later than the end of the 4th month after the reports date, quarterly financial statements (unaudited) not later than the end of the 1st month after the reports date, financial statements used as the basis for the calculation of profit sharing, and reports on Bank’s saudness and self-assessment on the implementation of Good Corporate Governance to OJK.

The Bank without written approval from Monitoring Agent shall not undertake as follow: (i) reduce issued and paid-up capital; (ii) change the main business; (iii) conduct mergers or business combinations or reorganization, except due to Government or Bank Indonesia’s regulation; (iv) conduct merger, consolidation, acquisition with other entity which lead to dissolution of the Bank.

Sharia Supervisory Board (SSB) of the Bank has issued an opinion through its letter number 18/13/DPS/X/2016 dated 1 November 2016 stating that the mudharabah sharia subordinated notes is in accordance with DSN Fatwa on sharia bonds and mudharabah sharia bonds (DSN-MUI Fatwa- No. 32/DSN-MUI/IX/2002 and No. 33/DSN-MUI/IX/2002). Profit sharing given to the holders of subordinated notes was taken from the portion of the Bank.

PT Bank Mandiri (Persero) Tbk is the trustee of the Subordinated Notes Mudharabah Bank Syariah Mandiri 2016.

LIST OF BONDS HOLDER List of Private Placement Bonds Holder (In million Rp)

No. Investor Nominal %

1 Bank 155,000 41.33

2 Foundation 74,000 19.73

3 Insurance 19,000 5.07

4 Securities 118,000 31.47

5 Others 9,000 2.4

TOTAL 375,000 100.00


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CoRPoRATE SUPPoRTiNg iNSTiTUTioN AND PRoFESSioNAl

NOTARYAshoya Ratam, SH, MKn.Address : Jl. Suryo No. 54 Keboyaron Baru Jakarta SelatanPhone. : (021) 29236070

PUBLIC ACCOUNTANT FIRM Public Accountant Firm Tanudiredja, wibisana, Rintis & Rekan Address : Plaza 89, Jl. Hr Rasuna Said Kav. X-7 No. 6 Jakarta 12940

LEGAL CONSULTANT Pradjoto & AssociatesAddress : The Bellezza Office Tower, 9th Floor, Jl. Arteri Permata Hijau No. 34 Jakarta 12210 – Indonesia

Marsinih Martoatmodjo Iskandar Address : Kusdihardjo Law Office Office 8, 15th Floor Suite H Scbd Lot 28 Jalan Jenderal Sudirman Kav. 52-53 Jakarta 12190


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BSM oPERATioN AREA AND NETwoRk ADDRESS

BSM has 7 (seven) Regional Offices spread throughout Indonesia.

REGION I/ SUMATERA 1Gedung BSM Lt. 4, Jl. A.Yani No. 100

Medan, Sumatera Utara. 20111Telp: (061) 4534466Fax: (061) 4534456

REGION II/ SUMATERA 2Jl. Kapten A. Rivai No. 39Kota Palembang, Sumatera Selatan 30100Telp: (0711) 318902, 318903Fax: -

REGION IV/ JAVA 1Jl. Sukajadi No. 215, Kel. Gegerkalong, Kec. Sukasari, Kota Bandung, Jawa Barat. 40153Telp: (022) 2038754 Fax: (022) 2041439

REGION V/ JAVA 2 Komplek Darmo Galeria Blok C-1

Jl. Mayjend Sungkono No. 75, Surabaya, Jawa Timur. 60189

Telp: (031) 5610554, 5632255Fax: (031) 5610556

REGION VI/ KALIMANTANJl. Lambung Mangkurat, Kel. Kertak Baru Ulu, Kec. Banjarmasin Tengah, Kota Banjarmasin,

Kalimantan Selatan. 70111Telp: (0511) 3304684

Fax: -

REGION VII/ EAST INDONESIAJl. Haji Bau No. 7 E-G, Kel. Losari,

Kec. Ujung Pandang, Kota Makassar, Sulawesi Selatan. 90112

Telp: (0411) 835065Fax: (0411) 835068

REGION III/ JAKARTAGedung Graha Mandiri Lantai

22, Jl. Imam Bonjol No. 61, Jakarta Pusat. 10310

Telp: (021) 3156369, 2301477, 2302308

Fax: (021) 3904395


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Region Head Profile

REGION I:Ahmad ZailaniWas born in Medan, April 28, 1964, graduated from D3 from Faculty of Economy, Universitas Sumatra Utara in 1987, Bachelor Degree from STIE in 1992, joined BSm since November 1, 1999.

REGION IIDeden DurachmanWas born in Bandung, September 17, 1972. Graduated from Faculty of Economy, Universitas Padjajaran Bandung in 1996. Master Degree from Faculty of Law, Universitas Padjajaran in 1999 and joined BSM on February 2, 2000.

REGION IIIEdhie RosmanWas born in Jakarta, December 13, 1966. Graduated from Faculty of Agriculture, Institut Pertanian Bogor in 1989, graduated from Master of Management in 2003 and joined BSM since March 6, 2000.

REGION IVJeffry PrayanaWas born in Medan on January 20, 1972. Graduated from Faculty of Mechanical Engineering, institute Teknologi Bandung (ITC) in 1999 and Master Degree from Faculty of Economy, Islamic Middle East major, Universitas Indonesia in 2007. Joined BSM since March 13, 2000.

REGION VAgus SumiratWas born in Ciamis, May 18, 1963. Graduated from STIE YPKP in 1990 and joined BSM since January 13, 2016.

REGION VIMahendra NusantoWas born in Serang, July 7, 1971, graduated from Faculty of Computer, Universitas Gunadarma in 1996 and joined BSM since July 15, 2002.

REGION VIIAnton SukarnaWas born in Bandung, November 24, 1970. Graduated from Faculty of Poultry, Institut Pertanian Bogor in 1994 and joined BSM since November 1, 1999.


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wORK UNIT REGION I/ SUMATERA 1

ADDRESSGedung BSM 4th FLoor, Jl. A.Yani No. 100, Medan, Sumatera Utara. 20111

PHONE (061) 4534466

FAX (061) 4534456

KC MEDAN KC ACEH

Jl. Jenderal Achmad Yani No. 100, Medan, Sumatera Utara. 20111

Jl. Diponegoro No. 6, Banda Aceh, Aceh. 23242

(061) 4153866, 4151466 (0651) 22010

(061) 4511867 (0651) 33945

KC PEKANBARU KC SIMEULUE

Jl. Jend. Sudirman No. 450, Pekanbaru, Riau.

Pertokoan Suak Tungkul Kavling 1 No. 5/6, Jl. Tgk. Diujung Sinabang, Simeuleu, Aceh. 23800

(0761) 849191, 849192 (0650) 21547

(0761) 849190, 31668 (0650) 21556

KC BINJAI KC RANTAU PRAPAT

Jl. Sukarno Hatta No. 22-23, Kel. Tanah Tinggi, Kec. Binjai Timur, Kota Binjai, Sumatera Utara. 20731

Jl. Jenderal Ahmad Yani No. 4, Kel. Bakaran Batu, Kec. Rantau Selatan, Kab. Labuhanbatu, Sumatera Utara. 21421

(061) 8826396 (0624) 24880, 24205, 25186

(061) 8826138 (0624) 24653

KC BATAM KC PADANGSIDEMPUAN

Komplek Graha Sulaeman Blok B No. 2, Jl. Sultan Abdul Rahman, Lubuk Baja, Batam, Kep. Riau. 29440

Jl. Sudirman No. 130 A, Kel. Wek I, Kec. Padangsidempuan Utara, Kota Padangsidempuan, Sumatera Utara. 22718

(0778) 431331 (0634) 28200

(0778) 432727 (0634) 28103

KC DUMAI KC PEMATANGSIANTAR

Jl. Jenderal Sudirman No. 162, Dumai, Riau. 28800

Jl. Perintis Kemerdekaan No. 1, Pematangsiantar, Sumatera Utara. 21113

(0765) 33555 (0622) 435858, 435857, 435861

(0765) 32379 (0622) 435848

KC LANGSA KC TANJUNG PINANG

Jl. Ahmad Yani No. 20-22, Kel. Gampong Jawa, Kec. Langsa Kota Langsa, Aceh. 24400

Jl. Basuki Rahmat No. 1-3, Kel. Tanjungpinang Timur, Kec. Bukit Bestari, Kota Tanjungpinang, Kep. Riau. 29122

(0641) 426135, 21357, 426451 (0771) 313788

(0641) 426051 (0771) 313995

KC DURI KC MEDAN GAJAH MADA

Jl. Hangtuah, Kel. Balai Makam, Kec. Mandau, Kab. Bengkalis, Riau. 28784

Jl. Gajah Mada No. 7, Kel. Petisah Hulu, Kec. Medan Baru, Kota Medan. Sumatera Utara. 20153

(0765) 598990 (061) 4550755

(0765) 598993 (061) 4550766, 4537627

KC MEDAN KAMPUNG BARU KC SIBOLGA

Jl. Brigjen Katamso No. 717 B, Medan, Sumatera Utara. 20100

Jl. Sutoyo Siswomiharjo No. 22, Sibolga Utara, Sibolga, Sumatera Utara. 22500

(061) 7878383 (0631) 24555

(061) 7872323 (0631) 26722

KC LUBUK PAKAM KC LHOKSEUMAwE

Jl. Diponegoro No. 45-46 Pasar I, Kel. Lubuk Pakam, Kec. Lubuk Pakam, Kab. Deli Serdang, Sumatera Utara. 20511

Jl. Merdeka No. 24-25, Desa Simpang Empat, Kec. Banda Sakti, Kotif Lhokseumawe, Aceh. 24314

(061) 7950417 (0645) 631146, 631147, 631148

(061) 7950419 (0645) 41555

KC PEKANBARU HARAPAN RAYA KC KABANJAHE

Jl. Haji Imam Munandar No. 8, Kel. Tangkerang Utara, Kec. Bukit Raya, Kota Pekanbaru, Riau. 28289

Komplek Raja Lahir Munte Blok E No. 1-2, Jl. Selamat Ketaren, Kel. Gung Leto, Kec. Kabanjahe, Kab. Karo, Sumatera Utara. 22172

(0761) 862222 (0628) 21999

(0761) 849799 (0628) 21859

KC MEDAN AKSARA KC MEULABOH

Jl. Letda Sujono No. 110, Kel. Medan Estate, Kec. Percut Sei Tuan, Kab. Deli Serdang, Sumatera Utara. 20371

Jl. Nasional No. 107, Gampong Ujong Baroh, Kec. Johan Pahlawan, Kabupaten Aceh Barat, Aceh. 23611

(061) 7325939, 7325957 (0655) 7551109, 7551558

(061) 7332936 (0655) 7551184

wORK UNIT REGION II/ SUMATERA 2

ADDRESSJl. Kapten A. Rivai No. 39, Kota Palembang, Sumatera Selatan. 30100

PHONE (0711) 318902, 318903

FAX -

KC PALEMBANG KC PADANG

Jl. Demang Lebar Daun No. 8, Kel. Lorok Pakjo, Kec. Ilir Barat I, Kota Palembang, Sumatera Selatan. 30137

Jl. Belakang Olo No. 47, Kel. Kampung Jawa, Kec. Padang Barat, Kota Padang, Sumatera Barat. 25171

(0711) 421919, 415986 (0751) 21113, 20765

(0711) 419952 (0751) 24768


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KC PALEMBANG PASAR 16 ILIR KC JAMBI

Pasar 16 Ilir, Jl. Masjid Lama No. 30-31, Palembang, Sumatera Selatan.

Jl. Jend. Gatot Subroto No. 127 A-B, Kel. Sungai Asam, Kec. Pasar Jambi, Kota Jambi, Jambi. 36134

(0711) 377244, 377322 (0741) 27730, 27788

(0711) 353594 (0741) 27733

KC BANDAR LAMPUNG KC PALEMBANG SIMPANG PATAL

Jl. Diponegoro No. 189, Kel. Gotong Royong, Kec. Gotong Royong, Kota Bandarlampung, Lampung. 35119

Jl. R. Soekamto No. 6A, Kel. 8 Ilir, Kec. Ilir Timur II, Kota Palembang, Sumatera Selatan. 30114

(0721) 258960, 258952 (0711) 819062, 814341

(0721) 263588 (0711) 811078

KC BUKITTINGGI KC PAYAKUMBUH

Jl. Jenderal Sudirman No. 73, Bukittinggi, Sumatera Barat. 26100

Jl. Ade Irma Suryani No. 3 D-E, Payakumbuh, Sumatera Barat. 26213

(0752) 627633, 627635 (0752) 796640, 796641

(0752) 627637 (0752) 93167

KC BANDAR JAYA KC PRABUMULIH

Komp. Pertokoan Central Niaga Bandar Jaya No. 1-3, Jl. Proklamator Raya, Yukum Jaya, Lampung Tengah, Lampung. 34163

JL. Jend. Sudirman No. 7-8 Rt 01/10, Kel. Muara dua, Kec. Prabumulih Timur, Kota Prabumulih, Sumatera Selatan. 31114

(0725) 529825, 529826 (0713) 322888

(0725) 529831 (0713) 322565

KC BATURAJA KC METRO

Jl. Slamet Riadi No. 231, RT. 02/02, Kel. Kemalaraja, Kec. Baturaja Timur, Kab. Ogan Komering Ulu, Sumatera Selatan. 32116

Jl. Jend. Sudirman No. 43 E-F, Kel. Imopura, Kec. Metro Pusat, Kota Metro, Lampung. 34111

(0735) 325111 (0725) 7851606

(0735) 322552 (0725) 7851605

KC BENGKULU KC PANGKAL PINANG

Jl. Semangka No. 49, Lingkar Timur, Bengkulu. 38226

Jl. Masjid Jamik No. 123, Pangkal Pinang, Kep. Bangka Belitung. 33123

(0736) 342007, 346498 (0717) 432229, 433177

(0736) 346707 (0717) 431445

wORK UNIT REGION III/ JAKARTA

ADDRESSGedung Graha Mandiri 22th FLoor, Jl. Imam Bonjol No. 61, Jakarta Pusat 10310

PHONE (021) 3156369, 2301477, 2302308

FAX (021) 3904395

KC JAKARTA HASANUDIN KC JAKARTA MAYESTIK

Jl. S. Hasanudin No. 57, Jakarta Selatan 12160

Jl. Kyai Maja Blok D/1 Persil No. 6-6A, Kramat Pela, Kebayoran Baru, Jakarta Selatan 12130

(021) 2701515, 2701505 (021) 7202451, 7202728, 7202509, 7394952

(021) 7220362 (021) 7220822

KC JAKARTA wARUNG BUNCIT KC JAKARTA PONDOK INDAH

Gedung Fortune Lt. Dasar Jl. Mampang Prapatan No. 96 Jakarta Selatan.

Komp. Ruko Pondok Indah Kav. II No.11 Blok UA, Jl.Taman Duta I Sektor II, Jakarta Selatan. 12310

(021) 7662029, 7662030

(021) 7662028, 7665391

KC BEKASI KC JAKARTA THAMRIN

Komplek Pertokoan Kalimalang Comm Center, Jl. A Yani A5 No. 6-7, Bekasi, Jawa Barat. 17144

Jl. M. H. Thamrin No. 5, Jakarta Pusat. 10340

(021) 8853990, 8856368, 8840355, 8853991, 88855418

(021) 2300509, 39839000

(021) 8856406 (021) 39832939

KC BOGOR KC TANGERANG

Jl. Pajajaran No. 8, Kel. Baranangsiang, Kec. Bogor Timur, Kota Bogor, Jawa Barat. 16143

Ruko Business Park Tangerang City Blok A No. 12, Jl. Jend. Sudirman, Tangerang, Banten 15117

(0251) 8350562, 8350563, 8350564

(021) 55781230, 55781231, 55781232

(0251) 8350565 (021) 55781233

KC CILEGON KC JAKARTA TANJUNG PRIOK

Jl. Sultan Ageng Tirtayasa No. 115 A, Cilegon, Banten. 42400

Jl. Enggano No. 42B - 42, Tanjung Priok, Jakarta Utara. 14310

(0254) 399444, 375648 (021) 43906060, 43906055

(0254) 375645 (021) 43906058, 43906059


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KC JAKARTA SAHARJO KC JAKARTA RAwAMANGUN

Jl. Minangkabau No. 39, Pasar Manggis Setiabudi, Jakarta Selatan. 12970

Jl. Paus Raya No. 86, Rawamangun, Jakarta Timur. 13220

(021) 8308768, 8292824, 8357309 (021) 4711987

(021) 8308769, 8357310 (021) 4711963

KC JAKARTA KEBON JERUK KC DEPOK

Jl. Raya Kebon Jeruk, RT 0010/01, Kel. Kebon Jeruk, Kec. Kebon Jeruk, Jakarta Barat. 11530

Ruko Depok Mas Blok A1-2, Jl. Margonda Raya No. 42, Depok, Jawa Barat. 16431

(021) 53662464, 53662465, 53662467

(021) 7765231, 7765251, 7765289, 77213804

(021) 53662471, 53662472 (021) 77202905, 77203598

KC JAKARTA KELAPA GADING KC JAKARTA PONDOK KELAPA

Komplek Graha Bulevar Blok KGC No. A-02 dan A-03, Jl. Boulevard Kelapa Gading, Kel. Kelapa Gading Timur, Kec. Kelapa Gading, Jakarta Utara. 14240

Ruko Komplek Billy & Moon Blok E No. 5A-5B, Jl. Raya Kalimalang, Pondok Kelapa, Jakarta Timur. 13450

(021) 29375262, 29375261 (021) 86903501

(021) 29375197, 29375198 (021) 86903502

KC JAKARTA CIPULIR KC JAKARTA CIBUBUR

Jl. Ciledug Raya Cipulir No. 123E, Jakarta Selatan. 12230

Ruko Citra Gran Blok R-2 No. 8-9, Jl. Raya Alternatif, Cibubur, Jakarta Timur. 13700

(021) 7244664, 72786414, 72786361

(021) 84300107, 84300108, 8449778

(021) 72786360 (021) 84590918

KC TANGERANG BINTARO KC BEKASI PONDOK GEDE

Bintaro Trade Center, Jl. Jend. Sudirman Blok A1 No. 7 - 8, Bintaro Sektor 7, Pondok Aren, Tangerang, Banten. 15224

Jl. Jatiwaringin Raya No. 110 D-E, Pondok Gede, Kota Bekasi, Jawa Barat. 17411

(021) 7450120, 7453301, 7450296, 7450297

(021) 84970255, 84900806, 84900810

(021) 7450116 (021) 84970265

KC CIBINONG KC SERANG

Ruko Graha Cibinong Blok D No. 2, Jl. Raya Bogor KM 43, Cibinong, Bogor, Jawa Barat. 16911

Jl. Ahmad Yani No. 175 C-D, Kel. Sumur Pecung, Kec. Serang, Kab. Serang, Banten. 42100

(021) 87915703, 87915704 (0254) 222984, 210191

(021) 87919008 (0254) 222985

KC JAKARTA MANGGA DUA KC JAKARTA CENGKARENG

Jl. Mangga Dua Raya Blok E 4 Kav No. 3, Jakarta Utara. 14000

Ruko Mutiara Taman Palem Blok A2 No. 9-10, Jl. Kamal Raya Outering Ring Road, Cengkareng, Jakarta Barat. 11730

(021) 6128715, 6128716 (021) 54353515, 54353540

(021) 6128615 (021) 54353155

KC JAKARTA KALIBATA KC JAKARTA HAYAM wURUK

Jl. Raya Pasar Minggu No. 75, Kel. Kalibata, Kec. Pancoran, Jakarta Selatan. 12740

Jl. Hayam Wuruk No. 101, Kec. Tamansari, Jakarta Barat. 11110

(021) 7940323, 7940341, 7940353 (021) 6259000

(021) 7940420 (021) 6297427

KC JAKARTA SUDIRMAN KC TANGERANG CILEDUG

Mayapada Tower II Lantai GF, Jl. Jend. Sudirman Kav. 27, Jakarta Selatan. 12920

Jl. HOS Cokroaminoto No. 69, Ciledug, Tangerang, Banten. 15151

(021)-2500511, 2500533 (021) 73458147, 73458148, 73458149

(021)-2500422 (021) 73458150

KC JAKARTA JATINEGARA KC TANGERANG CIPUTAT

Perkantoran Mitra Matraman Blok A1 No. 8-9, Jl. Matraman Raya No. 148, Jakarta Timur. 13150

Jl. Ir. H. Juanda No. 111, RT 006/001, Kel. Cempaka Putih, Kec. Ciputat Timur, Kota Tangerang Selatan, Banten. 15412

(021) 85904866 (021) 7425267

(021) 85905634 (021) 7423018

KC JAKARTA PLUIT KC BEKASI CIKARANG

Kawasan Emporium Mall Pluit, Komplek CBD Pluit Blok S-17, Jl. Raya Pluit Selatan No. 1, Kel. Penjaringan, Kec. Penjaringan, Jakarta Utara. 14430

Ruko Sentra Cikarang, Jl. Cikarang Cibarusan BI. B No. 2, Cikarang, Kab. Bekasi, Jawa Barat. 17530

(021 ) 29388018, 29388019, 29388020, 29388021

(021) 89902076, 89902077

(021) 29388021, 66673079 (021) 89906765


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wORK UNIT REGION IV/ JAVA 1

ADDRESSJl. Sukajadi No. 215, Kel. Gegerkalong, Kec. Sukasari, Kota Bandung, Jawa Barat. 40153

PHONE (022) 2038754

FAX (022) 2041439

KC BANDUNG KC PEKALONGAN

Jl. Ir. H. Juanda No. 24, Kel. Citarum, Kec. Cibeunying, Bandung, Jawa Barat. 40132

Jl. KH. Wahid Hasyim No. 11A, Kel. Kauman, Kec. Kota Pekalongan Timur, Kota Pekalongan, Jawa Tengah. 51127

(022) 84469443 (0285) 434911, 434912

(022) 4200011 (0285) 434894

KC SOLO KC CIREBON

Jl. Slamet Riyadi No. 388, Solo, Jawa Tengah. 57142

Jl. Dr. Cipto Mangunkusumo No. 89, Cirebon, Jawa Barat. 45124

(0271) 710820 (0231) 202760, 202092, 202093, 200423

(0271) 742085, 742086 (0231) 202067

KC YOGYAKARTA KC SEMARANG

Jl. C. Simanjuntak No. 24, Kel. Terban, Kec. Gondokusuman, Yogyakarta 55223

Jl. Pandanaran No. 90, Kel. Pekunden, Kec. Semarang Tengah, Kota Semarang, Jawa Tengah. 50132

(0274) 555022, 555024 (024) 3568891, 3568894

(0274) 555021 (024) 3568890

KC TASIKMALAYA KC PURwAKARTA

Jl. Otto Iskandardinata No. 5, Tasikmalaya, Jawa Barat. 46113

Jl. Raden Edi Martadinata, RT 25 RW 05, Kel. Nagri Tengah, Kec. Purwakarta, Kab. Purwakarta, Jawa Barat. 41115

(0265) 312995, 312999 (0264) 231760

(0265) 311199 (0264) 231761

KC PURwOKERTO KC CILACAP

Jl. Jend. Sudirman No. 433, Purwokerto, Jawa Tengah. 53116

Jl. A. Yani No. 97, Cilacap, Jawa Tengah. 53214

(0281) 641108, 641685 (0282) 531015, 531038

(0281) 625955 (0282) 535870

KC KUDUS KC TEGAL

Ruko Ahmad Yani No. 9, Jl. Ahmad Yani, Kab. Kudus, Jawa Tengah. 59318

Jl. Gajahmada No. 90, Tegal, Jawa Tengah. 52113

(0291) 439272 (0283) 325300, 325301

(0291) 439274 (0283) 351460

KC SUKABUMI KC CIMAHI

Jl. RE. Martadinata No. 38, Gunung Parang, Cikole, Sukabumi, Jawa Barat. 43112

Jl. Jend. Amir Machmud No. 118, Cibabat, Cimahi, Jawa Barat. 40513

(0266) 243888 (022) 6632228

(0266) 243898 (022) 6632212

KC PATI KC BANDUNG AHMAD YANI

Jl. P. Sudirman No. 207, Plaza Pati Blok A1-A2, Kel. Pati Lor, Kab. Pati, Jawa Tengah. 59111

Jl. Jendral Ahmad Yani No. 252, Kel. Kacapiring, Kec. Batununggal, Bandung, Jawa Barat. 40271

(0295) 386699 (022) 7202688, 7231090, 082819030694

(0295) 387799 (022) 7271334

KC KENDAL KC SALATIGA

Jl. Raya Soekarno Hatta No. 325, Kel. Pegulon, Kec. Kendal, Kab. Kendal, Jawa Tengah. 51372

Jl. Diponegoro Ruko Salatiga Square No. 77-A6 dan 77-A7, Kel. Sidorejo Lor, Kec. Sidorejo, Kota Salatiga, Jawa Tengah. 50714

(0294) 388173, 388175 (0298) 328558, 328885

(0294) 388172 (0298) 314407

KC CIANJUR KC GARUT

Jl. Siliwangi No. 6, Kel. Pamoyanan, Kec. Cianjur, Kab. Cianjur, Jawa Barat. 43211

Jl. Ciledug No. 148-149, Kel. Kota Kulon, Kec. Garut Kota, Kab. Garut, Jawa Barat. 44112

(0263) 284648 (0262) 243689, 243692

(0263) 284677 (0262) 233137

wORK UNIT REGION V/ JAVA 2

ADDRESSKomplek Darmo Galeria Blok C-1, Jl. Mayjend Sungkono No. 75, Surabaya, Jawa Timur. 60189

PHONE (031) 5610554, 5632255

FAX (031) 5610556

KC SURABAYA KC PAMEKASAN

Jl. Raya Darmo No. 17, Surabaya, Jawa Timur. 60265

Jl. KH. Agus Salim No. 3A, Pamekasan, Jawa Timur. 69310

(031) 5674848, 5679842, 5677062 (0324) 331223, 331224, 331225

(031) 5679841 (0324) 331218

KC MALANG KC MATARAM

Jl. Letjen Sutoyo No. 77B, Kel. Lowokwaru, Kec. Lowokwaru, Kota Malang, Jawa Timur, 65141

Jl. Hasanudin No. 40, Mataram, Nusa Tenggara Barat. 83121

(0341) 402290 (0370) 644888, 622300, 622700

(0341) 495311 (0370) 634999


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KC KEDIRI KC JEMBER

Jl. Hayam Wuruk No. 49, Kediri, Jawa Timur. 64123

Jl. P. B. Sudirman No. 41-43, Jember, Jawa Timur. 68118

(0354) 672000 (0331) 411522

(0354) 672105 (0331) 411525

KC DENPASAR KC BANYUwANGI

Jl. Raya Puputan No. 114, Kel. Sumerta Klod, Kec. Denpasar Timur, Kota Denpasar, Bali. 80239

Jl. Basuki Rakhmat No. 30, Kel. Singotrunan, Kec. Banyuwangi, Kab. Banyuwangi, Jawa Timur. 68413

(0361) 231999 (0333) 418624, 418625, 418626, 418627

(0361) 237100 (0333) 418628

KC GRESIK KC KUPANG

JL. RA. Kartini No. 180, Gresik, Jawa Timur. 61122

JL. Sudirman No. 33, Kupang, Nusa Tenggara Timur. 85300

(031) 3972053 (0380) 834100, 823466, 828617

(031) 3972065, 3979791 (0380) 826150

KC BOJONEGORO KC MADIUN

Jl. Panglima Sudirman No. 99A, Kab. Bojonegoro, Jawa Timur. 62111

Jl. Cokroaminoto No. 41, Madiun, Jawa Timur. 63130

(0353) 892124, 892125 (0351) 454000

(0353) 892123 (0351) 458300

KC SIDOARJO KC BLITAR

Komplek Ruko Sentral Jenggolo A3, Jl. Jenggolo No. 9, Pucang, Sidoarjo, Jawa Timur. 61219

Jl. Tanjung No. A4-A5, Kel. Sukorejo, Kec. Sukorejo, Kota Blitar, Jawa Timur. 66121

(031) 8946449, 8947231, 8921033, 8922129

(0342) 816999

(031) 8957429 (0342) 816777

KC SURABAYA JEMUR HANDAYANI

Jl. Jemur Handayani No. 3, Kel. Jemur Wonosari, Kec. Wonocolo, Surabaya, Jawa Timur. 60237

(031) 8411230, 8411250

(031) 8411260

wORK UNIT REGION VI/ KALIMANTAN

ADDRESSJl. Lambung Mangkurat, Kel. Kertak Baru Ulu, Kec. Banjarmasin Tengah, Kota Banjarmasin, Kalimantan Selatan, 70111

PHONE (0511) 3304684

FAX -

KC BANJARMASIN KC BALIKPAPAN

Jl. Lambung Mangkurat No. 16, Banjarmasin, Kalimantan Selatan. 70111

Jl. Jend. Sudirman No. 330, Balikpapan, Kalimantan Timur. 76100

(0511) 3366408, 3366409 (0542) 413382, 414630

(0511) 3366426 (0542) 412109

KC PONTIANAK KC MARTAPURA

Jl. Sultan Abdurrachman No. 23, Kel. Sungai Bangkong, Kec. Pontianak Barat, Kota Pontianak, Kalimantan Barat, 78117

Jl. A. Yani KM 40 No. 5, Martapura, Kalimantan Selatan. 70600

(0561) 745004 (0511) 4722713, 4722755

(0561) 744774 (0511) 4722714

KC SAMARINDA KC KUTAI KARTANEGARA

Jl. Antasari No. 33 RT 02, Kel. Air Putih, Kec. Samarinda Ulu, Kota Samarinda, Kalimantan Timur. 75124

Jl. KH. Akhmad Muksin RT. 01, Kel. Timbau, Kec. Tenggarong, Kab. Kutai Kartanegara, Kalimantan Timur. 75511

(0541) 7271271, 7271272, 7271273, 7271274

(0541) 665362, 665365

(0541) 7271276, 7271277, 7271278

(0541) 665017

KC KETAPANG KC BONTANG

Jl. R. Soeprapto No. 88, Kel. Sampit, Kec. Delta Pawan, Ketapang, Kalimantan Barat. 78813

Jl. MT. Haryono No. 53, Kel. Gunung Elai (d/h Desa Bontang Baru), Kec. Bontang Utara, Kota Bontang, Kalimantan Timur. 75300

(0534) 34600 (0548) 20007

(0534) 34395 (0548) 25005

KC PALANGKARAYA KC PANGKALAN BUN

Jl. Ahmad Yani No. 75, Palangkaraya, Kalimantan Tengah. 73111

Jl. Sukma Arianingrat No. 14, Kel. Baru, Kec. Arut Selatan, Kab. Kota Waringin Barat, Kalimantan Tengah. 74100

(0536) 3222223 (0532) 25624, 25625

(0536) 3227000 (0532) 25636


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KC SAMBAS KC TANJUNG

Jl. Gusti Hamzah No. 41, Dusun Kubu, Desa Durian, Kec. Sambas, Kab. Sambas, Kalimantan Barat. 79400

Jl. Ir. Pangeran Haji Muhammad Noor No. 12, Desa Pembataan, Kec. Murung Pudak, Kab. Tabalong, Kalimantan Selatan. 71571

(0562) 391900 (0526) 2024484

(0562) 392200 (0526) 2024494

KC SAMPIT KC SINGKAwANG

Jl. M. T. Haryono No. 6, Kel. Mentawa Baru Hulu, Kec. Mentawa Baru Ketapang, Kab. Kotawaringin Timur, Kalimantan Tengah. 74322

Jl. Alianyang No. 16 C-D, Kel. Melayu, Kec. Singkawang Barat, Kota Singkawang, Kalimantan Barat. 79122

(0531) 24222 (0562) 639866

(0531) 24400 (0562) 639865

wORK UNIT REGION VII/ EAST INDONESIA

ADDRESSJl. Haji Bau No. 7 E-G, Kel. Losari, Kec. Ujung Pandang, Kota Makassar, Sulawesi Selatan. 90112

PHONE (0411) 835065

FAX (0411) 835068

KC MAKASSAR KC PALU

Jl. Dr. Ratulangi No. 88 B-C-D, Makassar, Sulawesi Selatan. 90125

Jl. Wolter Monginsidi No. 77, Palu, Sulawesi Tengah. 94117

(0411) 833070 (0451) 426222

(0411) 833069 (0451) 452108

KC MANADO KC JAYAPURA

Kawasan Mega Mas, Jl. Piere Tendean Boulevard Blok I D-1 No. 28, Manado, Sulawesi Utara, 95100

Komplek Perniagaan Kelapa Dua - Entrop Jl. Raya Kelapa Dua No. 1-2, Entrop, Jayapura, Papua. 99100

(0431) 879444 (0967) 550965, 550966

(0431) 879492 (0967) 550968

KC GORONTALO KC TERNATE

Jl. Ahmad Yani No. 127, Gorontalo. 96111

Ruko Jatiland Business Center No. 19-20, Ternate, Maluku Utara. 97700

(0435) 828666 (0921) 3127220

(0435) 830056 (0921) 3127336

KC MAMUJU KC SORONG

Jl. Urip Sumoharjo No. 44, Mamuju, Sulawesi Barat. 91511

Jl. Ahmad Yani No. 21, Sorong, Papua Barat. 98400

(0426) 22651, 2703380 (0951) 323366

(0426) 21922 (0951) 323360

KC AMBON KC KENDARI

Jl. Pala No. 2, Kel. Uritetu, Kec. Sirimau, Kota Ambon, Maluku. 97127

Jl. Abdullah Silondae No. 137, Kel. Korumba, Kec. Mandonga, Kota Kendari, Sulawesi Tenggara. 93111

(0911) 344572, 344337 (0401) 3128822, 3128245, 3128897

(0911) 344582 (0401) 3127478

KC LUwUK KC BONE

Jl. Urip Sumoharjo No. 18C dan 18D, Kel. Simpong, Kec. Luwuk, Kab. Banggai, Sulawesi Tengah. 94715

Jl. Jend. Ahmad Yani No. 48, Watampone, Kel. Macanang, Kec. Tanette Riattang Barat, Kab. Bone, Sulawesi Selatan. 92733

(0461) 21214, 22779 (0481) 28774

(0461) 325456 (0481) 28775


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INFORMATION ON wEBSITEWebsite is web page contains information or data that can be access through an Internet network system. As a means of communication, promotion and fulfillment on good corporate governance aspect, Bank Syariah Mandiri had owned corporate website since 2000. Bank Syariah Mandiri website is www.syariahmandiri.co.id. Information on the website is presented in Bahasa and English. The contents are divided into some parts as follows:

a. Corporate website contains information on- Company profile (History, Profile of bank name, swift code, address, email, share ownership and supervisory

authority),- Vision, Mission, Shared Values,- Organization (Name, Curriculum Vitae including work experiences and education background with photos of

the Board of Commissioners, Directors and Senior Executive Vice President, as well as Sharia Supervisory Board including the organization structure),

- Corporate Social Responsibility Report,- GCG implementation report in concurrent year,

CoRPoRATE wEBSiTE


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- News and press release published by BSM- BSM network covering outlet and atm,- Financial Statements (Monthly, Quarterly, and Annual Report since the establishment in 1999 or more than

five consecutive years),- Financial Analysis in 2017, and- Sustainability Report since 2013.

b. Information on 24 Hour Service including BSM Netbanking, Mobile banking, and BSMCall 14140 call center services. BSM website also becomes one of Internet banking transaction gateways.

c. Consumer Banking This channel is a channel to inform product in consumer segment both from funding and financing. Among

others including information on Saving Account, Current Account, time deposits, financing product of BSM Griya, BSM Emas, BSM Oto, Product related to Hajj and Umrah, services and BSM (Priority) service.

d. Business Banking This channel is a channel to inform products and services in corporate and commercial segment as well as

information related to products and services in small and micro segment.

e. Sharia Education Contains information on Frequently Asked and Question (FAQ) related to sharia bank and sharia term as well

as agreements. Contents on the website are in line with provision of OJK Regulation Number 8/POJK.04/2015 concerning public listed website. In that provision, OJK requires the companies to provide information in two languages.


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The Company also signs up corporate email, [email protected] for any input or served as communication channel for the customers to as question, opinion or complain on Bank service. Until December 2017, the average visit per month was more than 121,000. Access to website was majority (60%) taken through mobile. The information that was mostly accessed is sharia investment product and information regarding career.

Based on those findings, in 2017 BSM had adjusted the website interface to be responsive (adaptive to media used to access) and will simplify the information on the products to be more simple with clean design.

Table of website Conformity with ARA Criteria

ARA Criteris Conformity with BSM website

Information on shareholders up to individual owner; Not Applicable.

BSM shareholders are in the form of private company, comprising of PT Bank Mandiri (Persero) Tbk and PT Mandiri Sekuritas. There is no share ownership up to individual level.

Code of Ethics contents; Applied.

In Company Profile/GCG/Code of Ethics

Information on General Meeting of Shareholders (GMS) at least contains agenda discussed in GMS, minutes of meeting of GMS, and information on important dates such as GMS announcement date, GMS calling date, GMS date, publishing date of GMS minutes of meeting;

Applied.

In Company Profile/Financial Statements/Annual Report/Management Report

Separated annual financial statements (the last 5 years); Applied.

In Company Profile/Annual Report/Management Report

Profile of the Board of Commissioners and Directors; Applied.

In Company Profile/About Us/The Board of Directors/The Board of Commissioner/Sharia Supervisory Board

Charter of the Board of Commissioners, Directors, Committees, and Internal Audit Unit.

Applied.

In Company Profile/GCG/GCG Implementation


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Information on Social MediaSince the high usage of internet is mainly for social media, therefore Bank Syariah Mandiri alaso has several official accounts in social media. The official accounts are:

a. Facebook: Bank Syariah Mandiri As of December 2017, the official fanpage account of Bank Syariah Mandiri has 69,491 followers.

The account was firstly established in 2018, as communication tool of BSM to society. Information presented are corporate activities, marketing program information, BSM news, and direct communication and interactivity with followers.

Majority of the followers are 65% 25-34 years old, male gender and 75% access the Facebook through mobile.

b. Twitter: @syariahmandiri In line with Facebook, BSM started to communicate through twitter since 2009. As of December

2016, BSM Twitter followers reached 270,797. Communication delivered through Twitter also related to corporate activities, product promotion, non-formal communication, social activities and others. In addition to corporate twitter, BSM through business work unit also has account related to products such as @BSMMenabung and @BSMEmas.

c. Instagram: @BankSyariahMandiri With 13,137 followers, Instagram account is used to post photos of corporate acitivties to followers.

In line with the official corporate email, [email protected], BSM social media could become one of the gateways for customer complaint service. For settlement, the customer complaint will be discussed with related work unit through complaint management system managed by Customer Care.


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HUMAN ReSoURCeS

DeVeLoPMeNT

04

BSM believes that reliable Human Resources (HR) will be able to provide key contribution for the performance and Company’s performance sustainability. Good HR will enable BSM to realize its vision and mission as well as sustainable work plan as set.

Therefore, BSM management pays a lot of attention to HR competency management and development. That attention started from recruitment, management, up to development taken continuously

In line with that, BSM had also determined corporate culture integrated through a series of the Company’s vision, mission and values internalization program. Work culture implementation is an important matter for the Company to ensure that each employee is able to uphold the Company’s values, fully implement Good Corporate Governance and perform in line with the Company’s strategy and business activities as a whole.

EMPLOYEE PROFILEUntil the end of 2017, total employee of Bank was 15,659 employees, decreased by 3.16% from 16,170 employees at the end of 2016. Total organic employee decreased by 300 employees, meanwhile outsourcing employee decreased by 211 employees compared to previous year. A decrease in total employee of BSM in 2017 was adjusted with the Bank’s needs in improving employee productivity.

1. Total employee and growth

BSM determines competency based HR management. That model is the combination of skill, knowledge, attitude and behavior owned by each employee to perform their duties and roles on their position productively and professionally.


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2. HR Composition by education level

Education Level2015 2016 2017

BSM Outsource BSM Outsource BSM OutsourcePost Doctoral Degree 1 1

Master Degree 276 2 265 2 264 2Bachelor Degree 8,136 1,855 7,837 1,774 7,595 1,636Diploma Degree 1,059 343 999 418 947 429Senior High School 85 4,962 67 4,652 61 4,710Junior High School (others) 7 200 6 150 6 8

Total 9,564 7,362 9,174 6,996 8,874 6,785

Chart of employee composition by education level

1 1

9,991

1,402

5,047

207278

9,611

1,417

4,719

156267

9,231

1,376

4,771

14266

Post Doctoral Degree

Master Degree Bachelor Degree Diploma Degree Senior High School Junior High School (Others)

2015 2016 2017

3. HR Composition by career level

Career Level 2015 2016 2017Executive Vice President 3 2 1Senior Vice President 24 23 23Vice President 14 18 20Assistant Vice President 26 31 34General Manager 85 82 87Assistant General Manager 116 137 171Senior Manager 521 532 512Manager 247 323 300Deputy Manager 501 786 775Assistant Manager 1,278 990 973Associate Manager 931 846 690Senior Executive 1,170 1,248 1,281Executive 2,082 1,973 1,813Junior Executive 986 1,621 1,680Assosiate Executive 1,525 517 470Non Clerk 55 45 44Outsource 7,362 6,996 6,785Total Pegawai 16,926 16,170 15,659


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4. HR Composition by gender

YearOrganic Outsource

Female Male Total Female Male Total2017 3,573 5,301 8,874 5,086 1,445 6,7852016 3,702 5,472 9,174 5,103 1,893 6,9962015 4,045 5,519 9,564 5,242 2,120 7,362

5. Organic HR Composition

work Unit 2016 2017HEAD OFFICE 2,659 2,806REGION I / SUMATERA 1 1,019 1,032REGION II / SUMATERA 2 655 661REGION III / JAKARTA 1,545 1,639REGION IV / JAVA 1 1,177 1,199REGION V / JAVA 2 847 867REGION VI / KALIMANTAN 467 475REGION VII / EAST INDONESIA 505 495Total 8,874 9,174

RECRUITMENTRecruitment is one of important processes in identifying, finding and attracting employee candidate to fulfill organization needs set through employment planning process. To support business development and service quality improvement, BSM needs qualified employees with good competency. To fulfill that needs, BSM had conducted regular recruitment process to fulfill Staff level employee or specific recruitment program to fulfill officer level employee, as well as participate in joint recruitment activities with Parent Company and Mandiri Group.

Regular Recruitment Program:It is a recruitment program to find employee candidate in accordance to the Company’s needs. Employee candidate filter and selection based on the required qualification of employee fulfillment for Head Office, Regional Office, and BSM Branch Office work units throughout Indonesia.

This regular recruitment program is started with candidate searching step, administration selection, interview test, psychology test, cross reference process (clarify data to previous company), medical check up and until work agreement signing.

Employee fulfillment through regular program in 2017 with total new employee of 250 employees consists of 225 staff level employees, 8 officer level employees and 17 prohire employees.

Prohire employee fulfillment of 17 employees is employee fulfillment on strategic positions that requires employees with experiences in the field and based on the required qualification in BSM organization.

Recruitment flow in BSM

Specific Recruitment ProgramThis program is education program for 9 months to develop potential and talents of BSM employee candidate. To participate in this program, BSM employee candidate not only required to have good academic score but also active in student or social organization. ODP is one of the tools to prepare leader candidates of Bank Syariah Mandiri in the future (Future Leader).

In terms of employee fulfillment in accordance to organization needs, BSM also conducts long term Talent Acquisition Strategy as described below:


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No Program Type of Activity Description

1 ODP Regional National / Regional ODP Recruitment and selection process of ODP candidate is classified based on needs in Regional.

2 E-Rekrut E–Recruitment& Selection Recruitment and selection process through integrated online system with BSM website.

3 TOP (Talent Outreach Program)

a. Dedicate Graduate Campus

b. University Business Alignment

c. Corporate PR Program

Talent acquisition through cooperation with the best Universities (nationally or regionally).

Talent Acquisition by conducting business approach between BSM and campus.

Talent Acquisition through Corporate PR activities of social media.

Kriya Recruitment ProgramIntegrated working learning program (internship) managed comprehensively as part of Corporate Social Responsibility (CSR) Program implementation in education and prepare ready to work employee. Providing opportunities to Senior High School or Diploma graduates to get to know the work environment and obtain ready to work skills in banking industry. This Kriya BSM program had been approved and finalized its implementation report to Ministry of Manpower of the Republic of Indonesia Internship Unit. This program has 2 levels comprise of Kriya BSM Basic level (Junior teller) and Kriya BSM Advance level (Teller). In 2017, there were 357 students who participated in Kriya BSM Program spread in Branch Office throughout Indonesia.

Selection step for this Kriya Program is started from candidate searching and qualification, internship agreement signing, in class & job training, work practice in Branch Office, monitoring and evaluation.

ORGANIZATION AND POSITIONOrganization is effectively supporting productivity improvement, channel management, risk management and internal control functions strengthening and synergy with Bank Mandiri. Organization establishment is made based on


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work activities classification within the same business process flow to create efficiency.

BSM Human Capital Group Structure

Human Capital

Human CapitalServices Learning CenterHuman Capital

Policy & Culture

Organization Design & HC

SystemDCOR

Recruitment & Outsourcing

Management

Learning Program Development

Talent & Rewards Management

HC Operation & Services

Learning Delivery & Service

Corporate Culture Management

HC Business Partner

Learning Solution & Performance

REMUNERATION SYSTEMReward management in transaction and non-transaction and aim to individual or communal. Transactional reward is tangible reward that comes from transaction between Bank and employee in terms of income both fixed and non fixed, and various facilities. Meanwhile non transactional reward is intangible reward in terms of learning and development as well as work environment climate creation.

Non-cash appreciation is also provided massively. Hundreds of the best employees were departed to holy land for Umrah prayer. Meanwhile other employees were participated in abroad Short Course to improve their competencies and leadership debriefing.

Various facilities are launched to continuously improving employee welfare. Health insurance providence with wide coverage is improved until guarantee specific services including medical action by using advanced equipment. Employee financing scheme with low margin and long term is provided to assist employees and their families to own house and vehicle in certain positions.

Corporate culture values are redefined to support the Company’s vision and mission. Culture values implementation in daily work activities and role model from leadership also form a conducive work environment climate.


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Transactional

Indi

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1. Income:a. Fixed Incomeb. Non-fixed Income

2. Facilities:a. Applies to all employeesb. Based on criteria

Comm

unal

3. Learning and Development:• Educationanddevelopmentinworkplace• Training• PerformanceManagement• CareerDevelopment

4. Work Environment Climate:• ETHICsharedvalueimplementation• Coachingprogram• Leadership• EmployeeAspiration• TalentManagement• Workdesignandroledevelopment• Workinteractionquality• Balanceofpersonalandcareerlives

Non-Transactional


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TALENT MANAGEMENTBSM implements Talent Management program as one of the Company’s mission implementation, Developing Talent Management and Sound Work Environment.

Talent Management objectives are:1) Ensuring that Bank is able to attract, develop and

maintain talent to support the achievement of Bank’s business strategies.

2) Ensuring that Bank has leader candidate in the future who are ready to fill in the leadership pipeline to be able to management succession plan effectively to minimize operational risk.

BSM talent management process is started by identifying employee who are in High Potential (HiPo) category. HiPo employee is employee with good performance and has potential to be developed to higher level.

Next step from talent management process is alignment with succession planning to optimize talent pool utilization as successor candidate internal source. Integration between talent management and succession planning can be explained below:

1) Talent management berperan dalam pemetaan klasifikasi talent seluruh pegawai BSM ke dalam talent pool berdasarkan Talent Classification.

2) Succession planning berperan dalam sesi identifikasi dan perencanaan persiapan pegawai untuk menjadi kandidat suksesor yang bersumber dari pegawai talent pool HIPO BSM.

BSM had prepared HiPo development program individually called as Individual Development Plan (IDP). This IDP is prepared based on employee competency development on the current position or on the projected position based on the company’s strategy.

Samples of development program for HiPo are:1) Job Assignment2) Strategic Project Assignment3) Leadership Development Program4) Professional Capabilities Acceleration5) Coaching6) Mentoring


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LEADERSHIP DEVELOPMENT PROGRAMBSM is committed to continuously improving employee competency to support the Company’s strategies. One of the competency development programs is Leadership Development Program (LDP). LDP aims to prepare the Company’s leader candidates at all levels of the organization.

Leadership Development Programs taken in 2017 were:1. Staff Development Program (SDP) a program to prepare

leader candidate on supervisor level. Total employee who graduated from SDP in 2017 were 194 employees.

2. Management Development Program (MDP) a program to prepare leader candidate on manager level. Total employee who graduated from MDP in 2017 were 114 employees.

REwARD AND PUNISHMENT POLICYEmployee reward management is all types of Bank reward to employee both directly and indirectly; intrinsic or extrinsic. This approach is Bank effort to create work environment that is fun, challenging, and empowering employee through their abilities to perform outstanding performance. Therefore, employee will feel rewarded and able to improve their motivation and performance. Objective of the employee reward management is more than increasing reward nominal.

Development program taken regularly and job enrichment & job enlargement in the form of employee assignment on various projects aim to improve employee competency.

In addition to appreciation in the form of rewards, fair punishment system implementation for employee who conducts offense or irregularities to the provision in the form of reprimands, warnings and sanctions that are adjusted to the degree of offense committed.

TRAININGTo support employee competency development in accordance to the Company’s business target and focus, management organized training to employees in head office or regional office.

In 2017, there were 9,095 employees who participated in training or increased from 5,482 employees in 2016. From cost aspect, total cost disbursed reached Rp45.17 billion or increased compared to Rp37.15 billion in 2016.

Training held covering as follows:- Certification (373 employees).- Leadership (1,231 employees).- Operation and Support (2,720 employees).- Public Training (304 employees).- Retail Banking (1,891 employees).- Wholesale Banking (779 employees).- Sales and Service (228 employees).- Knowledge Sharing (1,599 employees).

In 2017, there was an increase in total learning participant for leadership program compared to 2016. Total leadership training participant is as follows:- BSP and BOP (Basic Certification Program and Basic

Operation Program). BSP participant increased from 166 in 2016 to 456 in 2017.- SDP and ODP (Senior Development Program and Officer

Development Program). SDP and ODP training participant increased from 216 in

2016 to 427 in 2017.- MDP (Manager Development Program) MDP training participant increased from 125 in 2016 to

140 employees in 2017.

Specific Training:In 2017, management also organized specific training:- High Potential (HIPO) employee training to abroad (45

employees)- Training for employee who enter pension age (102

employees)

E-LearningIn addition to face to face training, since 2007 management provided opportunities of training and learning through e-learning facility. The channel uses knowledge management portal BSM Known website.


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PT Bank Syariah Mandiri (BSM) still showed its position as sharia bank with the largest market share and assets in sharia banking industry in Indonesia. In 2017, BSM assets had reached Rp87.94 trillion, financing distributed amounted to Rp60.70 trillion, meanwhile third party fund (DPK) successfully collected from public reached Rp77.90 trillion.

GLOBAL ECONOMYWorld Bank forecasts the global economic growth will increase up to 3.1% in 2018 after the economic growth in 2017 was stronger than projected, due to continued recovery on investment, manufacture, and trading, as well as developing countries who exported commodity gained profit from the commodity price strengthening.

Meanwhile developed countries’ growth is forecasted to be lower to 2.2% in 2018, due to central bank in various countries gradually writing off their post crisis accommodation and during investment growth started to disappear. Growth in market and developing countries as a whole is projected to strengthen to 4.5% in 2018, due to continued recovery on commodity exporter. (January 2018 Global Economic Prospects Report – World Bank).

Meanwhile in East Asia and Pacific region, growth in this region is projected to decrease to 6.2% in 2018 from 6.4% in 2017. Structural slow down in China balanced the simple cycle increase in other regions. Risk on prospect becomes more balance. Stronger growth from forecasted among developed countries could cause faster growth from prospected in this region. On the negative side, increasing geopolitics pressure, increasing global protectionism, sudden tightening of global financing condition, caused a decline risk on regional prospects. Growth in China is forecasted to reach 6.4% in 2018 from 6.8% in 2017. Indonesia is projected to grow to 5.3% in 2018 from 5.1% in 2017.

ECoNoMY AND BANkiNg iNDUSTRY REViEw

Market Share BSM by Assets in 2017

Market Share BSM by Financing in 2017

Market Share BSM by DPK in 2017

BSM87.94 T;20.73%

BSM60.70 T;21.24%

BSM77.90 T;23.27%

Non BSM336.24 T;79.27%

Non BSM225.03 T;78.76%

Non BSM256.82 T;76.73%


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NATIONAL ECONOMYEconomic GrowthIndonesia economic on quarter IV 2017 grew at 5.07% (yoy), higher compared to quarter IV 2016 that was 5.03% (yoy). Economic growth in 2017 increased which supported by better economic structure and a decline in unemployment level, poverty and inequality. Economic dynamics in 2017 showed a continual Indonesia economic recovery gradually as supported by export and investment improvement. Overall, positive development on export and investment delivered great contribution on the Indonesia economic growth recovery. Indonesia economic recovery structure occurred on business field related with export, government investment and consumption shifting trend impact. Export improvement impact was shown on sub business field of plantation, some on mining and some on manufacturing industry. Meanwhile government investment on various infrastructure projects had driven the construction performance. Meanwhile, consumption pattern shifting to lifestyle and leisure had driven the accommodation and

beverages business field performance as well as information and communication business fields.

From spatial side, Sulawesi, Maluku and Papua economy grew in the midst of economic growth in Java, Kalimantan and Balinusra that slowed down and stable economic growth in Sumatera.

Continued economic recovery had driven welfare improvement. Unemployment level, poverty and inequality in 2017 decreased. Unemployment level was recorded decreasing, apart the informal manpower portion that was quite high. Poverty decreased was influenced by low inflation including stability of basic commodity price and impact on income limited improvement.

With that concern, Bank Indonesia projected the economic growth in 2018 on the level of 5.1-5.5%. That economic


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growth will be supported by investment in line with the continued infrastructure project and increasing non building investment including private investment, especially machine and equipment. In addition, export is forecasted to keep growing high in line with the world economic recovery and high commodity price.

Source: Badan Pusat Statistilk

Inflation RateOn December 2017, inflation was 0.92%, lower than same period in the last three years. Inflation pressure was quite under control with the inflation increase that was more sourced from cyclical influences related to increasing year-end demand. That matter was shown from the increasing volatile food inflation especially due to rising prices of red chili and rice as well as administered prices inflation pressure that was driven by increasing price of various cigarettes and household fuels.

With that progress, Bank Indonesia (BI) believed the inflation at the end of 2018 was projected to be on the level of 3.5+1%. Government and Bank Indonesia will strengthen the inflation controlling, among others as risk anticipation on the inflation pressure increase, especially that sourced from volatile food.

Source: Badan Pusat Statistilk

Exchange RateRupiah exchange rate strengthened on quarter IV 2017 (Rp13,537 per USD), in line with the regional currency weakened due to broad based US Dollar currency strengthening. US dollar currency strengthening towards other world currencies was supported by continued improvement of US economic, balance sheet reduction realization, and FFR increase.

BI predicted the rupiah exchange rate in 2018 to be on the range of Rp13,400–Rp13,700. However, Bank Indonesia will always aware on the increasing uncertainty risk of global financial market and will take stabilization actions of exchange rate to be in line with its fundamental value by maintaining the market mechanism.

BI 7-Day Reverse Repo RateTo improve monetary policy transmission effectiveness, starting from August 19, 2016 Bank Indonesia (BI) used BI 7-day Reverse Repo Rate (BI 7-day RR Rate) as policy interest rate replacing BI rate. In addition, BI will also maintain the symmetric and narrower interest rate corridor, which is the bottom limit of Deposit Facility (DF Rate) interest rate corridor and top limit of Lending Facility (LF Rate) interest rate corridor on 75 bps below and above BI 7-day RR Rate respectively.

Board of Governor of Bank Indonesia’s meeting on February 14-15, 2018 decided to maintain BI-7 day Reverse Repo Rate to stay at 4.25% with Deposit Facility interest rate stayed at 3.50% and Lending Facility of 5.00%. With various risks that need to be aware, both from external such as uncertainty increase on global financial market related to expected higher increase of Fed Fund Rate (FFR) from forecasted and increasing world oil price, or from domestic related to continuous consolidated corporation, and from banking intermediary that was not strong enough and inflation risk. Bank Indonesia will continuously optimizing the mix of monetary policy, macro prudential, and payment system to maintain the balance between macro economy stability and financial system with on going economic recovery.

NATIONAL BANKING INDUSTRYTotal banking assets until the end of December 2017 reached Rp7,387 trillion. That achievement grew by 9.77% year on year or 4.34% year to date).


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Banking third party fund (DPK) growth on December 2017 was relatively slower than previous month, even though total tie deposit showed a growth. Bank Indonesia recorded bank’s total DPK collected on December 2017 reached Rp5,289 trillion, grew by 9.4% year on year (yoy). That growth was relatively slower than on December 2016 that was 9.6% yoy. On the other side, total time deposit also increased to Rp2,355 trillion or grew by 8.98% yoy, increased from previous year’s growth of 6.5%. That deposits growth was mainly due to growth on rupiah denomination that grew from 7.3% yoy to 9.3%.

Banking loan distribution on December 2017 was Rp4,738 trillion or grew by 8.2% (yoy). Investment Credit growth was driven by growth on load distributed to social/public service and construction sector to 24.2% and 20.6% respectively. At the end of December 2017, consumption credit was Rp1,335 trillion or increased by 11.0%, slightly higher than growth in previous month of 8.8%. Growth in consumption credit mainly occurred on housing loan (KPR) growth. KPR and KPA (Apartment loan) growth was recorded increased from 8.0% on previous period to 11.0% on December 2017. Until the end of 2018, credit is projected to grow to 10% up to 18% and non-performing loan (NPL) ratio is projected to be below 3%. Meanwhile currently, non-performing loan (NPL) was at 2.6% at the end of December 2017, better than the same period of previous year that was 2.9%.

SHARIA BANKING INDUSTRYUntil the end of 2017, bank who conducts business activities based on sharia principle reached 201 banks that comprises of 13 sharia commercial banks and 21 sharia business units as well as 167 sharia BPR.

Sharia Banking Performance 2017(Trillion Rupiah)

424.00

335.00

286.00

Asset DPK Financing

Sharia banking assets until the end of 2017 was Rp424 trillion grew by 18.98% (yoy) from position at the end of 2016 that was Rp357 trillion. In line with that growth, market share of sharia banking assets towards national banking assets was 5.44%.

Until the end of 2017, sharia banking DPK was Rp335 trillion grew by 19.83% (yoy) from position at the end of 2016 that was Rp279 trillion. Market share of sharia banking DPK towards national banking DPK was 6.33%.

From financing side, until the end of 2017 was Rp286 trillion grew by 15.21% (yoy) from position at the end of 2016 that was Rp248 trillion. Market share of sharia banking financing towards national banking was 6.03%.

Meanwhile, quality of sharia banking financing as reflected from gross Non Performing Financing (NPF) ratio started to improve from 4.16% at the end of 2016 to 3.87% at the end of December 2017.


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MARKET SHAREMarket Share from Assets AspectIn the midst of sharia banking industry tight competition until the end of 2017, Bank Syariah Mandiri (BSM) still hold the largest market share with position amounted to Rp87.94 trillion. From total assets aspect, BSM market share decreased, from 22.11% to 20.73%.

Table of BSM Assets Market Share towards Sharia Banking Assets (in Billion Rupiah)

Asset 2016 2017 GrowthMarket Share

BSM 78,832 87,940 11.55% 20.73%

Non BSM 277,672 336,241 21.09% 79.27%

Sharia Banking 356,504 424,181 18.98% 100.00%

Chart of BSM Assets Market Share towards Sharia Banking Assets

ASSET 2017 ASSET 2016

BSM22.11%

BSM20.73%

Non BSM79.27%

Non BSM77.89%

Third Party Fund (DPK) Market ShareOn DPK segment, BSM market share also experienced a decline in 2017 to 23.27% from DPK market share in 2016 that was 25.04%. In position, total DPK of BSM in 2017 reached Rp77.90 trillion.

Table of BSM DPK Market Share towards Sharia Banking DPK (in Billion Rupiah)

DPK 2016 2017 GrowthMarket Share

BSM 69,950 77,903 11.37% 23.27%

Non BSM 209,385 256,816 22.65% 76.73%

Sharia Banking 279,335 334,719 19.83% 100.00%

Chart of BSM DPK Market Share towards Sharia Banking DPK

DPK 2017 DPK 2016

BSM25.04%

Non BSM74.96%

BSM23.27%

Non BSM74.96%

Saving Account Market ShareUntil 2017, BSM successfully collected public fund through saving account product amounted to Rp31.39 trillion, grew by 13.13% from position at the end of 2016 amounted to Rp27.75 trillion. In 2017, Indonesia sharia banking (BUS and UUS) collected fund through saving account amounted to Rp98.45 trillion, increased compared to 2016 position amounted to Rp85.19 trillion. In 2017, BSM still leaded the saving account market share by 31.89% from saving account total fund in sharia banking.

Table of BSM Saving Account Market Share Growth towards Sharia Banking Saving Account (in Billion Rupiah)

Saving Account 2016 2017 GrowthMarket Share

BSM 27,751 31,394 13.13% 31.89%

Non BSM 57,437 67,054 16.74% 68.11%

Sharia Banking 85,188 98,449 15.57% 100.00%

Chart of BSM Saving Account Growth Market Share towards Sharia Banking Saving Account (in Billion Rupiah)

Saving Account 2017

Saving Account 2016

BSM31.89%

Non BSM68.11%

BSM32.58%

Non BSM67.42%


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Chart of BSM Current Account Growth Market Share towards Sharia Banking Current Account (in Billion Rupiah)

GIRO 2017 GIRO 2016

BSM24.77%

Non BSM75.23%

BSM22.38%

Non BSM77.62%

Financing Market ShareOn December 2017, BSM financing reached Rp60.70 trillion towards BSM financing in 2016 that was Rp55.58 trillion. On the same period, sharia banking financing (BUS and UUS) grew by 9.20% from Rp248.01 trillion in 2016 to Rp285.72 trillion. BSM financing market share towards sharia banking financing decreased from 22.41% in 2016 to 21.24% in 2017.

Table of BSM Financing Market Share towards Sharia Banking Financing (in Billion Rupiah)

Financing 2016 2017 GrowthMarket Share

BSM 55,580 60,695 9.20% 21.24%

Non BSM 192,427 225,027 16.94% 78.76%

Sharia Banking 248,007 285,722 15.21% 100.00%

Chart of BSM Financing Market Share towards Sharia Banking Financing

Financing 2017 Financing 2016

BSM22.41%

BSM21.24%

Non BSM78.76%

Non BSM77.59%

Time Deposit Market ShareUntil 2017, BSM successfully collected public fund through time deposit product amounted Rp37.55 trillion, grew by 6.46% from position at the end of 2016 amounted to Rp35.27 trillion. In 2017, Indonesia sharia banking (BUS and UUS) collected fund through time deposit amounted to Rp198.23 trillion, increased compared to 2016 position amounted to Rp166.17 trillion. In 2017, BSM still leaded time deposit market share by 19.13% from total time deposit in sharia banking.

Table of BSM Time Deposit Growth Market Share towards Sharia Banking Time Deposit (in Billion Rupiah)

Time Deposit 2016 2017 GrowthMarket Share

BSM 35,269 37,548 6.46% 19.13%

Non BSM 130,905 158,678 21.22% 80.87%

Sharia Banking 166,174 196,226 18.08% 100.00%

Chart of BSM Time Deposit Growth Market Share towards Sharia Banking Time Deposit (in Billion Rupiah)

Time Deposit 2017 Time Deposit 2016

BSM21.22%

BSM19.13%

Non BSM80.87%

Non BSM78.78%

Current Account Market ShareBSM current account on December 2017 grew by 29.31% from Rp6.93 trillion in 2016 to Rp8.96 trillion. On the same period, sharia banking current account (BUS and UUS) increased from Rp27.97 trillion to Rp40.05 trillion. In 2017, BSM current account market share was 22.38% towards sharia banking total current account.

Table of BSM Current Account Growth Market Share towards

Sharia Banking Current Account (in Billion Rupiah)

Current Account 2016 2017 GrowthMarket Share

BSM 6,930 8,961 29.31% 22.38%

Non BSM 21,043 31,084 47.72% 77.62%

Sharia Banking 27,972 40,045 43.16% 100.00%


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BUSINESS PROSPECTBank financial projection based on realization in 2017 as based figured as well as assumptions that underlie the banking industry development review is as follows:

Economy and financial indicator projection

Description 2018 2019 2020

Economic Growth 5.60% 6.10% 6.20%

Inflation rate 4.50% 4.50% 4.50%

Rp/USD exchange rate 13.200 13.300 13.200

7-Day Reverse Repo Rate 4.50% 4.50% 4.50%

Source: Office of Chief Economist Bank Mandiri

Social Politic ConditionYear 2018 is political year for Indonesia since Local Leaders Election (Pilkada) will take place concurrently on June 27, 2018. Pilkada will be taken in 171 regions to select 17 governors, 115 regents, and 39 mayors. It means that Pilkada 2018 will take place in half of the total provinces in

Indonesia (34 provinces) or there will be 140,085,308 voters. Regionally, there are 8 provinces within West Indonesia region (North Sumatera, Riau, South Sumatera, Lampung, West Java, Central Java, East Java, Bali) and 9 provinces in East Indonesia (West Nusa Tenggara, East Nusa Tenggara, West Kalimantan, East Kalimantan, South Sulawesi, South East Sulawesi, Maluku, North Maluku, Papua). Banking needs to pay attention on the equal location spread and has to be more prudent in performing their business activation in the region, especially in West Java, Central Java and East Java.

Macro Economy ConditionIn 2018, government will encourage growth in East Indonesia region, especially in border area and underdeveloped area. Development focus which is on the infrastructure improvement and development, both for connectivity and energy availability. This policy supports the regional economy improvement and equal national development.


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BANKING BUSINESS DEVELOPMENT STRATEGY FOCUS IN 2017In accordance to Corplan 2016–2020, to achieve vision and mission, BSM has five main strategy focuses that comprises of Sound & sustainable business growth; Financing quality; Fee Based Income (FBI); Productivity & Efficiency; and Contribution Margin.

Sound & sustainable business growth, Financing quality, Fee Based Income (FBI), Productivity & Efficiency, Contribution Margin

Core Business: Consumer (Griya, Pension, Payroll & Oto), Micro & pawning

Organization adjustment (Head Office & Distribution) and KPI based on

business focus

Information & Technology:IT Strategy, Digital Banking and

Operational Excellence

Human Capital: People Productivity Enhancement

Integration with Mandiri group

Learning: Competency improvement, Return on Training Investment &

Training Coverage

1. Simplification & automation of financing and operational business process

2. Collection & Recovery

3. Micro, business banking & commercial business model improvement

“The second core” Corporate: integrated with Bank Mandiri, Product Differentiation

Transaction banking & Islamic Sector Solution

Cross SellingIntegrated Sales

Efficiency program & sustainableproductivity improvement

Low Cost Fund (BSM Saving Account from 9th position to 5th position of

national bank)FBI focus: Umrah/Hajj, E-channel, Saving Account & Remittance, Pawning, Trade

Service, SAR

Five main focuses are taken through 3 Pillars, comprise of:1. Business Refocusing On this Pillar, BSM Focuses on Consumer segment

(Griya, Pension, Payroll & Oto), Micro & Pawning as Core Business. Meanwhile on the Second Core, BSM focuses on Corporation segment through Integrated With Bank Mandiri (Joint financing with Bank Mandiri) and differentiation product.

From funding aspect, BSM will focus on “low cost fund” which is saving account by improving to 5th position from 9th in national banking. Meanwhile for FBI, BSM will focus on Umrah/Hajj, E-channel, Saving Account & Remittance, Pawning, Trade Service and SAR.

BSM will also focus on Transaction Banking & Islamic Sector Solution management as well as Cross Selling through Integrated Sales.

2. Fixing The Fundamental On this pillar, BSM focuses to conduct Organization

Structure sharpening both in Head Office or Distribution and KPI adjustment as business focus. BSM will also conduct simplification and automation of operational business process and financing, collateral and recovery as well as micro, business banking and commercial business model. BSM will also conduct efficiency and HR productivity improvement continuously.

3. Strengthen Enabler On this pillar, BSM focuses on Information & Technology

which is IT Strategy, Digital Banking and Operational Excellent. From Human Capital aspect, BSM will focus on People Productivity Enhancement improvement. BSM will also synergy through integration with Mandiri Group. Meanwhile from employee development aspect, BSM will conduct competency improvement and Return on Training Investment & training Coverage.


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1. BUSINESS DEVELOPMENT IN 2017BSM continuously sharpens its business focus with higher quality and more aggressive growth, in addition to strengthening network distribution by improving productivity and expanding marketing scope. In 2017, BSM conducted consolidation to improve BSM foundation to achieve its Vision to become a Leading and Modern Sharia Bank. During the consolidation, BSM conducted fundamental improvements to support profitable long-term growth.

Strategic initiative that aims to improve Bank performance to achieve corporate plan as joint commitment is taken through key strategies in 2017 as follows:a. Improving branch productivity with strategies below: Implementation of various branch performance tools (4DX, pipeline management, contribution

margin, incentive system, etc.)Business focus determination by implementing excellent product and business strategies based on

outlet potential of each regionb. Improving HR productivity with strategies below:Back office (support) employee mapping in branch office and head office which function is diverted

to strengthen business function in region and branchTraining focus for sales and marketing

c. Reorganizing organization with strategies below:More efficient and narrower implementation of head office organization structure (focus to

support business process in branch) Implementation of 35 area manager and 2 new regional office

d. Improving low cost fund and government sukuk financing with strategies below: Improving promotion and marketing to grab low cost fund Implementing low cost fund product cross selling strategy with financing productHigher sukuk financing based on project (private placement)

e. Strengthening Risk Management and Business Model with strategies below:Determination of product focus, target market, quality assurance and implementing tools

monitoring (early warning system)Strengthening of 3 pillars function division (business, risk and operation) on financing process

f. Implementing culture and strengthening HR competency with strategies below:Roll out of PAS culture implementation (confidence, enthusiastic and spirit) nationally through

change agent and role model determination Implementation of talent management and training selling skill Implementation of religious, spiritual and Corporate Social Responsibility (CSR) program

In 2017, Bank had implemented thorough and consistent business segmentation. This continues the business segmentation strategies that just being implemented since quarter IV 2015. The criteria of Bank business segmentation is explained below:

oPERATioN REViEw PER BUSiNESS SEgMENT


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Fund Segmentation

NoBusiness Field Segmentation

Market Segmentation

Primary CriteriaSecondary Criteria Management

UnitGAS Limit

1. Retail Banking Micro Banking Third Party Funds from customers:a. Program Financingb. Financing for multifunctional purposesc. Individual financing for productive

purposes.

– Up to 200 million rupiahs

Micro Banking and Branch

Business Banking

a. Third Party Funds from individual financing customers or private business entities

Up to 25 billion rupiahs

More than 200 million rupiahs and up to 5 billion rupiahs

• BusinessBanking (non-individual)

• ConsumerDeposit (Individual)

• Branch

b. Third Party Funds from Individuals and Private and Non-Private Business Entities

More than 25 billion rupiahs

c. Third Party Funds from financing customers of:1) PKPA2) Sharia Microfinance Institutions (LKMS)3) BPRS4) Program (non micro)

Regardless of customer’s GAS and limit

Consumer Banking

a. Individual third party fundsb. Third party funds from BSM Implan

financing customersc. Third party funds from mortgage/gold

installment customersd. Third party funds from Hajj and Umrah

Advance Funds financing customers


• Consumer Deposit

• Cabang

2. Wholesale Banking

CommercialBanking

a. Third Party Funds from Private Enterprise financing customers

More than 25 billion rupiahs and up to 250 billion rupiahs


Commercial Banking• Institutional

Banking (specifically for institutional/non-lending funds (mirroring with branch)

• Branch

b. Financing for private commercial enterprises for productive purposes (not members of the borrowing group and not considered as special criteria for customers in the corporate segment)


c. Third party funds from customers:1) Regional-owned enterprises and their

subsidiaries2) Insurance3) Local Government4) Hospitals and Universities5) Pension Funds6) Securities7) National-scale foundations including the

subsidiaries8) National scale community organizations

including the subsidiaries


CorporateBanking

Funds from corporate and syndicated financing customers for private and non-private business entities



• Corporate Banking

• Institutional Banking (specifically for institutional/non-lending funds (mirroring with branch)

Third Party Funds (DPK) from:1) State-owned enterprises and their

subsidiaries2) Multinational Companies3) Public companies (go public)4) Ministries, State Institutions, Work Units

under ministries/state institutions, for example: PGN, Pelindo, etc.



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Financing Segmentation

NoBusiness Field Segmentation

Market Segmentation

Primary CriteriaSecondary Criteria

Management UnitGAS* Limit

1. Retail Banking Micro Banking a. Financing for individuals for productive purposes

b. Financing for individuals for multifunctional purposes

c. Micro program financing

– Up to 200 million rupiahs

Micro Segment Management Unit, Branch

Business Banking

a. Financing for individuals or private business entities for productive purposes

Up to 25 billion rupiahs

More than 200 million rupiahs and up to 5 billion rupiahs

Micro Segment Management Unit, Branch

b. Financing for individuals or private business entities for productive purposes (not members of the borrowing group and not considered as special criteria for customers in the commercial segment)


1) Cooperative Financing (including for its members with productive & consumptive purposes)

2) Financing for Sharia Microfinance Institutions (Linkage)

3) BPRS4) Program financing (non-micro)


c. Productive financing for Hajj & Umrah travel agents and their supply chains

Consumer Banking

Financing for individuals for consumptive/multifunctional purposes

Consumer Segment Management Unit (including mortgage and hajj advance fund management), CFBC/CFBO, Branch

2. Wholesale Banking

Commercial Banking

a. Financing for private business entities More than 25 billion rupiahs and up to 250 billion rupiahs


Commercial Segment Management Unit, Branch

b. Financing for private business entities for productive purposes (not members of the borrowing group and not considered as special criteria for customers in the corporate segment)


1) Regional-owned enterprises and their subsidiaries

2) Local Government3) Multi-finance companies4) Financing for subcontractors through

supply chain financing patterns


Corporate Banking

a. Financing for private business entities More than 250 billion rupiahs


Corporate Segment Management Unit

1) State-owned enterprises and their subsidiaries

2) State Institutions3) Multinational Companies4) Bank and non-bank financial institutions

outside multi-finance companies5) Syndication financing6) Public Companies7) Securities


b. Institution for the member’s consumptive financing (BSM Implan financing)

c. Gold mortgage/installment product

d. Umrah and Hajj advance funds


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2. BUSINESS SEGMENTATION Bank had taken segmentation process with aim to improve Bank business volume by classifying existing market potential to categories with the same characteristic (desire, strengths and purchasing power). That will ease Bank in drafting marketing and promotion strategies as well as creating product as needed, so the segmentation will strengthen Bank positioning in industry. Classification in this segment aim to improve Bank performance to focus on customer characteristic and eliminate risk on that segment.

3. RETAIL BANKING BUSINESS SEGMENT Overview of Retail Banking Business SegmentRetail banking segment is Bank priority and business focus that comprises of micro, business banking and consumer segmentation. In 2017, management decided to make Retail Banking as segment focus (Core). Retail Banking business segment management focus is distributing financing to individual customer such as third party fund, payment transaction and other transactions owned by Retail customer. The explanation of retail banking segmentation is as follows:

RETAILBANKINGM

ICRO

BANKING BUSINESS BAN

KIN

G

CONSUMER BANKING

a. MICRO BANKING Financing distribution on micro segment to drive

economic growth in real sector and support government program in absorbing manpower. BSM is committed to serve micro segment that comprises of financing and retail fund. Financing plafond for micro banking segment is up to Rp200 million.

In addition, financing distribution to micro segment is in line with PBI provision No. 17/12/PBI/2015 concerning

Credit or Loan Providence by Commercial Bank and Technical Assistance in Developing Micro, Small and Medium Enterprise in which the financing portfolio to SMEs segment for each bank is minimum 20%.

Until the end of 2017, Micro Unit outlet had been operated amounted to 504 outlets and 58 Micro Banking Area Units spread throughout Indonesia region.

Main target of Micro Unit market is individual customer, both individual and alliance that need productive financing of investment/capital and multi purpose up to Rp200 million. Sample of customer in this category is grocery stores, food stalls, market booths, motor vehicle workshop/accessories service, midwives/doctors/pharmacies/drug stores, as well as program cluster according to regional potential.

Chart of Micro Banking Financing (in billion Rupiah)

4,181

4,297

2016 2017

Micro Financing Grow

2.78%

In 2017, financing of micro banking segment grew by Rp110 billion from Rp4,181 billion to Rp4,297 billion or grew by 2.78%. In 2017, in line with macro economy condition, micro banking segment performance focused on consolidated quality improvement and segment target focus.

b. BUSSINESS BANKING Small and Medium Enterprise (SME) segment also

serves as Bank business focus to support government’s key program and encourage economic growth in real sector. This is in line with market potential, in which the enterprises in Indonesia are mostly SME. Bank service on business banking segmentation including financing and retail fund. Total financing for business banking segment is above Rp200 million until Rp5 billion.


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Chart of Business Banking Financing (in billion Rupiah)

9,780

8,916

2016 2017

Business Banking focuses on Consolidation

Small/Business Banking Segment financing experienced a negative growth of 8.83% or Rp864 billion from Rp9,780 billion to Rp8,916 billion. For this segment, management still also focused on consolidated quality improvement.

Financing provided through linkage pattern, PKPA, and Business to consumer financing. In 2017, BSM started to target supply chain and directed the target to education and social sector.

c. CONSUMER BANKING Consumer segment aims to fulfill non productive needs

of customers or public. In 2017, in line with the Company’s business development, the Consumer segment became Core target meanwhile the second core was Corporate.

This segment also becomes Bank business focus due to relatively high market potential of this segment, among others basic needs fulfillment through housing/griya financing and multi purpose needs such as implant financing, vehicle/oto and so on. In addition, consumer banking in Sharia bank also serves gold pawning/installment and umrah and hajj service. Bank service on consumer banking segmentation comprises of non productive financing and retail fund.

With the entrance of Bank Syariah Mandiri as BO2 Bank, then BSM started to targeted government institution including SOEs. To accelerate business process and also synergy, then in 2017, management implemented automotive financing together with Mandiri Tunas Finance.

Chart of Consumer Banking Financing (in billion Rupiah)

16,817

21,097

2016 2017

Consumer Banking financing grew by 25.45%

Consumer segment financing performance that consists of consumer financing and pawning, grew by 25.45% (year on year) or Rp4,280 billion from Rp16,817 billion to Rp21,097 billion.

RETAIL BANKING BUSINESS SEGMENT PERFORMANCERetail Banking Financing PerformanceIn 2017, Retail Banking financing performance reached Rp34.31 trillion, grew by Rp3.53 trillion or 11.48% compared to Retail Banking financing performance in 2016 that was Rp30.78 trillion.

Chart of Retail Banking financing(in billion Rupiah)

30,778

34,310

2016 2017

Retail banking financing grew by 11.48%

Table of Retail Banking Financing (in billion Rupiah)

No. Sub Segment 2016 2017 ∆ Nominal ∆ %

1Business Banking (SMEs)

9,780 8,916 (864) (8,83)

2 Micro Banking 4,181 4,297 116 2.78

3Consumer Banking

14,711 18,737 4,026 27.37

Total 30,779 34,310 3,531 11,47

In term of composition, Retail Banking achievement was contributed by Business Banking financing amounted to


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Rp8.92 trillion or 25.99%, Micro Banking financing amounted to Rp4.30 trillion or 12.52% and Consumer Banking financing amounted to Rp21.10 trillion or 61.49%.

Retail Banking Funding Performance Retail Banking funding performance in 2017 grew by 14.17% to Rp51.05 trillion from Rp45.11 trillion in 2016. Funding performance of this segment was majority supported by Retail Deposit performance that reached Rp49.23 trillion.

Chart of Retail Banking Funding(in billion Rupiah)

45,112

51,504

2016 2017

Table of Retail Banking Funding (in billion Rupiah)

No. Description 2016 2017 ∆ Nominal ∆ %

1 Business Banking 1,804 1,818 14 0.78

Current Account 603 612 9 1.49

Saving Account 671 672 1 0.15

Time Deposits 531 534 3 0.56

2 Micro Banking 404 452 48 11.86

Current Account 4 3 (1) (25.00)

Saving Account 349 401 52 14.90

Time Deposits 51 48 (3) (5.88)

3 Retail Deposite 42,904 49,234 6,330 14.75

Current Account 3,728 4,140 412 11.05

Saving Account 24,802 28,327 3,525 14.21

Time Deposits 14,374 16,766 2,392 16.64

Total 45,112 51,504 6,392 14.17

Meanwhile funding performance in 2017 on Retail Banking segment reached Rp51.50 trillion or in terms of position was 65.80% towards total funding amounted to Rp78.28 trillion. Bank funding of Retail Banking segment was from Third Party Fund (DPK) with composition as follows: Time Deposit amounted to Rp17.35 trillion or with portion of 33.68%,

Current Account amounted to Rp4.75 trillion or with portion of 9.23% and Saving Account amounted to Rp29.40 trillion or with portion of 57.09% towards total DPK of Retail Banking segment.

Fee Based Income Retail Banking Fee Based income for Retail Banking segment in 2017 reached Rp626.41 billion or increased by 8.90% towards total Fee Based income on Retail Banking segment in 2016 that was Rp575.21 billion. In terms of position, Retail Banking Fee Based was from BBG amounted to Rp1.45 billion (0.23%, CHG amounted to Rp23.48 billion (3.75%), PWG amounted to Rp276.37 billion (44.12%), RDG amounted to Rp216.73 billion (34.60%) and EBG amounted to Rp109.83 billion (17.53%).

Tabel FeeBased Retail Banking (in billion Rupiah)

Description 2016 2017 ∆ Nominal ∆ %

BBG 1.47 1.45 (0.01) (0.86)

CHG 16.53 23.48 6.95 2.06

PWG 226.72 276.37 49.65 21.90

RDG 224.34 216.73 (7.61) (3.39)

EBG 107.61 109.83 2.21 2.06

Retail 575.21 626.41 51.21 8.90

INCOME AND PROFITABILITY OF RETAIL BANKING BUSINESS SEGMENTIn 2017, profit sharing income on Retail Banking segment reached Rp4.36 trillion, increased by 11.89% from retail segment income in 2016 that was Rp3.89 trillion. In terms of position, that profit sharing income was from BBG amounted to Rp1.08 trillion (24.67%), MBG amounted to Rp817 billion (18.75%), PWG amounted to Rp331 billion (7.60%), and CHG amounted to Rp2.13 trillion (48.97%). Meanwhile net profit sharing on Retail Banking in 2016 reached Rp1.97 trillion. In terms of position, net profit sharing was from BBG amounted to Rp419 billion (13.99%), MBG amounted to Rp511 billion (17.06%), PWG amounted to Rp193 billion (6.44%), CHG amounted to Rp893 billion (29.81%), and RDG amounted to Rp981 billion (32.74%).


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Table of Retail Banking Income in 2016 (in billion Rupiah)

Description

2016 2017 ∆

Profit Sharing Income

Net Profit Sharing


Net Profit Sharing


Net Profit Sharing

BBG 1,078 329 1,075 419 (3) 90

MBG 760 442 817 511 57 69

PWG 272 160 331 193 59 33

CHG 1,785 626 2,134 893 349 267

RDG - 419 - 981 - 1

Retail 3,895 1,975 4,358 2,996 463 1,021

Profitability of Retail Banking Business SegmentOperating Profit before PPAP/CKPN of Retail Banking business segment in 2017 reached Rp1,167.64 billion. In terms of position, contribution of operating profit before PPAP/CKPN from Retail banking business segment was 59.56% towards operating profit before PPAP/CKPN Bank in 2017.

Table of Retail Banking Profitability in 2017

No. Description

Retail Banking

Business Micro Consumer PawningRetail

DepositTotal

A. Financing Income 386,632 497,842 893,361 192,826 - 1,970,660

- Profit Sharing Income, Sale Purchase and Lease

1,075,493 816,874 2,134,156 331,068 - 4,357,592

- FTP Expenses Allocation (688,862) (319,033) (1,240,795) (138,243) - (2,386,932)

B. Securities Income - - - - - -

- Securities Profit Sharing Income - - - - - -

- FTP Expenses Allocation - - - - - -

C. Placement with Other Bank Income - - - - - -

- Placement with Other bank Profit Sharing Income

- - - - - -

- FTP Expenses Allocation - - - - - -

D. Funding Income 32,113 12,877 - - 980,525 1,025,515

- FTP Income Allocation 59,063 20,431 - - 2,564,497 2,643,991

- Third Party Rights on Temporary Syirkah Profit Sharing Fund

(26,950) (7,554) - - (1,583,972) (1,618,476)

E. Sub debt Expenses - - - - -

F. Net Margin Income 418,745 510,719 893,361 192,826 980,525 2,996,174

G. Fee Based Income 13,622 - 7,829 267 219,167 240,884

H. Operating Income before Overhead 432,366 510,719 901,189 193,093 1,199,692 3,237,059

I. Overhead Expenses (108,343) (263,663) (314,372) (139,728) (938,202) (1,764,308)

J. Operating Profit/Loss before PPAP/CKPN 324,023 247,056 586,817 53,365 261,490 1,472,751

K. PPAP/CKPN Expense (168,058) (23,918) (112,147) (988) - (305,110)

L. Profit/Loss 155,965 223,138 474,670 52,377 261,490 1,167,641


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4. wHOLESALE BANKING BUSINESS SEGMENT wHOLESALE BANKING BUSINESS SEGMENT OVERVIEwWholesale banking segmentation aims to customer who has financial transaction that is relatively high and the average customer are business entity or company. Classification in this segment aims to clear and measure customers achievement with big transaction amount/value.

Wholesale Banking is product and service in Commercial Banking and Corporate Banking Unit. Focus of Wholesale business segment management is to distribute financing and third party fund to business entity, and payment transaction as well as other transactions owned by wholesale customer (Letter of Credit, Guarantee Bank and Cash Management).

In 2017, wholesale segment is bank business core with segment target of government institution and SOEs through infrastructure projects. By entering infrastructure segment, BSM policy to support government program in developing infrastructure for the nation.

The explanation of wholesale banking segmentation is as follows:

wHOLESALE

COMMERCIAL BANKING

CORPORATE BANKING

a. COMMERCIAL BANKING Bank to improve business target achievement is also

supported by commercial customer, by distributing working capital financing and investment. This financing can be used for capital goods, infrastructure project and new business establishment. In addition to distributing financing, commercial banking also conducts third party fund collection activities and improving fee base through

trade finance transaction. Total financing for commercial banking sub segment with limit above Rp5 billion up to Rp50 billion.

In 2017, Commercial Banking determined key sectors that comprise of education service, healthcare service and multi finance. With products offered comprising of working capital financing, investment financing and cash management.

In 2017, commercial banking financing performance reached Rp5.89 trillion, grew by Rp319 billion or 5.72% compared to commercial banking financing performance in 2016 that was Rp5.57 trillion.

Chart of Commercial Banking Financing (in billion Rupiah)

5,572

5,891

2016 2017

Commercial Banking Financing grew by 5.73%

b. CORPORATE BANKING In addition to supported by commercial segmentation,

Bank also provides service to corporate segmentation that aims to big or core customers of the Bank for investment, working capital and third party fund collection to improve business target achievement. In addition to distribution financing and third party fund, corporate banking also conducts business activities to improve fee base through trade finance transaction.

In 2017, corporate segment targeted infrastructure financing with SOEs.

In 2017, corporate banking financing performance reached Rp20.24 trillion, grew by Rp1.04 trillion or 5.44% compared to corporate banking financing in 2016 that was Rp19.20 trillion.


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Chart of Corporate Banking Financing (in billion Rupiah)

19,195

20,239

2016 2017

Corporate Banking Financing grew by 5.44%

PERFORMANCE OF wHOLESALE BANKING BUSINESS SEGMENTwholesale Banking Financing PerformanceIn 2017, wholesale banking financing performance reached Rp26.13 trillion, grew by Rp1.36 trillion or 5.50% compared to wholesale banking financing performance in 2016 that was Rp24.77 trillion.

Chart of wholesale Banking Financing (in billion Rupiah)

24,767

26,129

2016 2017

Wholesale Banking Segment Financing grew by 5.5%

In terms of composition, wholesale banking achievement was contributed by Corporate Banking financing amounted to Rp20.24 trillion or 77.45% and Commercial Banking financing amounted to Rp5.89 trillion or 22.55%.

Table of wholesale Banking Financing (in billion Rupiah)

work Unit 2016 2017 ∆ Nominal ∆ %

Corporate Banking 19,195 20,239 1,044 5.44

Commercial Banking 5,572 5,891 319 5.73

Wholesale Banking 24,767 26,129 1,362 5.50

wholesale Banking Funding PerformanceFunding performance in 2017 on Wholesale Banking segment reached Rp26.77 trillion or grew by 7.63% compared to Wholesale Banking segment in 2016 that was Rp24.87 trillion. Bank funding of Wholesale Banking was from Third Party Fund (DPK) with composition as follows: Time Deposits amounted to Rp20.29 trillion or with portion of 75.80%, Current Account amounted to Rp4.61 trillion or with portion of 17.23% and Saving Account amounted to Rp1.87 trillion or with portion of 6.98% towards total DPK of Wholesale Banking segment.

Table of wholesale Banking Funding Performance (in billion Rupiah)

No. work Unit 2016 2017∆

Nominal∆%

wholesale 24,873 26,772 1,899 7.63

Current Account 2,584 4,611 2,027 78.44

Saving Account 1,959 1,868 (91) (4.65)

Time Deposit 20,330 20,293 (37) (0.18)

1 CB 1 876 1,061 185 21.12


Saving Account 4 3 (1) (25.00)

Time Deposit 409 85 (324) (79.22)

2 CB 2 1361 1798 437 32.11


Saving Account 957 889 (68) (7.11)

Time Deposit 167 216 49 29.34

3 CMG 572 616 44 7.69


Saving Account 122 122 - -

Time Deposit 154 126 (28) (18.18)

4 IBG 22,061 23,297 1,236 5.60

Current Account 1,586 2,577 991 62.48

Saving Account 876 854 (22) (2.51)

Time Deposit 19,600 19,866 266 1.36

wholesale Banking Fee BasedFee Based income for Wholesale Banking segment in 2017 reached Rp150.21 billion or increased by 119.41% compared to Fee Based Income of Wholesale Banking in 2016 that was Rp68.46 billion. In terms of position, Fee Based of Wholesale Banking was from CB amounted to Rp69.41 billion (46.21%), CMG amounted to Rp42.01 billion (27.97%), PTG amounted to Rp66.00 billion (43.94%) and TIG amounted to Rp37.34 billion (24.86%).


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Table of wholesale Banking Fee Based (in billion Rupiah)

No. work Unit 2016 2017 ∆ Nominal ∆ %

1 CB 19.76 69.41 49.65 251.27

2 CMG 26.10 42.01 15.91 60.96

3 TIG 21.11 37.34 16.23 76.88

4 PTG 37.08 66.00 28.92 77.99

Wholesale 68.46 150.21 81.75 119.41

wHOLESALE BANKING INCOME PERFORMANCEIn 2017, profit sharing income on Wholesale Banking segment reached Rp2.23 trillion. In terms of position, profit sharing income from Corporate Banking amounted to Rp1.68 trillion (75.24%) and Commercial Banking amounted to Rp553 billion (24.76%). Meanwhile net profit sharing on Wholesale Banking segment in 2017 reached Rp668 billion. In terms of position, net profit sharing from Corporate Banking amounted to Rp497 billion (74.40%) and Commercial Banking amounted to Rp170 billion (25.45%).

Table of wholesale Banking Income Performance (in billion Rupiah)

Description

2016 2017 ∆


Net Profit Sharing


Net Profit Sharing


Net Profit Sharing

Corporate Banking 1,316 158 1,680 497 364 339

Commercial Banking

632 152 553 170 (79) 18

wholesale Banking

1,948 310 2,233 668 285 358

PROFITABILITY OF wHOLESALE BANKING BUSINESS SEGMENTOperating profit before PPAP/CKPN of Wholesale Banking business segment in 2017 reached Rp792.95 billion. In terms of position, contribution of operating income before PPAP/CKPN from Wholesale Banking business segment was 40.65% towards operating profit before PPAP/CKPN Bank in 2017.

Table of wholesale Banking Profitability

No. Descriptionwholesale Banking

Corporate Institutional Commercial Total

A. Financing Spread 467,946 - 154,155 622,101

- Profit Sharing Income 1,680,015 - 552,592 2,232,606

- FTP Expenses (1,212,069) - (398,436) (1,610,505)

B. Securities Income - - - -

- Profit Sharing Income - - - -

- FTP Expenses - - - -

C. Placement with Other Bank Income - - - -

- Profit Sharing Income - - - -

- FTP Expenses - - - -

D. Funding Spread 29,179 122,955 16,321 168,455

- FTP Income 53,566 1,399,290 32,357 1,485,214

- Profit Sharing Fund (19,368) (1,168,653) (13,298) (1,201,319)

E. Sub debt Expenses - - - -


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No. Descriptionwholesale Banking

Corporate Institutional Commercial Total

F. Net Margin Income 497,125 122,955 170,476 790,556

G. Fee Based Income 71,056 - 34,201 105,257

H. Operating Income before Overhead 568,181 122,955 204,677 895,813

I. Overhead Expenses (18,950) (26,904) (57,005) (102,859)

J. Operating Profit/Loss before PPAP/CKPN

549,231 96,051 147,672 792,954

OPERATION PERFORMANCE PER ECONOMIC SECTORIn 2017, BSM had distributed financing on economic sector reached Rp60.69 trillion. That financing was distributed to 10 economic sectors of agriculture sector, construction sector, electrical, water and gas sector, industry sector, mining sector, business service sector, social service sector, trading sector, transportation and communication sector as well as other sectors.

In terms of position, other sectors financing reached Rp6,707.81 trillion (11.07%), mining sector amounted to Rp22,834.89 trillion (37.62%), business service sector amounted to Rp5,296.68 trillion (8.73%), industry sector amounted to Rp9,130.50 trillion 15.04%), agriculture sector amounted to Rp4,109.10 trillion (6.77%), electrical, water and gas sector amounted to Rp4,054.01 trillion (6.68%), transportation and communication sector amounted to Rp3,348.65 trillion (5.52%), construction sector amounted to Rp3,182.87 trillion (5.24%), mining sector amounted to Rp1,843.88 trillion (3.04%), and social service sector amounted to Rp174.89 trillion (0.29%).

BSM as SOE subsidiary (Bank Mandiri) also participates in succeeding and supporting government program in infrastructure development by distributing financing to construction sector amounted to Rp23,182.87 trillion.

Financing Per Economic Sector in 2017 (in billion Rupiah)

DescriptionOutstanding

TotalIDR Currency USD Currency

Agriculture 4,109.10 - 4,109.10

Construction 3,182.87 - 3,182.87

Electrical, Water and gas 2,378.55 1,675.46 4,054.01

Industry 9,090.81 39.69 9,130.50

Mining 701.07 1,142.81 1,843.88

Business Service 5,274.19 22.49 5,296.68

Social Service 174.89 - 174.89

Trading 22,834.89 - 22,834.89

Transportation and Communication 2,421.87 926.78 3,348.65

Others 6,707.81 11.64 6,719.45

Total 56,876.05 3,818.86 60,694.91


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Financing Per Economic Sector in 2016 (in billion Rupiah)

KeteranganOutstanding

Total IDR Currency USD Currency

Agriculture 4,146.59 - 4,146.59

Construction 2,211.34 13,09 2,224.44

Electrical, Water and gas 2,013.52 2,096.23 4,109.75

Industry 4,021.55 203.94 4,225.49

Mining 460.12 1,265.93 1,726.05

Business Service 5,340.98 11.88 5,352.86

Social Service 93.87 - 93.87

Trading 6,235.01 44.78 6,279.79

Transportation and Communication 2,868.70 1,172.47 4,041.17

Others 23,372.52 7.69 23,380.21

Total 50,764.20 4,816.01 55,580.21


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FiNANCiAl PERFoRMANCE REViEw

78.83

87.9483.89

Des 2016 Dec 2017 Target Dec 2017

Asset (Rp Trilliun)

55.5860.58 60.58

Des 2016 Dec 2017 Target Dec 2017

Financing (Rp Trillion)

4.92%

4.53%

4.92%

Dec 2016 Dec 2017 Target Dec 2017

NPF Gross

34.68 40.36 38.03


Third Party Fund (Rp Trillion )

(49.58%) (51.80%) (51.34%)

74.0677.9069.95

67.25%70.33%

64.75%


Cash Coverage

325 365 346


Pro�t After Tax(Rp Billion)

CASA

104.83%100.18%

108.69% 108.64% 105.60%

105.19%

11.37%11.55%

9.00%

12.22%3.08%-0.39%

Discussion on Bank Financial Statements that is presented based on prevailing financial accounting in general in Indonesia (PSAK) for the years ended on December 31, 2017. The financial statements have been audited by Public Accountant Firm Tanudiredja, Wibisana, Rintis & Partners (Price Waterhouse Coopers/PWC) with an opinion that the financial statements present fairly in all material respects the financial position of PT Bank Syariah Mandiri dated 31 December 2017. The Financial position is reflected in the financial performance of cash flows, reconciliation of revenue and Profit sharing, sourcing and distribution of zakat funds, and the sources and uses of charity fund for the year ended on the date, in accordance with Financial Accounting Standards in Indonesia.

Discussion and analysis on these financial conditions are presented in several parts as follows:1. Consolidated Financial Position Statements2. Profit Loss and Other Comprehensive Income Statements3. Statement of Changes in Equity (POJK No. 10/2017)4. Cash Flow Statements5. Key Financial Ratios Statements6. Public Accountant Opinion on Annual Financial

Statements (POJK No. 10/2017)7. Commitment and Contingency Statements (POJK No.

10/2017)8. Other Financial Performance Information (POJK No.

10/2017)

1. FINANCIAL POSITION STATEMENTS PERFORMANCE

BSM continuously tries to maintain the bank’s profit and business growth sustainability. Sustainable performance is an asset for Bank to play active role in empowering employee and improving contribution in social empowerment. Therefore, BSM tries to manage assets and liabilities carefully, prudently and optimally. With that principle, BSM has adequate ability to fulfill all liabilities in time to maintain liquidity and obtain adequate income at the acceptable risk level.

87.94Trillion11.55%

60.58Trillion9.00%

77.90Trillion11.37%

7.31Trillion14.42%

Asset 2017

Financing 2017

DPK 2017

equity 2017


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In 2017, BSM successfully recorded assets amounted to Rp87.94 trillion. Financing distributed reached Rp60.58 trillion. Public fund collection through Third Party Fund performance was recorded amounted to Rp77.90 trillion. Meanwhile equity in 2017 reached Rp7.31 trillion.

Table of Financial Position Statements (in BIllion Rupiah)

Description 2016 2017Growth

Nominal %

Assets 78,832 87,940 9,108 11.55

Productive Assets 72,968 79,737 6,769 9.28

SBIS, FASBIS and Reverse Repo SBSN Placement 9,968 8,647 (1,321) (13.25)

Financing provided 55,580 60,584 5,004 9.00

Liabilities 11,233 13,531 2,298 20.46

Temporary Syirkah Fund 60,831 66,719 5,888 9.68

Issued Securities 375 375 - -

Third Party Fund 69,950 77,903 7,953 11.37

1. Current Account 6,930 8,961 2,031 29

2. Saving Account 27,751 31,394 3,463 13

3. Time Deposit 35,269 37,548 2,279 6.46

Ekuity 6,392 7,314 922 14.42

ASSETSBank’s assets consists of cash, current account and placement with Bank Indonesia, current account with other bank, placement with other bank, investment of securities, account receivables, qardh loan, financing, assets obtain for ijarah, temporary equity investment, fixed assets and other assets.

Chart of Assets Growth (in Billion Rupiah)

2013 2014 20162015 2017

63,965 66,956 70,37078,832

87,940

BSM assets growth for the last 5 (five) years showed a significant growth of average 8.28%. BSM assets growth position as of December 31, 2017 reached Rp87.94 trillion, grew by Rp9.11 trillion or 11.55% compared to total assets in 2016 that was Rp78.83 trillion.


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Table of Assets (in Billion Rupiah)

No Description 2016 2017Growth

Nominal %

1 Cash 1,086.57 1,135.61 49.04 4.51

2 Placements with Bank Indonesia 11,995.50 14,391.29 2,395.79 19.97

3 Placements with Other Banks 1,552.37 702.72 (849.65) (54.73)

4 Spot and Forward Receivables - - - -

5 Marketable Securities 6,906.55 10,255.56 3,349.00 48.49

6 Receivables on securities purchased under resale agreements (reverse repo) 1.009.20 - (1,009.20) (100.00)

Acceptance Receivables 114.03 98.55 (15.48) (13.57)

7 Liabilities 37,991.19 38,644.87 653.67 1.72

8 Profit sharing financing 16,489.86 21,038.96 4,549.10 27.59

9 Lease Financing 907.19 787.77 (119.42) (13.16)

10 Investment 50.33 50.33 - -

11 Provision for Impairment Losses of Productive Asset -/- (1,998.68) (1,958.16) 40.51 (2.03)

12 Intangible Assets 203.71 218.73 15.03 7.38

13 Accumulated Amortization -/- (131.48) (167.12) (35.64) 27.11

Fixed Asset and Inventory 2,034.40 1.994.40 (39.99) (1.97)

14 Accumulated Depreciation -/- (1,147.93) (1,217.40) (69.48) 6.05

Assets Among Offices 0.82 - (0.82) (100.00)

15 Deferred Tax Assets 226.04 272.71 46.67 20.65

16 Other Assets 1.542.05 1,690.95 148.90 9.66

TOTAL ASSETS 78,831.72 87,939.77 9,108.05 11.55

PRODUCTIVE ASSETS Increase in BSM total assets were majority contributed by productive assets. This can be seen from productive assets composition to total assets of 90.67%. Total productive assets increased by Rp6.77 trillion or 9.28% from Rp72.97 trillion in 2016 to Rp79.94 trillion in 2017.

(in Billion Rupiah)

2016 2017

72,968

79,737

PLACEMENT OF SBIS, FASBIS AND REVERSE REPO SBSNBank places its fund to Bank Indonesia in the form of Bank Indonesia Sharia Saving Facility (FASBIS), Bank Indonesia Sharia Certificate (SBIS), Reverse Repo and Term Deposits

Sharia Exchange Rate of Bank Indonesia. As of December 31, 2017, placement of SBIS, FASBIS and Reverse Repo SBSN amounted to Rp9.97 trillion, decreased by 13.25% to SBIS placement, FASBIS and Reverse Repo SBSN in previous year amounted to Rp9.97 trillion.

(in Billion Rupiah)

2016 2017

9,968

8,647

FINANCINGFinancing as of December 31, 2017 reached Rp60.58 trillion or grew by Rp5.00 trillion or 9.00% from position as of December 31, 2016 amounted to Rp55.58 trillion. That financing growth was followed by SME portfolio portion

Assets grew by 9.28%


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(in Billion Rupiah)

2016 2017

60,831

66,719

SUBORDINATED NOTES ISSUEDSubordinated notes issued position as of December 31, 2017 was Rp375 billion or equal to subordinated notes issued in previous year that was Rp375 billion. Bank issued subordination notes to strengthen capital.

Based on the latest rating report published on December 2017 and 2016, Bank subnotes has idAA rating from share rating agency, PT Pefindo.

(in Billion Rupiah)

2016 2017

375 375

THIRD PARTY FUND BSM successfully collected public fund throughout 2017 amounted to Rp77.90 trillion, grew by Rp7.95 trillion or 11.37% from Rp69.95 trillion in 2016. Third Party Fund (DPK) collected from public is in the form of current account, saving account and time deposit by using wadiah and mudharabah agreement.

growth. This achievement is part of BSM’s commitment to develop small and medium industry sector by improving financing portion on SME segment.

(in Billion Rupiah)

2016 2017

55,580

60,584

LIABILITIESTotal liabilities as of December 31, 2017 was Rp13.53 trillion, increased by Rp2.30 trillion or 20.46% to total liabilities as of December 31, 2016 amounted to Rp11.23 trillion. Such increase was due to increase in wadiah deposits and liabilities due immediately.

(in Billion Rupiah)

2016 2017

11,233

13,531

TEMPORARY SYIRKAH FUNDSTemporary syirkah funds portion as of December 31, 2017 reached Rp60.83 trillion, grew by Rp5.89 trillion or 9.68% compared to temporary syirkah funds position as of December 31, 2016 amounted to Rp60.83 trillion. Such increase was mainly obtained from increase in mudharabah saving, murharabah time deposit and bank temporary syirkah funds.

Financing grew by 9.00%

Temporary Syirkah Funds grew by 9.68%

Third Party Fund grew by 11.37%

Liabilities grew by 20.46%


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(in Billion Rupiah)

2016 2017

69,950

77,903

In 2017, current account increased by Rp1.10 trillion or grew by 18.86%, from Rp5.83 trillion in 2016 to Rp6.93 trillion in 2017. Saving account increased by Rp2.76 trillion or 11.03% from Rp24.99 trillion in 2016 to Rp27.75 trillion in 2017. Time deposits increased by Rp778.70 billion or grew by 12.72% from Rp31.29 trillion in 2016 to Rp35.27 trillion in 2017.

DPK 2017(in Billion Rupiah)

DPK 2016(in Billion Rupiah)

Current Account

8.96111%

Saving Account

31.39440%

Time Deposit37.548

49%

Current Account

6.93010%

Saving Account

27.75140%

Time Deposit35.269

50%

EQUITY

(In Billion Rupiah)

2016 2017

6.392

7.314

As of December 31, 2017, equity reached Rp7.31 trillion, grew by Rp922 billion or 14.42% to equity position as of December 31, 2016 amounted to Rp6.39 trillion. Such increase was mainly obtained from profit in 2016 and profit for the year.

2. PROFIT LOSS AND OTHER COMPREHENSIVE INCOME STATEMENTS

Comprehensive Profit and Loss Performance

7.29Trillion12.66%

365.17Billion12.22%

470.21Billion11.37%

income as Mudharib2017

operating income 2017

Net income 2017

In 2017, BSM successfully recorded net income amounted to Rp365.17 billion, grew by RP39.76 billion or 12.22% compared to net income in 2016 that was Rp325.41 billion. That net income growth was driven by an increase in income from fund management by Bank as Mudharib.

equity grew by 14.42%


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Table of Comprehensive Profit and Loss Report (in Billion Rupiah)

No Description 2016 2017Growth

Nominal %

1. Income from Fund Management by Bank as Mudharib 6,467.90 7,286.67 818.77 12.66

2. Third Parties’ Share on Return of Temporary Syirkah Funds 2,339,72 2,541.13 201.41 8.61

3. Bank’s Share on Return 4,128.18 4,745.54 617.36 14.95

4. Other Operating Income 860,07 943.25 83.18 9.67

5. Operating Expenses 4,545.26 5,218.59 673.33 14.81

6. Operating Income 442,99 470.21 27.22 6.14

7. Net Income 325.41 365,17 39.76 12.22

8. Comprehensive Income 278.70 421.80 143.10 51.35

9. Basic Earnings Per Share 818.00 734.00 (84.00) (10.27)

1. Income from Fund Management by Bank as Mudharib In 2017, BSM recorded Income from Fund Management

by Bank as Mudharib amounted to Rp7.29 trillion, grew by Rp818.77 billion or 12.66% compared to income from Fund Management by Bank as Mudharib in 2016 that was Rp6.47 trillion. Increase in income from Fund Management by Bank as Mudharib was due to increase in murabahah profit income, income from lease, musyarakah profit sharing income and other main operating income.

(In Billion Rupiah)

2016 2017

6,467.90

7,286.67

2. Third Parties’ Share on Return of Temporary Syirkah Funds

Third Parties’ Share on Return of Temporary Syirkah Funds is bank liabilities to fulfill third parties’ share on return of temporary syirkah funds. Third parties’ share on return of temporary syirkah funds in 2017 amounted to Rp2.54 trillion, from Rp2.34 trillion in 2016.

(In Billion Rupiah)

2016 2017

2,339.72

2,541.13

3. Bank’s Share on Return In 2017, BSM recorded Bank’s Share on Return amounted

to Rp4.75 trillion, increased by Rp617.36 billion or 14.95% compared to Bank’s Share on Return in 2016 that was Rp4.13 trillion. Increase in Bank’s Share on Return was due to an increase in time deposits profit sharing, saving account, and current account.

(In Billion Rupiah)

2016 2017

4,128.18

4,745.54

4. Other Operating Income Realization of other operating income from fee based

income from banking services and fee income from restricted investments (mudharabah muqayyadah). In 2017, other operating income reached Rp943.25 billion,


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grew by 9.67% from other operating income in 2016 that was Rp860.07 billion.

(In Billion Rupiah)

2016 2017

860.07

943.25

5. Operating Expenses Realization of operating expenses in 2017 amounted to

Rp5.22 trillion, increased by Rp673.33 billion or 14.81% compared to operating expenses in 2016 that was Rp4.55 trillion. Increase in operating expenses was due to an increase in personnel expenses an increase in provision for impairment losses on productive assets.

(In Billion Rupiah)

2016 2017

4,545.26

5,218.59

6. Operating Income Realization of operating income in 2017 reached

Rp470.21 billion, increased by Rp27.22 billion or 6.14% compared to realization of operating income in 2016 that was Rp442.99 billion.

(In Billion Rupiah)

2016 2017

442.99

470.21

7. Net Income Realization of net income in 2017 reached Rp365.17

billion, increased by Rp39.76 billion or 12.22% compared to realization of net income in 2016 that amounted to Rp325.41 billion.

(In Billion Rupiah)

2016 2017

325.41

365.17

8. Comprehensive Income In 2017, realization of comprehensive income reached

Rp421.80 billion, grew by Rp143.10 billion or 51.35% to realization of comprehensive income in 2016 that amounted to Rp278.70 billion.

9. Basic Earnings per Share In 2017, realization of basic earnings per share reached

Rp734.00, decreased by Rp84.00 or 10.27% to realization of basic earnings per share in 2016 that was Rp818.00.


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3. STATEMENT OF CHANGES IN EQUITYTable of Statement of Changes in Equity for the year ended 31 December 2017(in Million Rupiah)

DescriptionIssued and fully paid-up capital

Paid-in capital in advance

Unrealized gain/(loss) on available-for sale marketable securities, after tax

Difference on fixed assets revaluation, after tax

Actuarial gain/(loss), after tax

Appro-priated Retained Earnings

Un-appro-priated Retained Earnings

Total

Balance as at 1 January 2016

1,989,022 - 5,952 344,038 32,225 297,804 2,944,698 5,613,739

Initial implementation of allowance for impairment of losses – 1 January 2016, after tax

- - 488 - - - - 488

Capital deposit funds

- 500,000 - - - - - 500,000

Additional paid-in capital

- - - - - 100,000 (100,000) -

Employee benefit – actuarial gain/(loss), after tax

- - - - (47,204) - - (47,204)

Net income for 2016

- - - - - 325,414 325,414

Balance as at 31 December 2016

1,989,022 500,000 6,440 344,038 (14,979) 397,804 3,170,112 6,392,437


- - (4,681) - - - - (4,681)

Addition of share capital

500,000 - - - - - - 500,000

Reclassification of capital deposit funds into share capital

- (500,000) - - - - - (500,000)

Capital deposit funds

- 500,000 - - - - - 500,000


- - - - - 100,000 (100,000) -


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DescriptionIssued and fully paid-up capital



Difference on fixed assets revaluation, after tax

Actuarial gain/(loss), after tax

Appro-priated Retained Earnings

Un-appro-priated Retained Earnings

Total

Employee benefit – actuarial gain/(loss), after tax

- - - - 61,319 - - 61,319

Net Income for 2017

- - - - - 365,166 365,166

Balance as at 31 December 2017

2,489,022 500,000 1,759 344,038 46,340 497,804 3,435,278 7,314,241

4. STATEMENTS OF CASH FLOwSCash and cash equivalents at the end of 2017 amounted to Rp14.12 trillion, increased by Rp3.21 trillion or 29.38% compared to cash and cash equivalents at the end of 2016 that amounted to Rp10.91 trillion. This was mainly influenced by an increase in cash flows from operating activities of a decrease in placement with Bank Indonesia, receipts from profit sharing, sales and purchases, rent and other main operating income, as well as an increase in wadiah savings.

Statements of Cash Flows (in Billion Rupiah)


Nominal Percentage

Cash Flows from Operating Activities 1,031.51 6,191.61 5,160.10 500.25

Cash Flows from Investing Activities 950.95 (3,485.64) (4,436.59) (466.54)

Cash Flows from Financing Activities 375.00 500.00 125.00 33.33

Increase/(Decrease) in Cash and Cash Equivalents 2,357.47 3,205.97 848.50 35.99

Cash and Cash Equivalents at the Beginning of the Year 8,554.82 10,912.29 2,357.47 27.56

Cash and Cash Equivalents at the end of the Year 10,912.29 14,118.26 3,205.97 29.38

a. Cash Flows from Operating Activities Net cash flows provided from operating activities in 2017 was Rp6.19 trillion, or reached 500.25% of cash flows

provided from operating income in 2016 that was Rp1.03 trillion. This was influenced by a decrease in placement with Bank Indonesia, receipts from profit sharing, sales and purchases, rent and other main operating income, as well as an increase in wadiah savings.


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Cash Flows from Operating Activities (in Billion Rupiah)


Nominal Percentage

Receipts from profit sharing, sales and purchases, rent and other main operating income

6,366.15 7,291.60 925.45 14.54

Payments of share on return of temporary syirkah funds

(2,322.81) (2,523.03) (200.22) 8.62

Receipts from other operating and non operating income

854.26 937.94 83.69 9.80

Receipts from recovery of financing and receivable written off

509.04 679.63 170.59 33.51

Payments of personal expenses (1,433.75) (1,543.33) (109.58) 7.64

Payments of tantiem (10,48) (14.29) (3.81) 36.36

Payments of operating expenses excluding personnel expenses

(1,609.42) (1,667.54) (58.12) 3.61

Received from tax receivables 71.94 0.01 (71.94) (99.99)

Payments of tax (126.95) (98.59) 28.37 (22.34)

Payments of zakat (22.77) (24.64) (1.87) 8,19

Decrease/(increase) in operating assets (36.99) (21.35) 15.64 (42.28)

Receipts of non-operating income (0.50) (12,55) (12.05) 2,410.80

Decrease/(increase) in operating assets (8,936.42) (4,899.81) 4,036.61 (45.17)

Increase/(decrease) in operating liabilities 1,271.59 2,199.95 928.36 73.01

Increase/(decrease) in temporary syirkah funds 6,458.63 5,887.61 (571.02) (8.84)

Net cash provided from operating activities 1,031.51 6,191.61 5,160.10 500.25

b. Cash Flows from Investing Activities Net cash flows used in investing activities in 2017 was Rp3.49 trillion, increased by Rp4.44 trillion compared to cash

flows provided from investing activities in 2016. This was mainly caused by a significant increase in purchase of available-for-sale and measured at cost marketable securities.

Cash Flows from Investing Activities (in BIllion Rupiah)


Nominal Percentage

Receipts from available-for-sale and measured at cost marketable securities

1,759.28 (735.06) (2,494.34) (141.78)

Purchase of available-for-sale and at cost marketable securities

(729.63) (2,694.01) (1,964.38) 269.23

Acquisition of fixed assets (80.59) (100.86) (20.27) 25.15

Proceeds from sales of fixed assets 1.89 44.29 42.40 2,243.39

Net cash provided from/(used in) investing activities 950.95 (3,485.64) (4,436.59) (466.54)

c. Cash Flows from Financing Activities Net cash flows provided from financing activities in 2017 was Rp500.00 billion, increased by 33.33% compared to

cash flows from financing activities in 2016 that was Rp350.00 billion. Increase in financing activities in 2017 was due to paid-in capital in advance amounted to Rp500.00 billion.


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Cash Flows from Financing Activities Period 2016-2017 (in Billion Rupiah)


Nominal Percentage

Paid-in capital in advance 500.00 500.00 - -

Repayment of subordinated notes mudharabah year 2011 (500.00) - 500.00 (100.00)

Proceeds from issuance of subordinated notes mudharabah year 2016

375.00 - (375.00) (100.00)

Net cash provided from financing activities 375.00 500.00 125.00 33.33

5. KEY FINANCIAL RATIOS REPORT Capital Adequacy Ratio (CAR) Capital Adequacy Ratio (CAR) of BSM was on the level

15.89% in 2017, increased compared to CAR in 2016 that was 14.01%. Bank has implemented Minimum Capital Adequacy Obligation (KPMM) that calculates operational risk and market risk. Meanwhile capital adequacy ratio based on Financial Services Authority standard is 8%. This means that BSM still as capital adequacy in performing banking business.

14.01

15.89

2016 2017

ROE dan ROA Return on Equity (ROE) performance of BSM in 2017 was

5.71%, decreased compared to ROE in 2016 that was 5.81%. Meanwhile Return on Assets (ROA) was 0.59%, equal to ROA in 2016.

5.81

0.59 0.59

5.71

2016 2017

ROE dan ROA (%)

Net Income Margin (NIM) In 2017, net income margin ratio reached 7.35%, increased

compared to NIM ratio in 2016 that was 6.75%. This was due to an increase in Bank income and cost of fund improvement.

7.35

6.75

2016 2017

Financing Deposit Ratio (FDR) Financing Deposit Ratio (FDR) is ratio of financing

provided to third parties to deposit in Rupiah and foreign currency. Bank FDR as of December 31, 2017 and 2016 was 77.66% and 79.19% respectively.

79.19

77.66

2016 2017

Non Performing Financing (NPF) Non performing financing (NPF) – Gross in 2017 reached

4.53%, decreased compared to NPF – Gross in 2016 that was 4.92%. This showed that bank financing quality improved.


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Table of Financial Ratio Report

RatioDecember 31,

2017December 31,

2016

Performance Ratio

1 Capital Adequacy Ratio (CAR) 15.89% 14.01%

2 Non performing productive assets and non performing non productive assets to total productive assets and productive non assets

3.65% 4.00%

3 Non performing productive assets to total productive assets 3.50% 4.03%

4 Provision for Impairment Losses of financial assets to productive assets 2.46% 2.76%

5 NPF Gross 4.53% 4.92%

6 NPF Net 2.71% 3.13%

7 Return On Assets (ROA) 0.59% 0.59%

8 Return On Equity (ROE) 5.71% 5.81%

9 Net Income Margin (NIM) 7.35% 6.75%

10 Net Operating Margin (NOM) 0.61% 0.64%

11 Operating Expenses to Operating Income (BOPO) 94.44% 94.12%

12 Profit sharing financing to total financing 34.44% 29.43%

13 Financing to Deposit Ratio (FDR) 77.66% 79.19%

Compliance

1 a. Percentage of BMPD infringement

a. 1. Related Parties 0.00% 0.00%

a. 2. Unrelated Parties 0.00% 0.00%

2 b. Percentage of BMPD Exceed

b. 1. Related Parties 0.00% 0.00%

b. 2. Unrelated Parties 0.00% 0.00%

3 GWM

a. Rupiah GWM 8.05% 5.14%

b. Foreign Currency GWM 1.05% 1.23%

4 Overall Net Foreign Exchange Position (PDN) 3.16% 8.65%


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Operating Expenses to Operating Income (BOPO)BOPO ratio in 2017 reached 94.44%, increased compared to BOPO in 2016 that was 94.12%.

94.12%94.44%

2016 2017

Percentage of BMPD Infringement and ExceedIn 2017 and 2016, percentage of BMPD infringement and exceed was 0%.

Net Foreign Exchange Position (PDN) RatioPDN ratio in 2017 reached 3.16%, decreased compared to PDN in 2016 that was 8.65%.

8.65%

3.16%

2016 2017

6. OPINION FROM PUBLIC ACCOUNTANT ON ANNUAL FINANCIAL STATEMENTS

Based on opinion of Public Accountant Firm Tanudiredja, Wibisana, Rintis & Partners with Public Accountant Drs. M. Jusuf Wibisana, M.Ec., CPA., financial statements of PT Bank Mandiri Syariah present fairly, in all material respects, the financial position of PT Bank Syariah Mandiri as at 31 December 2017, its financial performance, cash flows, reconciliation of income and revenue sharing, sources and distribution of zakat funds, and sources and uses of qardhul hasan funds for the year then ended, in accordance with Indonesian Financial Accounting Standards.


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7. COMMITMENT AND CONTINGENCY REPORT (SE OJK NO. 10/2017) Table of Commitment and Contingency Report (in Million Rupiah)

No. Accounts

BANK

December 31, 2017

December 31, 2016

I COMMITMENTS RECEIVABLE

1. Undisbursed Financing Facilities

a. Rupiah - -

b. Foreign Currency - -

2. Current Position of Spot and Forward Purchases - -

3. Others - -

II COMMITMENTS PAYABLE

1. Undisbursed Customer Financing Facilities

a. Commited

i. Rupiah - -

ii. Foreign Currency - -

b. Uncommitted

i. Rupiah 643,572 869,182


2. Undisbursed Bank Financing Facilities

a. Committed

i. Rupiah - -


b. Uncommitted

i. Rupiah - -


3. Current Irrevocable L/C

a. Foreign L/C 64,723 8,065

b. Local L/C 78,381 799

4. Current Position of Spot and Forward Sales - -

5. Others - -

III CONTINGENCIES RECEIVABLE

1. Warranties Received

a. Rupiah - -

b. Foreign Currency 193,038 195,136

2. Receivables on Non-Performing Assets

a. Murabahah 200,355 199,329

b. Istishna’ 82 51

c. Lease 2,556 3,014

d. Profit Sharing 76,618 -

e. Others 65 126,828

3. Others - -


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No. Accounts

BANK

December 31, 2017

December 31, 2016

IV CONTINGENCIES PAYABLE

1. Warranties Given

a. Rupiah 41,385 45,507

b. Foreign Currency 736,437 608,896

2. Others - -

8. INFORMATION OF OTHER FINANCIAL PERFORMANCE (SE OJK NO. 10/2017) a. Capital Adequacy Obligation (KPMM) Table of Capital Adequacy Obligation (KPMM) (in Million Rupiah)

Description

Bank

December 31, 2017

December 31, 2016

CAPITAL COMPONENT I. Core Capital (Tier 1) 6,943,575 6,109,151

1. Common Equity Tier 1 (CET 1) 6,943,575 6,109,1511.1 Paid-in Capital (Minus Treasury Stock) 2,489,022 1,989,0221.2 Disclosed Reserves 4,778,879 4,418,394

1.2.1 Agio (Disagio) of Common Stock - -1.2.2 Contributed Capital - -1.2.3 General Reserves 497,804 397,8041.2.4 Previous Year’s Profit (Loss) That Can be Calculated 3,070,112 2,844,6981.2.5 Current Year’s Profit (Loss) That Can be Calculated * 365,166 325,4141.2.6 Exchange Rate Difference Due to the Translation of Financial Statement - -1.2.7 Capital Fund 500,000 500,0001.2.8 Issued Warrant - -1.2.9 Stock Option Issued Related to Compensation Program - -1.2.10 Other Comprehensive Income (Losses) 1,759 6,4401.2.11 Balance of Fixed Asset Revaluation Surplus 344,038 344,0381.2.12 Negative Differences between Regulatory Provision and Impairment of

Earning Assets- -

1.2.13 Required Regulatory Provision on Non-productive Assets - -1.2.14 Negative Differences on Adjustment of Fair Value on Financial

Instrument in the Trading Book- -

1.3 Minority Interest That Can be Calculated - -1.4 Deduction Factor of Tier 1 (324,326) (298,265)

1.4.1 Calculation of Deferred Tax (272,709) (226,035)1.4.2 Goodwill - -1.4.3 Other Intangible Assets (51,617) (72,230)1.4.4 Equity Investment Calculated as Deduction Factor - -1.4.5 Shortfall on the Capital of Insurance’s Subsidiary - -1.4.6 Exposure of Securitization - -1.4.7 Other Deduction Factors of Tier 1 - -1.4.8 Investment in Other Banks’ AT1 & Tier 2 Instruments - -

2. Additional Tier 1 - -2.1 Instruments That Meet AT-1 - -


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Description

Bank

December 31, 2017

December 31, 2016

2.2 Agio (Disagio) (+/-) - -2.3 Deduction Factor: Investment in Other Banks’ AT1 & Tier 2 Instruments - -

II. Supplementary Capital (Tier 2) 900,550 832,8511. Capital Instrument in the Form of Shares or Others that Meet Requirements 375,000 375,0002. Agio or Disagio Which Comes from the Issuance of Supplementary Capital

Instrument- -

3. Required General Reserves of Regulatory Provision Earning Assets (maximum 1.25% of RWA Credit Risk)

525,550 457,851

4. Specific Reserves - -

5. Deduction Factor of Supplementary Capital - -

5.1 Sinking Fund - -

5.2 Investment in Other Banks’ Tier 2 Instruments - -

Total Capital 7,844,125 6,942,002

Description

Bank

Description

Bank

December 31, 2017

December 31, 2016

December 31, 2017

December 31, 2016

RISK wEIGHTED ASSET (RwA)

CAPITAL ADEQUACY RATIO

CREDIT RISK RWA 42,030,117 42,213,944 CET1 Ratio (%) 14.07% 12.33%

MARKET RISK RWA 248,147 601,469 Tier 1 Ratio (%) 14.07% 12.33%

OPERATIONAL RISK RWA 7,071,920 6,740,505 Tier 2 Ratio (%) 1.82% 1.68%

TOTAL RWA 49,350,184 49,555,918 Capital Adequacy Ratio (%) 15.89% 14.01%

CAPITAL ADEQUACY RATIO ACCORDING TO RISK PROFILE (%)

CET1 FOR BUFFER (%) 5.90% 4.02%

FULFILLMENT ALLOCATION OF CAPITAL ADEQUACY AC-CORDING TO RISK PROFILE

BUFFER PERCENTAGE THAT HAS TO BE FULFILLED BY THE BANK (%)

From CET1 4.50% 4.50% Capital Conservation Buffer (%) 1,250% 0.625%

From AT1 0.00% 0.00% Countercyclical Buffer (%) 0.000% 0.000%

From Tier 2 1.82% 1.68% Capital Surcharge for D-SIB (%) 0.000% 0.000%

b. Provision for Impairment Losses (CKPN) and Allowances for Losses To provide security guarantee to customer on credit risk due to default debtor or other parties in fulfilling their

obligation to Bank in accordance to agreed agreement, BSM conducts provision for impairment losses (CKPN) and allowances of Productive Assets Write Off (PPAP) as stipulated in rules and regulations.

In 2017, BSM formed CKPN amounted to Rp1.99 trillion, decreased compared to CKPN in 2016 that was Rp2.01 trillion. Meanwhile PPAP in 2017 was Rp1.70 trillion, decreased compared to PPAP in 2016 that was Rp1.93 trillion. This was in line with the increase in total financing provided by BSM to society/customers.


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Table of Regulatory Provision and ILA Requirements as of December 31, 2017 and 2016 (in million rupiahs)

No POS-POS

December 2017 December 2016

CKPN PPAP wajib Dibentuk CKPN PPAP wajib Dibentuk

Individual Collective General Specific Individual Collective General Specific

1Interbank Placement

- 11 11 - - 54 54 -

2Spot and Forward Claims

- - - - - - - -

3 Owned Securities - 19,912 19,912 - - 154,374 17,374 137,000

4 Acceptance Claims - 985 985 - - 1,140 1,140 -

5Murabahah Receivables

658,946 849,000 308,712 948,052 571,356 846,188 299,048 1,044,759

6Istishna’ Receivables

- 2,239 5 2,234 - 4,912 11 4,901

7 Qardh Receivables - 8,021 5,998 2,023 - 7,749 1,909 5,840

8 Lease Receivables - 972 - 972 - 2,164 - 2,164

9Mudharabah Financing

- 38,388 31,969 6,419 - 65,586 28,343 14,574

10Musyarakah Financing

100,453 271,685 156,791 179,765 86,165 251,439 104,972 241,379

11 Other Financing - - - - - - - -

12 Equity Investment - - - - - - - -

13Temporary Equity Investment

- 7,550 - 7,550 - 7,550 - 7,550

14Commitment and Contingencies

- 32,366 7,668 24,698 - 14,257 5,000 9,257

c. Spot and Forward Transaction Table of Spot and Forward Transaction Report as of December 31, 2017 (in Million Rupiah)

No. TRANSACTION

BANK

Notional ValuePurpose Claim and Liability

Not Hedging Hedging Claim Liability

A. Related to Exchange Rates

1. Spot - - - - -

2. Forward - - - - -

3. Others - - - - -

B. Others

- - - - -

TOTAL - - - - -


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d. Profit Sharing Distribution Report Table of Profit Sharing Distribution Report Period of December 31, 2017 (in Million Rupiah)

INDICATOR

Average Balance

Revenue to Share

Portion of the Fund Owner

Ratio (%)

Bonus and Profit-

Sharing Amount

Indication of Rate of Return

A B C DE=(D / A x 100%)

x 12A. FINANCING1. Bank 190,904 1,647 2. Non Bank 54,275,762 547,520

B. FUNDRAISING

1. Wadiah Demand Deposit

a. Bank 49,393 426 34 0.83%

b. Non Bank 4,447,760 38,377 1,219 0.33%

2. Mudharabah Demand Deposit

a. Bank

b. Non Bank 2,848,288 24,576 5% 1,345 0.57%

3. Wadiah Saving

a. Bank

b. Non Bank 3,678,166 31,736 2,497 0.81%

4. Mudharabah Saving

a. Bank 282,553 2,438 34% 829 3.52%

b. Non Bank 25,690,845 221,667 19% 42,710 1.99%

5. Mudharabah Deposit

a. Bank

- 1 month 70,096 605 45% 272 4.66%

- 3 months 7,994 69 46% 32 4.76%

- 6 months 10,000 86 47% 41 4.87%

- 12 months 7,458 64 48% 31 4.97%

b. Non Bank

- 1 month 28,859,000 249,003 46% 113,788 4.73%

- 3 months 2,849,346 24,585 50% 12,196 5.14%

- 6 months 1,395,383 12,040 51% 6,094 5.24%

- 12 months 2,784,392 24,025 49% 11,761 5.07%

TOTAL 72,980,674 629,697 192,849


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e. Sources and Zakat Funds Distribution Table of Sources and Zakat Funds Distribution Report (in Million Rupiah)

No. Description December 31, 2017 December 31, 2016

1. Starting Balance of Zakat Funds 13,295 11,740

2. Zakat Funds from:

a. Islamic Commercial Bank’s Internal 12,489 11,146

b. Islamic Commercial Bank’s External 13,540 13,175

3. Distribution of Zakat Funds to Zakat Management Entities

a. Amil Zakat Board 24,636 22,766

b. Amil Zakat Institution - -

4. Increase (Decrease) in Zakat Funds 1,393 1,555

5. Ending Balance of Zakat Funds 14,688 13,295

f. Sources and Qardhul Hasan Funds Table of Sources and Qardhul Hasan Funds (in Million Rupiah)

No. Description December 31, 2017 December 31, 2016

1. Starting Balance of Qardhul Hasan Funds 136,051 132,486

2. Qardhul Hasan Funds Received from:

a. Infaq - -

b. Shodaqoh - -

c. Repayment of Productive Qardhul Hasan Funds - -

d. Penalties 49,532 40,168

e. Non-Halal Revenues 76 428

f. Others 5 81

Total Amount of Funds Received 49,613 40,677

3. Use of Qardhul Hasan Funds

a. Productive Qardhul Hasan Funds - -

b. Donation - -

c. Other Uses for Public Interests 21,318 37,112

Total Amount of Funds Used 21,318 37,112

4. Increase (Decrease) in Qardhul Hasan Funds 28,295 3,565

5. Ending Balance of Qardhul Hasan Funds 164,346 136,051


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g. Changes of Related Investment Funds Report Table of Changes on Related Investment Funds Report (in Million Rupiah)

DecriptionTOTAL

31 Desember 2017 31 Desember 2016

1. Initial Period Information

Starting Balance 63,770 63,943

2. Current Period Information

a. Funds Received - -

b. Funds Withdrawn (185) (176)

c. Investment Profit (Loss) - 7

d. Costs - -

e. Fee/Income Received by the Bank - (4)

3. Final Period Information

Ending Balance 63,585 63,770

h. Capital basel III and risk management practice Table of Capital Disclosure based on Basel III Framework as of December 31, 2017

No. Component Total (in Million Rupiah)

No. Ref. from Consolidated Statements 1

Common Equity Tier 1 capital: instruments and reserves

1 Directly issued qualifying common share (and equivalent for non-joint stock companies) capital plus related stock surplus

2,989,022 a+b+c+m

2 Retained earnings 3,933,082 d+e+h

3 Accumulated other comprehensive income (and other reserves)

345,797 f+g

4 Directly issued capital subject to phase out from CET1 (only applicable to non-joint stock companies)

N/A

5 Common share capital issued by subsidiaries and held by third parties (amount allowed in group CET1)

-

6 Common Equity Tier 1 capital before regulatory adjustments

7,267,901

Common Equity Tier 1 capital: regulatory adjustments

7 Prudential valuation adjustments -

8 Goodwill (net of related tax liability) -

9 Other intangibles other than mortgage-servicing rights (net of related tax liability)

(51,617) i+j

10 Deferred tax assets that rely on future profitability excluding those arising from temporary differences (net of related tax liability)

N/A

11 Cash-flow hedge reserve N/A

12 Shortfall of provisions to expected losses N/A

13 Securitisation gain on sale (as set out in paragraph 562 of Basel II framework)

N/A

14 Gains and losses due to changes in own credit risk on fair valued liabilities

N/A


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15 Defined-benefit pension fund net assets N/A

16 Investments in own shares (if not already netted off paid-in capital on reported balance sheet)

N/A

17 Reciprocal cross-holdings in common equity N/A

18 Investments in the capital of Banking. financial and insurance entities that are outside the scope of regulatory consolidation. net of eligible short positions. where the Bank does not own more than 10% of the issued share capital (amount above 10% threshold)

N/A

19 Significant investments in the common stock of Banking. financial and insurance entities that are outside the scope of regulatory consolidation. net of eligible short positions (amount above 10% threshold)

N/A

20 Mortgage servicing rights (amount above 10% threshold) -

21 Deferred tax assets arising from temporary differences (amount above 10% threshold. net of related tax liability)

N/A

22 Amount exceeding the 15% threshold N/A

23 of which: significant investments in the common stock of financials

N/A

24 of which: mortgage servicing rights N/A

25 of which: deferred tax assets arising from temporary differences

N/A

26 National specific regulatory adjustments

26a. -

26b. -

26c. (272,709) k

26d. -

26e. -

26f. -

26g. N/A

27 Regulatory adjustments applied to Common Equity Tier 1 due to insufficient Additional Tier 1 and Tier 2 to cover deductions

-

28 Total regulatory adjustments to Common equity Tier 1 (324,326)

29 Common Equity Tier 1 capital (CET1) 6,943,575

Additional Tier 1 capital: instruments

30 Directly issued qualifying Additional Tier 1 instruments plus related stock surplus

31 of which: classified as equity under applicable accounting standards

-

32 of which: classified as liabilities under applicable accounting standards

33 Directly issued capital instruments subject to phase out from Additional Tier 1

34 Additional Tier 1 instruments (and CET1 instruments not included in row 5) issued by subsidiaries and held by third parties (amount allowed in group AT1)


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35 of which: instruments issued by subsidiaries subject to phase out

N/A

36 Additional Tier 1 capital before regulatory adjustments -

Additional Tier 1 capital: regulatory adjustments

37 Investments in own Additional Tier 1 instruments N/A

38 Reciprocal cross-holdings in Additional Tier 1 instruments N/A

39 Investments in the capital of Banking. financial and insurance entities that are outside the scope of regulatory consolidation. net of eligible short positions. where the Bank does not own more than 10% of the issued common share capital of the entity (amount above 10% threshold)

N/A

40 Significant investments in the capital of Banking. financial and insurance entities that are outside the scope of regulatory consolidation (net of eligible short positions)

N/A

41 National specific regulatory adjustments -

41a. -

42 Regulatory adjustments applied to Additional Tier 1 due to insufficient Tier 2 to cover deductions

43 Total regulatory adjustments to Additional Tier 1 capital -

44 Additional Tier 1 capital (AT1) -

45 Tier 1 capital (T1 = CET1 + AT1) 6,943,575

Tier 2 capital: instruments and provisions

46 Directly issued qualifying Tier 2 instruments plus related stock surplus

375,000 l

47 Directly issued capital instruments subject to phase out from Tier 2

N/A

48 Tier 2 instruments (and CET1 and AT1 instruments not included in rows 5 or 34) issued by subsidiaries and held by third parties (amount allowed in group Tier 2)

49 of which: instruments issued by subsidiaries subject to phase out

N/A

50 Provisions 525,550

51 Tier 2 capital before regulatory adjustments 900,550

Tier 2 capital: regulatory adjustments

52 Investments in own Tier 2 instruments N/A

53 Reciprocal cross-holdings in Tier 2 instruments N/A

54 Investments in the capital of Banking. financial and insurance entities that are outside the scope of regulatory consolidation. net of eligible short positions. where the Bank does not own more than 10% of the issued common share capital of the entity (amount above the 10% threshold)

N/A

55 Significant investments in the capital Banking. financial and insurance entities that are outside the scope of regulatory consolidation (net of eligible short positions)

N/A

56 National specific regulatory adjustments


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56a. -

56b. -

57 Total regulatory adjustments to Tier 2 capital -

58 Tier 2 capital (T2) 900,550

59 Total capital (TC = T1 + T2) 7,844,125

60 Total risk weighted assets 49,350,184

Capital ratios and buffers

61 Common Equity Tier 1 (as a percentage of risk weighted assets)

14,07%

62 Tier 1 (as a percentage of risk weighted assets) 14,07%

63 Total capital (as a percentage of risk weighted assets) 15,89%

64 Institution specific buffer requirement (minimum CET1 requirement plus capital conservation buffer plus countercyclical buffer requirements plus G-SIB buffer requirement. expressed as a percentage of risk weighted assets)

1,250%

65 of which: capital conservation buffer requirement 1,250%

66 of which: Bank specific countercyclical buffer requirement

67 of which: G-SIB buffer requirement

68 Common Equity Tier 1 available to meet buffers (as a percentage of risk weighted assets)

5.90%

National minima (if different from Basel 3)

69 National Common Equity Tier 1 minimum ratio (if different from Basel 3 minimum)

70 National Tier 1 minimum ratio (if different from Basel 3 minimum)

71 National total capital minimum ratio (if different from Basel 3 minimum)

Amounts below the thresholds for deduction (before risk weighting)

72 Non-significant investments in the capital of other financials

73 Significant investments in the common stock of financials

74 Mortgage servicing rights (net of related tax liability)

75 Deferred tax assets arising from temporary differences (net of related tax liability)

Applicable caps on the inclusion of provisions in Tier 2

76 Provisions eligible for inclusion in Tier 2 in respect of exposures subject to standardised approach (prior to application of cap)

77 Cap on inclusion of provisions in Tier 2 under standardised approach

78 Provisions eligible for inclusion in Tier 2 in respect of exposures subject to internal ratings-based approach (prior to application of cap)

79 Cap for inclusion of provisions in Tier 2 under internal ratings-based approach


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Capital instruments subject to phase-out arrangements (only applicable between 1 Jan 2018 and 1 Jan 2022)

80 Current cap on CET1 instruments subject to phase out arrangements

81 Amount excluded from CET1 due to cap (excess over cap after redemptions and maturities)

82 Current cap on AT1 instruments subject to phase out arrangements

83 Amount excluded from AT1 due to cap (excess over cap after redemptions and maturities)

84 Current cap on T2 instruments subject to phase out arrangements

85 Amount excluded from T2 due to cap (excess over cap after redemptions and maturities)


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NET CLAIM DISCLOSURE BY REGION

PT BANK SYARIAH MANDIRIDated December 31, 2017(in million Rupiah)

No. Portfolio Category December 31, 2017

Net Receivables by Region

Sumatera Jakarta Java Kalimantan Sulawesi & Maluku

Bali & Nusa Tenggara

Irian Jaya & Papua

Others Overseas Total

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)

1. Receivables from the Government

- 22,655,621,075,822 - - - - - - - 22,655,621,075,822

2. Receivables from Public 309,812,079,159 5,103,922,993,434 398,977,307,614 272,964,691,866 8,724,734,921 414,760,328 703,151,013 - - 6,095,519,718,335

3. Sector Entities - - - - - - - - - -

4 Receivables from Multilateral Development Banks and International Institutions

16,673,316,757 1,237,197,754,468 151,832,255,024 - 9,184,442,996 - - - - 1,414,887,769,245

5. Receivables from Banks 1,148,439,992,745 867,763,056,606 5,353,695,066,005 501,528,075,875 388,291,216,252 293,859,610,696 63,928,748,582 - - 8,617,505,766,761

6. Loans Secured by Residential Property

- - - - - - - - - -

7. Loans Secured by Commercial Property

3,519,733,857,824 78,899,369,214 1,341,757,102,555 645,025,223,187 1,554,318,023,144 288,676,786,592 104,637,991,628 - - 7,533,048,354,144

8. Employee/Retirement Loans

2,731,152,897,702 816,243,991,676 4,339,848,884,881 705,075,456,681 843,935,436,983 371,919,642,968 75,087,926,922 - - 9,883,264,237,813

9. Receivables from SME & Retail Portfolio

5,072,016,181,246 10,190,347,799,150 7,451,202,092,919 4,014,129,409,221 1,052,851,732,826 177,066,044,143 216,690,298,763 - - 28,174,303,558,268

10. Receivables from Corporates

118,691,879,444 190,165,716,307 350,844,333,204 110,913,144,977 56,593,867,204 4,868,386,412 3,838,964,476 - - 835,916,292,024

11. Past Due Receivables 25,939,446,382 3,638,585,748,787 18,285,283,236 8,533,618,211 4,066,389,340 2,123,713,928 424,273,747 - - 3,697,958,473,631

Other Assets 12,942,459,651,259 44,778,747,505,465 19,406,442,325,438 6,258,169,620,018 3,917,965,843,666 1,138,928,945,067 465,311,355,131 - - 88,908,025,246,044


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NET CLAIM DISCLOSURE BY REGION

PT BANK SYARIAH MANDIRIDated December 31, 2017(in million Rupiah)

No. Portfolio Category December 31, 2017

Net Receivables by Region

Sumatera Jakarta Java Kalimantan Sulawesi & Maluku

Bali & Nusa Tenggara

Irian Jaya & Papua

Others Overseas Total

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)


- 22,655,621,075,822 - - - - - - - 22,655,621,075,822

2. Receivables from Public 309,812,079,159 5,103,922,993,434 398,977,307,614 272,964,691,866 8,724,734,921 414,760,328 703,151,013 - - 6,095,519,718,335

3. Sector Entities - - - - - - - - - -


16,673,316,757 1,237,197,754,468 151,832,255,024 - 9,184,442,996 - - - - 1,414,887,769,245

5. Receivables from Banks 1,148,439,992,745 867,763,056,606 5,353,695,066,005 501,528,075,875 388,291,216,252 293,859,610,696 63,928,748,582 - - 8,617,505,766,761


- - - - - - - - - -


3,519,733,857,824 78,899,369,214 1,341,757,102,555 645,025,223,187 1,554,318,023,144 288,676,786,592 104,637,991,628 - - 7,533,048,354,144


2,731,152,897,702 816,243,991,676 4,339,848,884,881 705,075,456,681 843,935,436,983 371,919,642,968 75,087,926,922 - - 9,883,264,237,813


5,072,016,181,246 10,190,347,799,150 7,451,202,092,919 4,014,129,409,221 1,052,851,732,826 177,066,044,143 216,690,298,763 - - 28,174,303,558,268


118,691,879,444 190,165,716,307 350,844,333,204 110,913,144,977 56,593,867,204 4,868,386,412 3,838,964,476 - - 835,916,292,024

11. Past Due Receivables 25,939,446,382 3,638,585,748,787 18,285,283,236 8,533,618,211 4,066,389,340 2,123,713,928 424,273,747 - - 3,697,958,473,631

Other Assets 12,942,459,651,259 44,778,747,505,465 19,406,442,325,438 6,258,169,620,018 3,917,965,843,666 1,138,928,945,067 465,311,355,131 - - 88,908,025,246,044


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NET CLAIM DISCLOSURE BY CONTRACT PERIOD TERM

PT BANK SYARIAH MANDIRIDated December 31, 2017

No. Portfolio Category

December 31, 2017

Net Receivables by Contract Period Term

≤ 1 year > 1 year to. 3 years > 3 year s.d. 5 years > 5 yearsNon-

ContractualTotal

(1) (2) (3) (4) (5) (6) (7) (8)

1. Receivables from the Government 18,259,793,422,305 4,395,827,653,517 - - - 22,655,621,075,822

2. Receivables from Public 3,362,773,825,264 1,053,314,476,131 664,376,591,186 1,015,054,825,754 - 6,095,519,718,335

3. Sector Entities - - - - - -

4. Receivables from Multilateral Development Banks and International Institutions

1,139,930,862,450 101,622,754,832 84,030,406,143 89,303,745,820 - 1,414,887,769,245

5. Receivables from Banks 56,399,648,127 521,252,291,619 751,835,644,551 7,288,018,182,464 - 8,617,505,766,761

6. Loans Secured by Residential Property - - - - - -

7. Loans Secured by Commercial Property 43,673,069,121 421,947,649,260 1,081,253,055,417 5,986,174,580,346 - 7,533,048,354,144

8. Employee/Retirement Loans 2,714,468,208,066 2,856,438,803,001 2,321,103,039,059 1,991,254,187,687 - 9,883,264,237,813

9. Receivables from SME & Retail Portfolio 7,533,101,352,264 6,858,027,392,911 6,022,464,752,175 7,760,710,060,918 - 28,174,303,558,268

10. Receivables from Corporates 141,700,879,004 221,380,286,246 113,622,847,268 359,212,279,506 - 835,916,292,024

11. Past Due Receivables 1,690,950,117,587 - - - 2,007,008,356,044 3,697,958,473,631

Other Assets 34,942,791,384,189 16,429,811,307,517 11,038,686,335,799 24,489,727,862,495 2,007,008,356,044 88,908,025,246,044


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NET CLAIM DISCLOSURE BY CONTRACT PERIOD TERM



December 31, 2017

Net Receivables by Contract Period Term

≤ 1 year > 1 year to. 3 years > 3 year s.d. 5 years > 5 yearsNon-

ContractualTotal

(1) (2) (3) (4) (5) (6) (7) (8)

1. Receivables from the Government 18,259,793,422,305 4,395,827,653,517 - - - 22,655,621,075,822

2. Receivables from Public 3,362,773,825,264 1,053,314,476,131 664,376,591,186 1,015,054,825,754 - 6,095,519,718,335

3. Sector Entities - - - - - -


1,139,930,862,450 101,622,754,832 84,030,406,143 89,303,745,820 - 1,414,887,769,245

5. Receivables from Banks 56,399,648,127 521,252,291,619 751,835,644,551 7,288,018,182,464 - 8,617,505,766,761

6. Loans Secured by Residential Property - - - - - -

7. Loans Secured by Commercial Property 43,673,069,121 421,947,649,260 1,081,253,055,417 5,986,174,580,346 - 7,533,048,354,144

8. Employee/Retirement Loans 2,714,468,208,066 2,856,438,803,001 2,321,103,039,059 1,991,254,187,687 - 9,883,264,237,813

9. Receivables from SME & Retail Portfolio 7,533,101,352,264 6,858,027,392,911 6,022,464,752,175 7,760,710,060,918 - 28,174,303,558,268

10. Receivables from Corporates 141,700,879,004 221,380,286,246 113,622,847,268 359,212,279,506 - 835,916,292,024

11. Past Due Receivables 1,690,950,117,587 - - - 2,007,008,356,044 3,697,958,473,631

Other Assets 34,942,791,384,189 16,429,811,307,517 11,038,686,335,799 24,489,727,862,495 2,007,008,356,044 88,908,025,246,044


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NET CLAIM DISCLOSURE BY ECONOMIC SECTOR


No. Economic SectorReceivables from the Government

Receivables from Public

Sector Entities

Receivables from Multilateral

Development Banks and International

Institutions

Receivables from Banks

Loans Securedby Residential

Property

Loans Secured by Commercial

Property

Employee/Retirement Loans

Receivables from SME & Retail

Portfolio

Receivables from Corporates

Past Due Receivables

Other Assets

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13)

June 30, 20171 Agriculture, Hunting, and Forestry - 245,537,859,067 - - - - - 642,666,980,518 3,077,993,322,954 20,936,354,630 -2 Fishery - 2,725,359 - - - - - 33,940,366,604 20,116,624,438 1,623,732,242 -3 Mining and Quarrying - 41,036,722,453 - - - - - 7,945,590,582 1,784,787,240,787 850,362,416 -4 Manufacturing - 363,901,819,225 - - - - - 239,843,923,991 2,758,828,508,312 17,366,581,144 -5 Electricity, Gas, and Water - 1,000,001,119,936 - - - - - 20,055,527,586 2,763,505,314,461 7,057,922,582 -6 Construction - 1,162,718,146,234 - - - - - 144,897,313,898 1,434,592,310,363 253,371,711,259 -7 Wholesale and Retail Trading - 45,745,089,520 - - - - - 1,692,144,511,338 2,451,399,042,778 108,246,447,244 -8 Hotel and Food & Beverages - 103,739,629,580 - - - - - 189,839,967,101 506,997,718,212 4,421,046,641 -

9Transportation, Warehouse, and Communication - 42,586,757,213 - - - - - 84,400,493,027 2,741,578,795,117 155,547,011,223 -

10 Financial Intermediary - 774,355,641,207 - 191,941,427,459 - - - 43,417,692,044 4,607,765,888,773 7,609,591,366 -11 Real estate, Rental, and Business Services - 759,523,970,114 - - - - - 117,297,823,904 1,304,483,275,159 5,574,090,682 -12 Public Administration, - - - - - - - - - - -13 Defense and Compulsory Social Security - 463,659,583 - - - - - 77,256,590,350 1,293,008,250,058 270,383,093 -14 Education Services - 47,236,430,258 - - - - - 93,124,437,068 1,529,963,104,285 1,544,865,626 -15 Health and Social Activities - 10,682,642,486 - - - - - 1,127,621,439,292 380,423,490,632 18,240,802,983 -

16Public Socio-Culture, Entertainment & Other Personal Services - - - - - - - 36,530,537,203 6,114,041,967 1,960,402,894 -

17 Personal & Household Services - - - - - - - - - - -18 Bodies & Other Extra International Bodies - - - - - - - - - - -19 Activities not clearly defined - - - - 8,617,505,766,761 - 7,533,048,354,144 5,301,660,497,817 857,152,912,257 231,294,985,999 -20 Non-business activities 22,655,621,075,822 1,497,987,506,100 - 1,222,946,341,786 - - - 30,620,545,490 655,593,717,715 - 3,697,958,473,631Total Others 6,095,519,718,335 - 1,414,887,769,245 8,617,505,766,761 - 7,533,048,354,144 9,883,264,237,813 28,174,303,558,268 835,916,292,024 3,697,958,473,631

June, 30 2016

1 Agriculture, Hunting, and Forestry - 287,594 - - - - - 757,963 2,647,014 78,004 -2 Fishery - 426 - - - - - 43,577 38,167 811 -3 Mining and Quarrying - 337 - - - - - 15,420 1,138,074 100,863 -4 Manufacturing - 12,323 - - - - - 304,225 3,742,055 243,001 -5 Electricity, Gas, and Water - 450,651 - - - - - 20,651 2,481,360 335,187 -6 Construction - 189,883 - - - - - 252,525 1,616,954 39,320 -7 Wholesale and Retail Trading - 32,755 - - - - - 2,376,270 2,745,752 252,083 -8 Hotel and Food & Beverages - 1,541 - - - - - 195,988 252,687 10,278 -

9Transportation, Warehouse, and Communication - 63,215 - - - - - 101,065 3,506,898 234,668 -

10 Financial Intermediary - 258,000 - 200,224 - - - 119,131 4,138,440 50,371 -11 Real estate, Rental, and Business Services - 1,402 - - - - - 147,820 1,477,433 22,805 -12 Public Administration, 250,000 - - - - - - - - - -13 Defense and Compulsory Social Security - 2,088 - - - - - 98,843 661,255 12,943 -14 Education Services - 5,012 - - - - - 134,442 819,989 8,903 -15 Health and Social Activities - 33,689 - - 490 - - 756,574 338,585 57,143 -

16Public Socio-Culture, Entertainment & Other Personal Services - 272 - - - - - 103,490 6,699 1,019 -

17 Personal & Household Services - - - - - - - - - - -18 Bodies & Other Extra International Bodies - - - - - - - - - - -19 Activities not clearly defined - - - - 8,110,623 - 3,517,666 4,806,989 194,764 300,908 -20 Non-business activities 14,683,201 265,000 - 1,252,345 - - - 65,921 1,088,956 149 4,003,235Total Others 1,604,187 - 1,452,569 8,111,114 - 3,517,666 10,300,895 26,895,084 1,748,457 4,003,235


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NET CLAIM DISCLOSURE BY ECONOMIC SECTOR


No. Economic SectorReceivables from the Government

Receivables from Public

Sector Entities

Receivables from Multilateral

Development Banks and International

Institutions

Receivables from Banks

Loans Securedby Residential

Property

Loans Secured by Commercial

Property

Employee/Retirement Loans

Receivables from SME & Retail

Portfolio

Receivables from Corporates

Past Due Receivables

Other Assets

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13)

June 30, 20171 Agriculture, Hunting, and Forestry - 245,537,859,067 - - - - - 642,666,980,518 3,077,993,322,954 20,936,354,630 -2 Fishery - 2,725,359 - - - - - 33,940,366,604 20,116,624,438 1,623,732,242 -3 Mining and Quarrying - 41,036,722,453 - - - - - 7,945,590,582 1,784,787,240,787 850,362,416 -4 Manufacturing - 363,901,819,225 - - - - - 239,843,923,991 2,758,828,508,312 17,366,581,144 -5 Electricity, Gas, and Water - 1,000,001,119,936 - - - - - 20,055,527,586 2,763,505,314,461 7,057,922,582 -6 Construction - 1,162,718,146,234 - - - - - 144,897,313,898 1,434,592,310,363 253,371,711,259 -7 Wholesale and Retail Trading - 45,745,089,520 - - - - - 1,692,144,511,338 2,451,399,042,778 108,246,447,244 -8 Hotel and Food & Beverages - 103,739,629,580 - - - - - 189,839,967,101 506,997,718,212 4,421,046,641 -

9Transportation, Warehouse, and Communication - 42,586,757,213 - - - - - 84,400,493,027 2,741,578,795,117 155,547,011,223 -

10 Financial Intermediary - 774,355,641,207 - 191,941,427,459 - - - 43,417,692,044 4,607,765,888,773 7,609,591,366 -11 Real estate, Rental, and Business Services - 759,523,970,114 - - - - - 117,297,823,904 1,304,483,275,159 5,574,090,682 -12 Public Administration, - - - - - - - - - - -13 Defense and Compulsory Social Security - 463,659,583 - - - - - 77,256,590,350 1,293,008,250,058 270,383,093 -14 Education Services - 47,236,430,258 - - - - - 93,124,437,068 1,529,963,104,285 1,544,865,626 -15 Health and Social Activities - 10,682,642,486 - - - - - 1,127,621,439,292 380,423,490,632 18,240,802,983 -

16Public Socio-Culture, Entertainment & Other Personal Services - - - - - - - 36,530,537,203 6,114,041,967 1,960,402,894 -

17 Personal & Household Services - - - - - - - - - - -18 Bodies & Other Extra International Bodies - - - - - - - - - - -19 Activities not clearly defined - - - - 8,617,505,766,761 - 7,533,048,354,144 5,301,660,497,817 857,152,912,257 231,294,985,999 -20 Non-business activities 22,655,621,075,822 1,497,987,506,100 - 1,222,946,341,786 - - - 30,620,545,490 655,593,717,715 - 3,697,958,473,631Total Others 6,095,519,718,335 - 1,414,887,769,245 8,617,505,766,761 - 7,533,048,354,144 9,883,264,237,813 28,174,303,558,268 835,916,292,024 3,697,958,473,631

June, 30 2016

1 Agriculture, Hunting, and Forestry - 287,594 - - - - - 757,963 2,647,014 78,004 -2 Fishery - 426 - - - - - 43,577 38,167 811 -3 Mining and Quarrying - 337 - - - - - 15,420 1,138,074 100,863 -4 Manufacturing - 12,323 - - - - - 304,225 3,742,055 243,001 -5 Electricity, Gas, and Water - 450,651 - - - - - 20,651 2,481,360 335,187 -6 Construction - 189,883 - - - - - 252,525 1,616,954 39,320 -7 Wholesale and Retail Trading - 32,755 - - - - - 2,376,270 2,745,752 252,083 -8 Hotel and Food & Beverages - 1,541 - - - - - 195,988 252,687 10,278 -

9Transportation, Warehouse, and Communication - 63,215 - - - - - 101,065 3,506,898 234,668 -

10 Financial Intermediary - 258,000 - 200,224 - - - 119,131 4,138,440 50,371 -11 Real estate, Rental, and Business Services - 1,402 - - - - - 147,820 1,477,433 22,805 -12 Public Administration, 250,000 - - - - - - - - - -13 Defense and Compulsory Social Security - 2,088 - - - - - 98,843 661,255 12,943 -14 Education Services - 5,012 - - - - - 134,442 819,989 8,903 -15 Health and Social Activities - 33,689 - - 490 - - 756,574 338,585 57,143 -

16Public Socio-Culture, Entertainment & Other Personal Services - 272 - - - - - 103,490 6,699 1,019 -

17 Personal & Household Services - - - - - - - - - - -18 Bodies & Other Extra International Bodies - - - - - - - - - - -19 Activities not clearly defined - - - - 8,110,623 - 3,517,666 4,806,989 194,764 300,908 -20 Non-business activities 14,683,201 265,000 - 1,252,345 - - - 65,921 1,088,956 149 4,003,235Total Others 1,604,187 - 1,452,569 8,111,114 - 3,517,666 10,300,895 26,895,084 1,748,457 4,003,235


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CLAIM DISCLOSURE AND RESERVE BY REGION

PT BANK SYARIAH MANDIRI Dated December 31, 2017

No. PORTFOLIO CATEGORY

December 31, 2017

NET RECEIVABLES BY REGION

Sumatera Jakarta Java Kalimantan Sulawesi & Maluku Bali & Nusa Tenggara Irian Jaya & Papua Others Overseas Total

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)

1 Receivables 13.140.743.741.671 46.138.964.928.937 19.781.333.151.813 6.377.813.723.368 3.972.501.624.317 1.147.290.020.168 478.146.761.909 - - 91.036.793.952.183

2 Impaired Receivables - - - - - - - - - -

a. Not Yet Due 730.157.022.554 2.294.862.396.029 1.971.408.269.331 677.372.064.076 168.122.365.920 70.687.157.754 46.720.724.484 - - 5.959.330.000.148b. Past Due 90.976.290.055 227.249.672.237 89.487.053.001 4.458.803.423 7.353.412.798 842.630.398 16.154.052.153 - - 436.521.914.065

3 Individual Impairments 42.691.235.842 520.390.592.586 137.533.869.563 50.775.473.143 2.184.373.218 - 5.823.406.251 - - 759.398.950.603

4 Collective Impairments 279.040.543.901 243.978.036.453 447.139.015.754 154.242.616.314 78.193.576.594 15.799.012.199 12.736.716.148 - - 1.231.129.517.363

5 Written-off Receivables 1.267.193.786.794 3.309.350.395.922 1.566.919.109.736 271.509.178.531 192.561.510.237 61.700.902.100 35.193.532.620 - - 6.704.428.415.940

CLAIM DISCLOSURE AND RESERVE BY ECONOMIC SECTOR


No. Sektor Ekonomi Receivables Impaired Receivables Individual

ImpairmentsCollective

Impairmentswritten-off ReceivablesNot Yet Due Past Due

(1) (2) (3) (4) (5) (6) (7) (8)

December 31, 2017

1 Agriculture, Hunting, and Forestry 4,037,644,083,234 107,049,936,230 32,270,758,410 - 93,885,312,219 168,970,600,245 2 Fishery 59,430,690,194 17,486,368,051 745,051,949 - 4,154,720,007 2,907,001,107 3 Mining and Quarrying 1,841,490,308,338 160,504,630,720 1,182,965,392 7,064,094,808 18,450,874,888 131,940,481,251 4 Manufacturing 3,477,569,041,878 754,168,077,416 6,059,723,583 16,992,101,087 108,428,966,511 141,390,608,391 5 Electricity, Gas, and Water 4,051,266,980,158 1,234,079,735,257 178,105,467,019 257,688,436,515 33,906,118,292 393,458,421,324 6 Construction 3,193,345,578,433 493,617,148,488 11,841,880,811 151,749,934,382 60,669,301,920 224,263,391,300 7 Wholesale and Retail Trading 4,470,788,215,811 767,104,836,146 66,284,652,919 45,509,088,712 174,919,432,011 398,492,571,429 8 Hotel and Food & Beverages 814,729,017,902 38,822,556,062 1,671,486,839 - 17,822,214,266 18,782,997,585 9 Transportation, Warehouse, and Communication 3,341,177,080,315 1,281,632,852,286 46,507,127,999 278,693,323,797 64,039,693,786 105,792,589,857 10 Financial Intermediary 6,252,233,249,871 80,509,462,347 915,707,375 - 103,533,664,176 283,961,163,564 11 Real estate, Rental, and Business Services 2,216,411,759,425 119,372,703,524 5,818,946,609 8,957,962 37,699,234,948 21,502,061,486 12 Public Administration, - - - - - 51,458,637 13 Defense and Compulsory Social Security 1,375,472,694,484 46,775,750,903 33,371,765 1,693,013,340 22,877,912,247 1,013,005,017 14 Education Services 1,676,533,658,583 113,864,082,019 130,451,944 - 26,372,666,021 8,001,051,861 15 Health and Social Activities 1,574,747,830,656 105,882,396,676 13,052,849,148 - 59,028,193,827 190,701,196,336 16 Public Socio-Culture, Entertainment & Other Personal Services 46,468,133,410 7,936,170,248 135,512,731 - 2,328,694,897 3,056,288,272 19 Personal & Household Services 22,685,864,094,678 630,523,293,775 21,434,533,534 - 342,188,191,161 4,610,143,528,278 20 Non-business activities 29,921,621,534,813 - 50,331,426,038 - 60,824,326,186 -

Total Others 5,959,330,000,148 436,521,914,065 759,398,950,603 1,231,129,517,363 6,704,428,415,940


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CLAIM DISCLOSURE AND RESERVE BY REGION

PT BANK SYARIAH MANDIRI Dated December 31, 2017

No. PORTFOLIO CATEGORY

December 31, 2017

NET RECEIVABLES BY REGION

Sumatera Jakarta Java Kalimantan Sulawesi & Maluku Bali & Nusa Tenggara Irian Jaya & Papua Others Overseas Total

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)

1 Receivables 13.140.743.741.671 46.138.964.928.937 19.781.333.151.813 6.377.813.723.368 3.972.501.624.317 1.147.290.020.168 478.146.761.909 - - 91.036.793.952.183

2 Impaired Receivables - - - - - - - - - -

a. Not Yet Due 730.157.022.554 2.294.862.396.029 1.971.408.269.331 677.372.064.076 168.122.365.920 70.687.157.754 46.720.724.484 - - 5.959.330.000.148b. Past Due 90.976.290.055 227.249.672.237 89.487.053.001 4.458.803.423 7.353.412.798 842.630.398 16.154.052.153 - - 436.521.914.065

3 Individual Impairments 42.691.235.842 520.390.592.586 137.533.869.563 50.775.473.143 2.184.373.218 - 5.823.406.251 - - 759.398.950.603

4 Collective Impairments 279.040.543.901 243.978.036.453 447.139.015.754 154.242.616.314 78.193.576.594 15.799.012.199 12.736.716.148 - - 1.231.129.517.363

5 Written-off Receivables 1.267.193.786.794 3.309.350.395.922 1.566.919.109.736 271.509.178.531 192.561.510.237 61.700.902.100 35.193.532.620 - - 6.704.428.415.940

CLAIM DISCLOSURE AND RESERVE BY ECONOMIC SECTOR


No. Sektor Ekonomi Receivables Impaired Receivables Individual

ImpairmentsCollective

Impairmentswritten-off ReceivablesNot Yet Due Past Due

(1) (2) (3) (4) (5) (6) (7) (8)

December 31, 2017

1 Agriculture, Hunting, and Forestry 4,037,644,083,234 107,049,936,230 32,270,758,410 - 93,885,312,219 168,970,600,245 2 Fishery 59,430,690,194 17,486,368,051 745,051,949 - 4,154,720,007 2,907,001,107 3 Mining and Quarrying 1,841,490,308,338 160,504,630,720 1,182,965,392 7,064,094,808 18,450,874,888 131,940,481,251 4 Manufacturing 3,477,569,041,878 754,168,077,416 6,059,723,583 16,992,101,087 108,428,966,511 141,390,608,391 5 Electricity, Gas, and Water 4,051,266,980,158 1,234,079,735,257 178,105,467,019 257,688,436,515 33,906,118,292 393,458,421,324 6 Construction 3,193,345,578,433 493,617,148,488 11,841,880,811 151,749,934,382 60,669,301,920 224,263,391,300 7 Wholesale and Retail Trading 4,470,788,215,811 767,104,836,146 66,284,652,919 45,509,088,712 174,919,432,011 398,492,571,429 8 Hotel and Food & Beverages 814,729,017,902 38,822,556,062 1,671,486,839 - 17,822,214,266 18,782,997,585 9 Transportation, Warehouse, and Communication 3,341,177,080,315 1,281,632,852,286 46,507,127,999 278,693,323,797 64,039,693,786 105,792,589,857 10 Financial Intermediary 6,252,233,249,871 80,509,462,347 915,707,375 - 103,533,664,176 283,961,163,564 11 Real estate, Rental, and Business Services 2,216,411,759,425 119,372,703,524 5,818,946,609 8,957,962 37,699,234,948 21,502,061,486 12 Public Administration, - - - - - 51,458,637 13 Defense and Compulsory Social Security 1,375,472,694,484 46,775,750,903 33,371,765 1,693,013,340 22,877,912,247 1,013,005,017 14 Education Services 1,676,533,658,583 113,864,082,019 130,451,944 - 26,372,666,021 8,001,051,861 15 Health and Social Activities 1,574,747,830,656 105,882,396,676 13,052,849,148 - 59,028,193,827 190,701,196,336 16 Public Socio-Culture, Entertainment & Other Personal Services 46,468,133,410 7,936,170,248 135,512,731 - 2,328,694,897 3,056,288,272 19 Personal & Household Services 22,685,864,094,678 630,523,293,775 21,434,533,534 - 342,188,191,161 4,610,143,528,278 20 Non-business activities 29,921,621,534,813 - 50,331,426,038 - 60,824,326,186 -

Total Others 5,959,330,000,148 436,521,914,065 759,398,950,603 1,231,129,517,363 6,704,428,415,940


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DISCLOSURE ON MOVEMENTS ON IMPAIRMENT PROVISIONS


No. REMARKS

December 31, 2017

Individual Impairments

Collective Impairments

(1) (2) (3) (4)

1 Impairments Provisions Starting Balance 657,521,182,507 1,355,413,367,545

2 Addition (Recovery) of Impairment Provision in the Current Period - -

2. a Addition of Impairment Provisions in the Current Period 100,576,462,380 1,488,987,173,558

2. b Recovery of Impairment Provisions in the Current Period - -

3 Impairment Provisions Used to Write Off the Receivables in the Current Period - (1,613,622,368,598)

4 Other Additions (Recoveries) in the Current Period 1,301,305,716 351,344,858

Impairments Provisions Ending Balance 759,398,950,603 1,231,129,517,363

DISCLOSURE ON NET RECEIVABLES BY PORTFOLIO CATEGORY AND RATING



December 31, 2017

Long Term Rating

Rating Company Long Term Rating Peringkat Jangka Panjang No Rating Total

Standard and Poor’s AAA AA+s.dAA- A+s.dA- BBB+ s.d BBB- BB+ s.d BB- B+ s.d B- Less than B- A-1 A-2 A-3 Less than A-3

Fitch Rating AAA AA+s.dAA- A+s.dA- BBB+ s.d BBB- BB+ s.d BB- B+ s.d B- Less than B- F1+ s.d F1 F2 F3 Less than F3

Moody’s Aaa Aa1 s.d Aa3 A1 s.d A3 Baa1 s.d Baa3 Ba1 s.d Ba3 B1 s.d B3 Less than B3 P-1 P-2 P-3 Less than P-3

PT. Fitch Ratings Indonesia

AAA (idn) AA+(idn) s.d AA-(idn)

A+(idn) s.d A-(idn) BBB+(idn) s.d BBB-(idn)

BB+(idn) s.d BB-(idn)

B+(idn) s.d B-(idn)

Less than B-(idn)

F1+(idn) s.d F1(idn)

F2(idn) F3(idn) Less than F3(idn)

PT. Pemeringkat Efek Indonesia

idAAA idAA+ s.d idAA- idA+ s.d idA- idBBB+ s.d idBBB- id BB+ s.d idBB- id B+ s.d idB- Less than idB

idA1 idA2 idA4 Less than idA4

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16)

1 Receivables from the Government

- - - 8,264,328,379,737 - - - - - - - 14,391,292,696,085 22,655,621,075,822

2 Receivables from Public 1,516,720,306,400 1,161,345,462,309 274,999,999,729 - - - - - - - - 3,142,453,949,897 6,095,519,718,335

3 Sector Entities - - - - - - - - - - - - -


306,436,032,881 100,000,000,000 191,000,000,000 - - - - - - - - 817,451,736,364 1,414,887,769,245

5 Receivables from Banks - - - - - - - - - - - - -

6 Loans Secured by Residential Property

- - - - - - - - - - - - -

7 Loans Secured by Commercial Property

- - - - - - - - - - - - -

8 Employee/Retirement Loans - - - - - - - - - - - - -

9 Receivables from SME & Retail Portfolio

1,178,987,199,118 - 3,120,338,818,549 109,790,956,473 163,521,403,578 - - - - - - 23,601,665,180,550 28,174,303,558,268

10 Receivables from Corporates - - - - - - - - - - - - -

11 Past Due Receivables - - - - - - - - - - - - -

Total 3,002,143,538,399 1,261,345,462,309 3,586,338,818,278 8,374,119,336,210 163,521,403,578 - - - - - - 41,952,863,562,896 58,340,332,121,670


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DISCLOSURE ON MOVEMENTS ON IMPAIRMENT PROVISIONS


No. REMARKS

December 31, 2017

Individual Impairments

Collective Impairments

(1) (2) (3) (4)

1 Impairments Provisions Starting Balance 657,521,182,507 1,355,413,367,545

2 Addition (Recovery) of Impairment Provision in the Current Period - -

2. a Addition of Impairment Provisions in the Current Period 100,576,462,380 1,488,987,173,558

2. b Recovery of Impairment Provisions in the Current Period - -

3 Impairment Provisions Used to Write Off the Receivables in the Current Period - (1,613,622,368,598)

4 Other Additions (Recoveries) in the Current Period 1,301,305,716 351,344,858

Impairments Provisions Ending Balance 759,398,950,603 1,231,129,517,363

DISCLOSURE ON NET RECEIVABLES BY PORTFOLIO CATEGORY AND RATING



December 31, 2017

Long Term Rating

Rating Company Long Term Rating Peringkat Jangka Panjang No Rating Total

Standard and Poor’s AAA AA+s.dAA- A+s.dA- BBB+ s.d BBB- BB+ s.d BB- B+ s.d B- Less than B- A-1 A-2 A-3 Less than A-3

Fitch Rating AAA AA+s.dAA- A+s.dA- BBB+ s.d BBB- BB+ s.d BB- B+ s.d B- Less than B- F1+ s.d F1 F2 F3 Less than F3

Moody’s Aaa Aa1 s.d Aa3 A1 s.d A3 Baa1 s.d Baa3 Ba1 s.d Ba3 B1 s.d B3 Less than B3 P-1 P-2 P-3 Less than P-3

PT. Fitch Ratings Indonesia

AAA (idn) AA+(idn) s.d AA-(idn)

A+(idn) s.d A-(idn) BBB+(idn) s.d BBB-(idn)

BB+(idn) s.d BB-(idn)

B+(idn) s.d B-(idn)

Less than B-(idn)

F1+(idn) s.d F1(idn)

F2(idn) F3(idn) Less than F3(idn)

PT. Pemeringkat Efek Indonesia

idAAA idAA+ s.d idAA- idA+ s.d idA- idBBB+ s.d idBBB- id BB+ s.d idBB- id B+ s.d idB- Less than idB

idA1 idA2 idA4 Less than idA4

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16)


- - - 8,264,328,379,737 - - - - - - - 14,391,292,696,085 22,655,621,075,822

2 Receivables from Public 1,516,720,306,400 1,161,345,462,309 274,999,999,729 - - - - - - - - 3,142,453,949,897 6,095,519,718,335

3 Sector Entities - - - - - - - - - - - - -


306,436,032,881 100,000,000,000 191,000,000,000 - - - - - - - - 817,451,736,364 1,414,887,769,245

5 Receivables from Banks - - - - - - - - - - - - -

6 Loans Secured by Residential Property

- - - - - - - - - - - - -

7 Loans Secured by Commercial Property

- - - - - - - - - - - - -

8 Employee/Retirement Loans - - - - - - - - - - - - -


1,178,987,199,118 - 3,120,338,818,549 109,790,956,473 163,521,403,578 - - - - - - 23,601,665,180,550 28,174,303,558,268

10 Receivables from Corporates - - - - - - - - - - - - -

11 Past Due Receivables - - - - - - - - - - - - -

Total 3,002,143,538,399 1,261,345,462,309 3,586,338,818,278 8,374,119,336,210 163,521,403,578 - - - - - - 41,952,863,562,896 58,340,332,121,670


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DISCLOSURE ON COUNTERPARTY CREDIT RISK


(1) Over the Counter Sharia Hedging Transaction (in million Rupiah)

No Underlying Variables

December 31, 2017

Notional Amount Sharia Hedging Receivables

Sharia Hedging Responsibility

Net Receivables before CRM

CRMNet Receivables

after CRM≤ 1 Year > 1 Year - ≤ 5 Years > 5 Years

1 Shariah Compliant Profit Rate Swap

2 Shariah Compliant Foreign Currency Swap

3 Others

TOTAL

(2) Repo Transaction (in million Rupiah)

No Portfolio Category

December 31, 2017

Fair Value SSB Repo Repo Payable Net Receivables RwA

(1) (2) (3) (4) (5) (6)


2 Receivables from Public Sector Entities


4 Receivables from Banks


6 Receivables from Corporates

TOTAL

(3) Reverse Repo Transaction (in million Rupiah)


December 31, 2017

Net Receivables CRMNet Receivables after

CRMRwA after CRM

(1) (2) (3) (4) (5) (6)







TOTAL


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DISCLOSURE ON COUNTERPARTY CREDIT RISK


(1) Over the Counter Sharia Hedging Transaction (in million Rupiah)

No Underlying Variables

December 31, 2017

Notional Amount Sharia Hedging Receivables

Sharia Hedging Responsibility

Net Receivables before CRM

CRMNet Receivables

after CRM≤ 1 Year > 1 Year - ≤ 5 Years > 5 Years

1 Shariah Compliant Profit Rate Swap

2 Shariah Compliant Foreign Currency Swap

3 Others

TOTAL

(2) Repo Transaction (in million Rupiah)


December 31, 2017

Fair Value SSB Repo Repo Payable Net Receivables RwA

(1) (2) (3) (4) (5) (6)







TOTAL

(3) Reverse Repo Transaction (in million Rupiah)


December 31, 2017

Net Receivables CRMNet Receivables after

CRMRwA after CRM

(1) (2) (3) (4) (5) (6)







TOTAL


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DISCLOSURE ON CREDIT RISK NET RECEIVABLES BASED ON RISK wEIGHT AFTER THE MEASUREMENT OF MITIGATION IMPACT OF CREDIT RISK



December 31, 2017

Net Receivables After Taking Account Credit Risk Mitigation

RwA Capital Charge(0%) (20%) (35%) (40%) (45%) (50%) (75%) (100%) (150%) (Others)

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14)

A Balance Sheet Exposure

1 Receivables from the Government 0 0 0 0 0 0 0 0 0 0 0 0

2 Receivables from Public Sector Entities 0 535,613,153,741.80 0 0 0 1,455,350,265,050.50 0 0 0 0 1,990,963,418,792.30 198,897,245,537.35


0 0 0 0 0 0 0 0 0 0 0 0

4 Receivables from Banks 0 226,226,983,337.80 0 0 0 127,121,861,069.50 0 0 0 0 353,348,844,407.30 35,299,549,556.29

5 Loans Secured by Residential Property 0 187,794,155,646.20 2,673,197,137,313.85 0 0 0 0 0 0 0 2,860,991,292,960.05 285,813,030,166.71

6 Loans Secured by Commercial Property 0 0 0 0 0 0 0 0 0 0 0 0

7 Employee/Retirement Loans 0 0 0 0 0 3,766,349,368,946.00 0 0 0 0 3,766,349,368,946.00 376,258,301,957.71

8 Receivables from SME & Retail Portfolio 0 0 0 0 0 0 5,716,282,608,960.00 0 0 0 5,716,282,608,960.00 571,056,632,635.10

9 Receivables from Corporates 0 235,797,439,823.60 0 0 0 1,456,669,409,274.50 0 21,844,119,796,343.00 0 0 23,536,586,645,441.10 2,351,305,005,879.57

10 Past Due Receivables 0 0 0 0 0 0 0 770,304,173,703.00 0 0 770,304,173,703.00 76,953,386,952.93

11 Other Assets 0 0 0 0 0 0 0 2,562,348,642,015.00 0 0 2,562,348,642,015.00 255,978,629,337.30

Total of Balance Sheet Exposure 0 1,185,431,732,549.40 2,673,197,137,313.85 0 0 6,805,490,904,340.50 5,716,282,608,960.00 25,176,772,612,061.00 0 0 41,557,174,995,224.70 4,151,561,782,022.96

B Off-Balance Sheet Exposure


2 Receivables from Public Sector Entities 0 0 0 0 0 184,796,361,761.70 0 0 0 0 184,796,361,761.70 18,461,156,539.99


0 0 0 0 0 0 0 0 0 0 0 0

4 Receivables from Banks 0 0 0 0 0 0 0 0 0 0 0 0

5 Loans Secured by Residential Property 0 0 0 0 0 0 0 0 0 0 0 0


7 Employee/Retirement Loans 0 0 0 0 0 0 0 0 0 0 0 0

8 Receivables from SME & Retail Portfolio 0 0 0 0 0 0 22,965,409,117.65 0 0 0 22,965,409,117.65 2,294,244,370.85

9 Receivables from Corporates 0 0 0 0 0 0 0 214,437,701,126.00 0 0 214,437,701,126.00 21,422,326,342.49


Total of Off-Balance Sheet Exposure 0 0 0 0 0 184,796,361,761.70 22,965,409,117.65 279,029,437,678.00 0 0 486,791,208,557.35 48,630,441,734.88

C Counterparty Credit Risk







Total of Counterparty Credit Risk Exposure


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December 31, 2017

Net Receivables After Taking Account Credit Risk Mitigation

RwA Capital Charge(0%) (20%) (35%) (40%) (45%) (50%) (75%) (100%) (150%) (Others)

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14)

A Balance Sheet Exposure


2 Receivables from Public Sector Entities 0 535,613,153,741.80 0 0 0 1,455,350,265,050.50 0 0 0 0 1,990,963,418,792.30 198,897,245,537.35


0 0 0 0 0 0 0 0 0 0 0 0

4 Receivables from Banks 0 226,226,983,337.80 0 0 0 127,121,861,069.50 0 0 0 0 353,348,844,407.30 35,299,549,556.29

5 Loans Secured by Residential Property 0 187,794,155,646.20 2,673,197,137,313.85 0 0 0 0 0 0 0 2,860,991,292,960.05 285,813,030,166.71


7 Employee/Retirement Loans 0 0 0 0 0 3,766,349,368,946.00 0 0 0 0 3,766,349,368,946.00 376,258,301,957.71

8 Receivables from SME & Retail Portfolio 0 0 0 0 0 0 5,716,282,608,960.00 0 0 0 5,716,282,608,960.00 571,056,632,635.10

9 Receivables from Corporates 0 235,797,439,823.60 0 0 0 1,456,669,409,274.50 0 21,844,119,796,343.00 0 0 23,536,586,645,441.10 2,351,305,005,879.57


11 Other Assets 0 0 0 0 0 0 0 2,562,348,642,015.00 0 0 2,562,348,642,015.00 255,978,629,337.30

Total of Balance Sheet Exposure 0 1,185,431,732,549.40 2,673,197,137,313.85 0 0 6,805,490,904,340.50 5,716,282,608,960.00 25,176,772,612,061.00 0 0 41,557,174,995,224.70 4,151,561,782,022.96

B Off-Balance Sheet Exposure


2 Receivables from Public Sector Entities 0 0 0 0 0 184,796,361,761.70 0 0 0 0 184,796,361,761.70 18,461,156,539.99


0 0 0 0 0 0 0 0 0 0 0 0

4 Receivables from Banks 0 0 0 0 0 0 0 0 0 0 0 0

5 Loans Secured by Residential Property 0 0 0 0 0 0 0 0 0 0 0 0


7 Employee/Retirement Loans 0 0 0 0 0 0 0 0 0 0 0 0

8 Receivables from SME & Retail Portfolio 0 0 0 0 0 0 22,965,409,117.65 0 0 0 22,965,409,117.65 2,294,244,370.85

9 Receivables from Corporates 0 0 0 0 0 0 0 214,437,701,126.00 0 0 214,437,701,126.00 21,422,326,342.49


Total of Off-Balance Sheet Exposure 0 0 0 0 0 184,796,361,761.70 22,965,409,117.65 279,029,437,678.00 0 0 486,791,208,557.35 48,630,441,734.88

C Counterparty Credit Risk








(in million Rupiah)


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December 31, 2017

Secured Portion by

Unsecured PortionNet Receivable Collateral Guarantee

Financing Insurance

Others

(1) (2) (3) (4) (5) (6) (7) (8)A Eksposur Neraca1 Receivables from the Government 22,655,621,075,822 - - - - 22,655,621,075,822 2 Receivables from Public Sector Entities 5,725,926,994,812 137,160,696,002 - - - 5,588,766,298,810 3 Receivables from Multilateral Development

Banks and International Institutions - - - - - -

4 Receivables from Banks 1,414,887,769,245 29,509,130,417 - - - 1,385,378,638,828 5 Loans Secured by Residential Property 8,617,505,766,761 40,828,881,919 - - - 8,576,676,884,842 6 Loans Secured by Commercial Property - - - - - - 7 Employee/Retirement Loans 7,533,048,354,144 349,616,252 - - - 7,532,698,737,892 8 Receivables from SME & Retail Portfolio 9,852,643,692,323 2,230,933,547,043 - - - 7,621,710,145,280 9 Receivables from Corporates 27,959,865,857,142 2,023,420,043,132 - - - 25,936,445,814,010 10 Past Due Receivables 771,324,555,472 1,020,381,769 - - - 770,304,173,703 11 Other Assets 3,697,958,473,620 - - - - -

Total of Balance Sheet Exposure 88,228,782,539,341 4,463,222,296,534 - - - 80,067,601,769,187 B Off-Balance Sheet Exposure1 Receivables from the Government - - - - - - 2 Receivables from Public Sector Entities 369,592,723,523 - - - - 369,592,723,523 3 Receivables from Multilateral Development


4 Receivables from Banks - - - - - - 5 Loans Secured by Residential Property - - - - - - 6 Loans Secured by Commercial Property - - - - - - 7 Employee/Retirement Loans - - - - - - 8 Receivables from SME & Retail Portfolio 30,620,545,490 - - - - 30,620,545,490 9 Receivables from Corporates 214,437,701,126 - - - - 214,437,701,126 10 Past Due Receivables 64,591,736,552 - - - - 64,591,736,552

Total of Off-Balance Sheet Exposure 679,242,706,692 - - - - 679,242,706,692 C Counterparty Credit Risk Exposure1 Receivables from the Government2 Receivables from Public Sector Entities3 Receivables from Multilateral Development

Banks and International Institutions4 Receivables from Banks5 Receivables from SME & Retail Portfolio6 Receivables from Corporates



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NA

GeM

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AN

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iSCU

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AN

ALy

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CoM

PAN

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Ro

FilE

CoR

Po

RAT

E S

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RES

Po

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iBil

iTY

MA

NA

gE

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NT

RE

Po

RT

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oR

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g

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NA

NC

EH

UM

AN

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oU

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DAT

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NA

NC

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EN

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December 31, 2017

Secured Portion by

Unsecured PortionNet Receivable Collateral Guarantee

Financing Insurance

Others

(1) (2) (3) (4) (5) (6) (7) (8)A Eksposur Neraca1 Receivables from the Government 22,655,621,075,822 - - - - 22,655,621,075,822 2 Receivables from Public Sector Entities 5,725,926,994,812 137,160,696,002 - - - 5,588,766,298,810 3 Receivables from Multilateral Development


4 Receivables from Banks 1,414,887,769,245 29,509,130,417 - - - 1,385,378,638,828 5 Loans Secured by Residential Property 8,617,505,766,761 40,828,881,919 - - - 8,576,676,884,842 6 Loans Secured by Commercial Property - - - - - - 7 Employee/Retirement Loans 7,533,048,354,144 349,616,252 - - - 7,532,698,737,892 8 Receivables from SME & Retail Portfolio 9,852,643,692,323 2,230,933,547,043 - - - 7,621,710,145,280 9 Receivables from Corporates 27,959,865,857,142 2,023,420,043,132 - - - 25,936,445,814,010 10 Past Due Receivables 771,324,555,472 1,020,381,769 - - - 770,304,173,703 11 Other Assets 3,697,958,473,620 - - - - -

Total of Balance Sheet Exposure 88,228,782,539,341 4,463,222,296,534 - - - 80,067,601,769,187 B Off-Balance Sheet Exposure1 Receivables from the Government - - - - - - 2 Receivables from Public Sector Entities 369,592,723,523 - - - - 369,592,723,523 3 Receivables from Multilateral Development


4 Receivables from Banks - - - - - - 5 Loans Secured by Residential Property - - - - - - 6 Loans Secured by Commercial Property - - - - - - 7 Employee/Retirement Loans - - - - - - 8 Receivables from SME & Retail Portfolio 30,620,545,490 - - - - 30,620,545,490 9 Receivables from Corporates 214,437,701,126 - - - - 214,437,701,126 10 Past Due Receivables 64,591,736,552 - - - - 64,591,736,552

Total of Off-Balance Sheet Exposure 679,242,706,692 - - - - 679,242,706,692 C Counterparty Credit Risk Exposure1 Receivables from the Government2 Receivables from Public Sector Entities3 Receivables from Multilateral Development

Banks and International Institutions4 Receivables from Banks5 Receivables from SME & Retail Portfolio6 Receivables from Corporates



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AN

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oo

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UM

AN

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FiNA

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DISCLOSURE ON THE ASSET SECURITIZATION TRANSACTION


No. Securitization Exposure

December 31, 2017

SecuritizedAsset

Impaired SecuritizationProfit/Loss from

SecuritizationRwA

CapitalDeductionPast Due Not Yet Due

(1) (2) (3) (4) (5) (6) (7) (8)

1. Bank acts as original creditor – type of exposure (example: loans secured by residential property)

2. Bank acts as provider for supporting creditors

a. Supporting facilities for first level risk bearer – type of exposure (example: loans secured by residential property)

b. Supporting facilities for second level risk bearer – type of exposure (example: loans secured by residential property)

3. Bank acts as provider of liquidity facility – type of exposure (example: loans secured by residential property)

4. Bank acts as provider of service – type of exposure (example: loans secured by residential property)

5. Bank acts as custodian bank – type of exposure (example: loans secured by residential property)

6. Bank acts as investor

a. Senior trache – type of exposure (example: loans secured by residential property)

b. Junior trache – type of exposure (example: loans secured by residential property)

PENGUNGKAPAN RINGKASAN AKTIVITAS TRANSAKSI SEKURITISASI ASET DALAM HAL BUS BERTINDAK SEBAGAI KREDITUR ASAL


No. Underlying Asset

December 31, 2017

SecuritizedAsset

Gain (Loss)from Sales

(1) (2) (3) (4)


2. Receivables from Public Sector Entities


4. Receivables from Banks






10. Other Assets

Total


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NA

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AN

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AN

ALy

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CoM

PAN

YP

Ro

FilE

CoR

Po

RAT

E S

oC

iAl

RES

Po

NS

iBil

iTY

MA

NA

gE

ME

NT

RE

Po

RT

go

oD

Co

RP

oR

ATE

g

oV

ER

NA

NC

EH

UM

AN

RES

oU

RC

ES

DE

VE

loP

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NT

CoN

Soli

DAT

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Fi

NA

NC

iAl

STAT

EM

EN

TS

DISCLOSURE ON THE ASSET SECURITIZATION TRANSACTION


No. Securitization Exposure

December 31, 2017

SecuritizedAsset

Impaired SecuritizationProfit/Loss from

SecuritizationRwA

CapitalDeductionPast Due Not Yet Due

(1) (2) (3) (4) (5) (6) (7) (8)

1. Bank acts as original creditor – type of exposure (example: loans secured by residential property)

2. Bank acts as provider for supporting creditors

a. Supporting facilities for first level risk bearer – type of exposure (example: loans secured by residential property)

b. Supporting facilities for second level risk bearer – type of exposure (example: loans secured by residential property)

3. Bank acts as provider of liquidity facility – type of exposure (example: loans secured by residential property)

4. Bank acts as provider of service – type of exposure (example: loans secured by residential property)

5. Bank acts as custodian bank – type of exposure (example: loans secured by residential property)

6. Bank acts as investor

a. Senior trache – type of exposure (example: loans secured by residential property)

b. Junior trache – type of exposure (example: loans secured by residential property)

PENGUNGKAPAN RINGKASAN AKTIVITAS TRANSAKSI SEKURITISASI ASET DALAM HAL BUS BERTINDAK SEBAGAI KREDITUR ASAL


No. Underlying Asset

December 31, 2017

SecuritizedAsset

Gain (Loss)from Sales

(1) (2) (3) (4)


2. Receivables from Public Sector Entities


4. Receivables from Banks






10. Other Assets

Total


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HT

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TA

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Ro

FilECo

RP

oR

ATE

SoC

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RES

Po

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iBiliT

YM

AN

Ag

EM

EN

TR

EP

oR

Tg

oo

D Co

RP

oR

ATE

g

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ER

NA

NC

EH

UM

AN

RESo

UR

CES

DE

VE

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NT

CoN

SoliD

ATE

D

FiNA

NC

iAl STAT

EM

EN

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DISCLOSURE OF RwA CALCULATION FOR CREDIT RISK USING STANDARD APPROACH


(1) Balance Sheet Exposure

No. Portfolio CategoryDecember 31, 2017

Net Receivables RwA before CRM RwA after CRM

(1) (2) (3) (4) (5)

1 Receivables from the Government 22.655.621.075.822.00 0 0

2 Receivables from Public Sector Entities 5.725.926.994.812.00 2.059.543.766.793.30 1.990.963.418.792.30


0 0 0

4 Receivables from Banks 1.414.887.769.245.00 368.103.409.615.80 353.348.844.407.30

5 Loans Secured by Residential Property 8.617.505.766.761.00 2.875.078.827.173.80 2.860.991.292.960.05

6 Loans Secured by Commercial Property 0 0 0

7 Employee/Retirement Loans 7.533.048.354.144.00 3.766.524.177.072.00 3.766.349.368.946.00

8 Receivables from SME & Retail Portfolio 9.852.643.692.323.00 7.389.482.769.242.25 5.716.282.608.960.00

9 Receivables from Corporates 27.959.865.857.142.00 25.456.506.688.573.10 23.536.586.645.441.10

10 Past Due Receivables 771.324.555.472.00 771.324.555.472.00 770.304.173.703.00

11 Other Assets 3.697.958.473.631.00 0 2.562.348.642.015.00

Total 88.228.782.539.352.00 42.686.564.193.942.20 41.557.174.995.224.70

(2) Eksposur Kewajiban Komitmen/Kontinjensi pada Transaksi Rekening Administratif

NO Kategori PortofolioDecember 31, 2017


(1) (2) (3) (4) (5)

1 Receivables from the Government 0 0 0

2 Receivables from Public Sector Entities 369,592,723,523.40 184,796,361,761.70 184,796,361,761.70


0 0 0

4 Receivables from Banks 0 0 0

5 Loans Secured by Residential Property 0 0 0


7 Employee/Retirement Loans 0 0 0

8 Receivables from SME & Retail Portfolio 30,620,545,490.20 22,965,409,117.65 22,965,409,117.65

9 Receivables from Corporates 214,437,701,126.00 214,437,701,126.00 214,437,701,126.00

10 Past Due Receivables 64,591,736,552.00 64,591,736,552.00 64,591,736,552.00

Total 679,242,706,691.60 486,791,208,557.35 486,791,208,557.35

(3) Counterparty Credit RiskNO Kategori Portofolio December 31, 2017


(1) (2) (3) (4) (5)


2 Receivables from Public Sector Entities 0 0 0


0 0 0


5 Receivables from SME & Retail Portfolio 0 0 0

6 Receivables from Corporates 0 0 0

Total 0 0 0


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RES

Po

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NT

RE

Po

RT

go

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Co

RP

oR

ATE

g

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ER

NA

NC

EH

UM

AN

RES

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NT

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DAT

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NC

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STAT

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EN

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DISCLOSURE OF RwA CALCULATION FOR CREDIT RISK USING STANDARD APPROACH


(1) Balance Sheet Exposure



(1) (2) (3) (4) (5)

1 Receivables from the Government 22.655.621.075.822.00 0 0

2 Receivables from Public Sector Entities 5.725.926.994.812.00 2.059.543.766.793.30 1.990.963.418.792.30


0 0 0

4 Receivables from Banks 1.414.887.769.245.00 368.103.409.615.80 353.348.844.407.30

5 Loans Secured by Residential Property 8.617.505.766.761.00 2.875.078.827.173.80 2.860.991.292.960.05


7 Employee/Retirement Loans 7.533.048.354.144.00 3.766.524.177.072.00 3.766.349.368.946.00

8 Receivables from SME & Retail Portfolio 9.852.643.692.323.00 7.389.482.769.242.25 5.716.282.608.960.00

9 Receivables from Corporates 27.959.865.857.142.00 25.456.506.688.573.10 23.536.586.645.441.10

10 Past Due Receivables 771.324.555.472.00 771.324.555.472.00 770.304.173.703.00

11 Other Assets 3.697.958.473.631.00 0 2.562.348.642.015.00

Total 88.228.782.539.352.00 42.686.564.193.942.20 41.557.174.995.224.70

(2) Eksposur Kewajiban Komitmen/Kontinjensi pada Transaksi Rekening Administratif

NO Kategori PortofolioDecember 31, 2017


(1) (2) (3) (4) (5)


2 Receivables from Public Sector Entities 369,592,723,523.40 184,796,361,761.70 184,796,361,761.70


0 0 0


5 Loans Secured by Residential Property 0 0 0


7 Employee/Retirement Loans 0 0 0

8 Receivables from SME & Retail Portfolio 30,620,545,490.20 22,965,409,117.65 22,965,409,117.65

9 Receivables from Corporates 214,437,701,126.00 214,437,701,126.00 214,437,701,126.00

10 Past Due Receivables 64,591,736,552.00 64,591,736,552.00 64,591,736,552.00

Total 679,242,706,691.60 486,791,208,557.35 486,791,208,557.35

(3) Counterparty Credit RiskNO Kategori Portofolio December 31, 2017


(1) (2) (3) (4) (5)


2 Receivables from Public Sector Entities 0 0 0


0 0 0


5 Receivables from SME & Retail Portfolio 0 0 0

6 Receivables from Corporates 0 0 0

Total 0 0 0


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(4) Settlement Risk Exposure


Exposure Capital Deduction Factor RwA after CRM

(1) (2) (3) (4) (5)

1 Delivery versus payment

a. Capital Charge 8% (5-15 days)

b. Capital Charge 50% (16-30 days)

c. Capital Charge 75% (31-45 days)

d. Capital Charge 100% (more than 45 days)

2 Non-delivery versus payment

Total

(5) Eksposur Sekuritisasi

No. Transaction TypeDecember 31, 2017

Exposure Capital Deduction Factor

(1) (2) (3) (4)

1 Eligible supporting financing facility

2 Non-eligible supporting financing facility

3 Eligible financing facility

4 Non-eligible financing facility

5 Eligible purchase of asset-backed securities

6 Non-eligible purchase of asset-backed securities

7 Securitization exposure not included in provisions governing prudential principles in activities

Total

(6) Total of Credit Risk Measurement

December 31, 2017

TOTAL OF CREDIT RISK RwA 42.043.966.203.782,10

TOTAL OF CAPITAL DEDUCTION FACTOR


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NA

NC

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STAT

EM

EN

TS

(4) Settlement Risk Exposure


Exposure Capital Deduction Factor RwA after CRM

(1) (2) (3) (4) (5)

1 Delivery versus payment

a. Capital Charge 8% (5-15 days)

b. Capital Charge 50% (16-30 days)

c. Capital Charge 75% (31-45 days)

d. Capital Charge 100% (more than 45 days)

2 Non-delivery versus payment

Total

(5) Eksposur Sekuritisasi

No. Transaction TypeDecember 31, 2017

Exposure Capital Deduction Factor

(1) (2) (3) (4)

1 Eligible supporting financing facility

2 Non-eligible supporting financing facility

3 Eligible financing facility

4 Non-eligible financing facility

5 Eligible purchase of asset-backed securities

6 Non-eligible purchase of asset-backed securities

7 Securitization exposure not included in provisions governing prudential principles in activities

Total

(6) Total of Credit Risk Measurement

December 31, 2017

TOTAL OF CREDIT RISK RwA 42.043.966.203.782,10

TOTAL OF CAPITAL DEDUCTION FACTOR


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Po

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iBiliT

YM

AN

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EN

TR

EP

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Tg

oo

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NA

NC

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UM

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DISCLOSURE ON MATURITY PROFILE OF RUPIAH AND FOREIGN CURRENCY


a) Maturity Profile of Rupiah

No. Accounts Balance

December 31, 2017

BalanceMaturity

≤ 1 Month >1 to 3 Months >3 to 6 Months >6 to 12 Months >12 Months

(1) (2) (3) (4) (5) (6) (7) (8) (3)

I Balance Sheet

A. Asset

1. Cash 1.063.097.391.864,00 1.063.097.391.864,00 0 0 0 0 1.232.436

2. Placement in Bank Indonesia 13.616.317.096.085,00 11.466.317.096.085,00 0 1.350.000.000.000,00 800.000.000.000,00 0 7.525.852

3. Placement in Other Banks 224.181.157.118,00 223.117.884.118,00 1.063.273.000,00 0 0 0 79.351

4. Owned Marketable Securities 10.115.271.792.842,00 2.438.646.179.095,00 1.866.302.061.761,00 778.779.895.171,00 200.000.000.000,00 4.831.543.656.815,00 6.430.100

5. Murabahah Receivables (Gross) 52.254.396.538.332,00 187.273.547.122,00 617.663.238.308,00 767.948.144.652,00 1.086.771.169.855,00 49.594.740.438.395,00 48.170.818

6. Salam Receivables 0 0 0 0 0 0 -

7. Istishna’ Receivables 3.143.974.751,00 2.221.419.590,00 0 0 5.684.834,00 916.870.327,00 7.147

8. Qardh Receivables 2.615.262.356.617,00 447.566.367.850,00 961.077.438.530,00 960.279.267.064,00 97.850.672.227,00 148.488.610.946,00 1.755.934

9. Mudharabah Financing 3.398.751.269.823,00 10.072.738.871,00 13.071.487.286,00 246.573.516.234,00 132,005.643.492,00 2.997.027.883.940,00 3.597.104

10. Musyarakah Financing 16.232.042.425.908,00 1.050.876.322.727,00 1.539.531.854.200,00 1.934.209.647.686,00 1.947.629.334.777,00 9.759.795.266.518,00 9.979.825

11. Ijarah 621.697.151.516,00 8.689.626,00 425.856.918,00 2.048.166.458,00 5.141.021.268,00 614.073.417.246,00 726.632

12. Other Assets 72.449.762.626.53 72.449.762.626.53 0 0 0 0 288.871

B. Liability

1. Third Party Funds

a. Wadiah Demand Deposit 6.980.168.824.983,00 6.980.168.824.983,00 0 0 0 0 4.826.082

b. Mudharabah Deposit 34.155.680.098.159,00 28.606.540.795.604,00 2.705.632.179.898,00 1.312.517.668.747,00 1.456.518.089.494,00 74.471.364.416,00 27.900.023

c. Wadiah Savings 3.193.557.633.943,00 3.193.557.633.943,00 0 0 0 0 2.335.566

d. Mudharabah Savings 28.195.838.480.384,00 27.705.878.226.195,00 19.836.925.775,00 34.329.741.132,00 55.358.984.734,00 380.434.602.548,00 22.191.113

e. Others 0 0 0 0 0 0 -

2. Liability to Bank Indonesia 0 0 0 0 0 0 -

3. Liability to Other Banks 653.525.410.735,00 621.781.277.306,00 18.711.029.493,00 3.230.883.936,00 6.802.220.000,00 3.000.000.000,00 264.167

4. Marketable Securities Issued 375.000.000.000 0 0 0 0 375.000.000.000 -

5. Financing Received 0 0 0 0 0 0 -

6. Other Liabilities 0 0 0 0 0 0 -

-

C. Off-Balance Sheets -

1. Commitment 78.381.228.775,00 6.219.706.694,00 72161522081 0 0 0 -

2. Contingency 41.384.845.362,00 0,00 100000000 26162000000 10151466556 4971378806 93.897

-

D. Difference (A-B) 26.662.840.469.278.50 -50.146.279.358.456.50 2.254.955.074.837,00 4.689.760.343.450,00 2.750.724.232.225,00 67.113.680.177.223,00 22.277.119

b) Maturity Profile of Foreign Currency


December 31, 2017

BalanceMaturity


(1) (2) (3) (4) (5) (6) (7) (8) (3)

I Balance Sheet

A. Asset

1. Cash 72,512,439,752.00 72,512,439,752.00 0 0 0 0 4,450

2. Placement in Bank Indonesia 774,975,600.000.00 774,975,600.000.00 0 0 0 0 127,986

3. Placement in Other Banks 478,534,229,865.00 477,177,479,865.00 1,356,750.000.00 0 0 0 44,376

4. Owned Marketable Securities 140,283,996,702.00 0 0 0 0 140,283,996,702.00 10,673

5. Murabahah Receivables (Gross) 2,529,583,305,501.00 208,554,785,533.00 0 0 145,763,118,966.00 2,175,265,401.002.00 236,332


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DISCLOSURE ON MATURITY PROFILE OF RUPIAH AND FOREIGN CURRENCY


a) Maturity Profile of Rupiah


December 31, 2017

BalanceMaturity


(1) (2) (3) (4) (5) (6) (7) (8) (3)

I Balance Sheet

A. Asset

1. Cash 1.063.097.391.864,00 1.063.097.391.864,00 0 0 0 0 1.232.436

2. Placement in Bank Indonesia 13.616.317.096.085,00 11.466.317.096.085,00 0 1.350.000.000.000,00 800.000.000.000,00 0 7.525.852

3. Placement in Other Banks 224.181.157.118,00 223.117.884.118,00 1.063.273.000,00 0 0 0 79.351

4. Owned Marketable Securities 10.115.271.792.842,00 2.438.646.179.095,00 1.866.302.061.761,00 778.779.895.171,00 200.000.000.000,00 4.831.543.656.815,00 6.430.100

5. Murabahah Receivables (Gross) 52.254.396.538.332,00 187.273.547.122,00 617.663.238.308,00 767.948.144.652,00 1.086.771.169.855,00 49.594.740.438.395,00 48.170.818


7. Istishna’ Receivables 3.143.974.751,00 2.221.419.590,00 0 0 5.684.834,00 916.870.327,00 7.147

8. Qardh Receivables 2.615.262.356.617,00 447.566.367.850,00 961.077.438.530,00 960.279.267.064,00 97.850.672.227,00 148.488.610.946,00 1.755.934

9. Mudharabah Financing 3.398.751.269.823,00 10.072.738.871,00 13.071.487.286,00 246.573.516.234,00 132,005.643.492,00 2.997.027.883.940,00 3.597.104

10. Musyarakah Financing 16.232.042.425.908,00 1.050.876.322.727,00 1.539.531.854.200,00 1.934.209.647.686,00 1.947.629.334.777,00 9.759.795.266.518,00 9.979.825

11. Ijarah 621.697.151.516,00 8.689.626,00 425.856.918,00 2.048.166.458,00 5.141.021.268,00 614.073.417.246,00 726.632

12. Other Assets 72.449.762.626.53 72.449.762.626.53 0 0 0 0 288.871

B. Liability

1. Third Party Funds

a. Wadiah Demand Deposit 6.980.168.824.983,00 6.980.168.824.983,00 0 0 0 0 4.826.082

b. Mudharabah Deposit 34.155.680.098.159,00 28.606.540.795.604,00 2.705.632.179.898,00 1.312.517.668.747,00 1.456.518.089.494,00 74.471.364.416,00 27.900.023

c. Wadiah Savings 3.193.557.633.943,00 3.193.557.633.943,00 0 0 0 0 2.335.566

d. Mudharabah Savings 28.195.838.480.384,00 27.705.878.226.195,00 19.836.925.775,00 34.329.741.132,00 55.358.984.734,00 380.434.602.548,00 22.191.113

e. Others 0 0 0 0 0 0 -


3. Liability to Other Banks 653.525.410.735,00 621.781.277.306,00 18.711.029.493,00 3.230.883.936,00 6.802.220.000,00 3.000.000.000,00 264.167

4. Marketable Securities Issued 375.000.000.000 0 0 0 0 375.000.000.000 -



-


1. Commitment 78.381.228.775,00 6.219.706.694,00 72161522081 0 0 0 -

2. Contingency 41.384.845.362,00 0,00 100000000 26162000000 10151466556 4971378806 93.897

-

D. Difference (A-B) 26.662.840.469.278.50 -50.146.279.358.456.50 2.254.955.074.837,00 4.689.760.343.450,00 2.750.724.232.225,00 67.113.680.177.223,00 22.277.119

b) Maturity Profile of Foreign Currency


December 31, 2017

BalanceMaturity


(1) (2) (3) (4) (5) (6) (7) (8) (3)

I Balance Sheet

A. Asset

1. Cash 72,512,439,752.00 72,512,439,752.00 0 0 0 0 4,450

2. Placement in Bank Indonesia 774,975,600.000.00 774,975,600.000.00 0 0 0 0 127,986

3. Placement in Other Banks 478,534,229,865.00 477,177,479,865.00 1,356,750.000.00 0 0 0 44,376

4. Owned Marketable Securities 140,283,996,702.00 0 0 0 0 140,283,996,702.00 10,673

5. Murabahah Receivables (Gross) 2,529,583,305,501.00 208,554,785,533.00 0 0 145,763,118,966.00 2,175,265,401.002.00 236,332


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7. Istishna’ Receivables 0 0 0 0 0 0 -

8. Qardh Receivables 2,329,645,306.00 2,329,645,306.00 0 0 0 0 9,620

9. Mudharabah Financing 0 0 0 0 0 0 -

10. Musyarakah Financing 1,408,170,527,058.00 25,197,659,635.00 0 3,866,737,500.00 272,381,130.000.00 1,106,724,999,923.00 94,634

11. Ijarah 166,072,050,171.00 0 0 0 0 166,072,050,171.00 12,512

12. Other Assets 13,088,412,907.06 13,088,412,907.06 0 0 0 0 511

-

B. Liability -

1. Third Party Funds -

a. Wadiah Demand Deposit 1,980,891,921,899.00 1,980,891,921,899.00 0 0 0 0 170,894

b. Mudharabah Deposit 3,392,108,553.005.00 2,916,777,631,392.00 339,648,676,293.00 34,065,729,987.00 100,110,703,688.00 1,505,811,645.00 319,772

c. Wadiah Savings 0 0 0 0 0 0 -

d. Mudharabah Savings 4,897,867,500.00 4,897,867,500.00 0 0 0 0 -

e. Others 0 0 0 0 0 0 -


3. Liability to Other Banks 0 0 0 0 0 0 -

4. Marketable Securities Issued 0 0 0 0 0 0 -



-


1. Commitment 64,723,240,868.00 0.00 13008272468 51714968400 0 0 394

2. Contingency 736,437,277,433.00 247,236,762,690.00 57168045136 11924367210 1,29343E+11 2,90765E+11 24,921

-

D. Difference (A-B) 207,651,864,858.06 -3,328,731,397,792.94 -338,291,926,293.00 -30,198,992,487.00 318,033,545,278.00 3,586,840,636,153.00 50,427

OPERATIONAL RISK


No. ApproachtDecember 31, 2017

Average Gross Income in the Past 3 Years

Capital Charge RwA

(1) (2) (3) (4) (5)

1 Basic Indicator Approach 3,771,691 565,754 7,071,920

TOTAL 3,771,691 565,754 7,071,920


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7. Istishna’ Receivables 0 0 0 0 0 0 -

8. Qardh Receivables 2,329,645,306.00 2,329,645,306.00 0 0 0 0 9,620

9. Mudharabah Financing 0 0 0 0 0 0 -

10. Musyarakah Financing 1,408,170,527,058.00 25,197,659,635.00 0 3,866,737,500.00 272,381,130.000.00 1,106,724,999,923.00 94,634

11. Ijarah 166,072,050,171.00 0 0 0 0 166,072,050,171.00 12,512

12. Other Assets 13,088,412,907.06 13,088,412,907.06 0 0 0 0 511

-

B. Liability -

1. Third Party Funds -

a. Wadiah Demand Deposit 1,980,891,921,899.00 1,980,891,921,899.00 0 0 0 0 170,894

b. Mudharabah Deposit 3,392,108,553.005.00 2,916,777,631,392.00 339,648,676,293.00 34,065,729,987.00 100,110,703,688.00 1,505,811,645.00 319,772

c. Wadiah Savings 0 0 0 0 0 0 -

d. Mudharabah Savings 4,897,867,500.00 4,897,867,500.00 0 0 0 0 -

e. Others 0 0 0 0 0 0 -


3. Liability to Other Banks 0 0 0 0 0 0 -

4. Marketable Securities Issued 0 0 0 0 0 0 -



-


1. Commitment 64,723,240,868.00 0.00 13008272468 51714968400 0 0 394

2. Contingency 736,437,277,433.00 247,236,762,690.00 57168045136 11924367210 1,29343E+11 2,90765E+11 24,921

-

D. Difference (A-B) 207,651,864,858.06 -3,328,731,397,792.94 -338,291,926,293.00 -30,198,992,487.00 318,033,545,278.00 3,586,840,636,153.00 50,427

OPERATIONAL RISK


No. ApproachtDecember 31, 2017

Average Gross Income in the Past 3 Years

Capital Charge RwA

(1) (2) (3) (4) (5)

1 Basic Indicator Approach 3,771,691 565,754 7,071,920

TOTAL 3,771,691 565,754 7,071,920

DISCLOSURE ON MARKET RISK USING STANDARD APPROACH


No. Type of Risk

December 31, 2017

Bank Consolidation

Capital Charge RwA Capital Charge RwA

(1) (2) (3) (4) (5) (6)

1 Interest Rate Benchmark Riskt

a. Specific Risk

b. General Risk 18 231

2 Exchange Rate Risk 19,833 247,916

3 Equity Risk*)

4 Commodity Risk*)

TOTAL 19,852 248,147

*) For Sharia General Bank that has a subsidiary company that has the intended risk exposure


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COLLECTABILITY LEVEL OF THE COMPANY’S PRODUCTIVE ASSETSCollectability Level of the Company’s Productive AssetsBased on the management review and evaluation, collectability of all current accounts with other banks and securities investment, investment and acceptance receivables as of December 31, 2017 and 2016 were classified as liquid. Management considered that total provision for impairment losses of current account with other banks and investment on securities as well as investment and acceptance receivables was adequate to cover the possibility of loss due to default current account with other banks, investment on securities, investment and acceptance receivables.

In 2017, receivables are generally secured by pledged mortgages, powers of attorney to pledge or sell, to release mudharabah time deposits, and other guarantees accepted by the Bank. Effective receivables margin for Rupiah was on the range between 11.21% per annum up to 13.53% per annum for 2016 and on the range between 11.10% per annum up to 12.45% per annum for 2016 and for foreign currency was on the range between 2.62% per annum up to 8.01% per annum for 2017 and on the range between 3.09% per annum up to 7.11% per annum for 2016.

Receivables in the form of syndication was Rp786,048 and Rp1,727,386 respectively as at December 31, 2017 and 2016. Meanwhile total restructured receivables until December 31, 2017 and 2016 was Rp3,790,985 and Rp3,819,685 respectively. Receivables restructuring was taken by extending time period, reschedule and additional of receivables facilities for debtor.

Receivables ratio and … as of December 31, 2017 was 5.10% and 2.50% (2016: 5.59% and 3.51%). In general, Management considered that provision for impairment losses formed was adequate to cover the possibility of loss due to default receivables.

oTHER FiNANCiAl iNFoRMATioN REViEw

CAPITAL STRUCTURE AND MANAGEMENT POLICY ON CAPITAL STRUCTURE Capital Structure The Bank’ aims to manage capital is to protect its ability in maintaining its business sustainability so the Bank will be able to provide return for shareholders and benefits to other stakeholders as well as maintain optimal capital structure to lower capital cost. Capital structure is a balance between the use of the capital with loan/liabilities that consists of current liabilities and non-current liabilities.

The Bank’s capital adequacy ratio as of December 31, 2017 was 15.89% and as of December 31, 2016 was 14.01%. That capital adequacy ratio was obtained from total capital amounted to Rp7.84 billion as at December 31, 2017 and Rp6.94 billion as at December 31, 2016 with core capital of 88.52% as at December 31, 2017, increased compared to previous year that was 88.00%.

Management Policy on Capital StructureThe Bank's capital management policy aims to ensure that the Bank has an efficient capital structure, has a strong capital to support the Bank’s current business development strategy and to maintain the continuity of the Bank’s business in the foreseeable future as well as to meet the capital adequacy set by the regulator.

Capital Plan is prepared by the Board of Directors as part of the Bank’s Business Plan and is approved by the Board of Commissioners. The Bank capital plan is formulated based on the assessment of capital adequacy requirements, business expansion plan, and the Bank’s liquidity needs.


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Table of Bank Capital Adequacy Ratio (in Million Rupiah)


I. Component Capital

A. Core-capital 6.109.151 6.943.575

Paid in capital 1.989.022 2.489.022

General reserve 397.804 497.804

Retained earning at beginning of year after tax 2.618.663 2.797.403

Current year net income after tax (100%) 325.414 365.166

Piad-in capital in advance 500.000 500.000

Other comprehensive income: gain potential 6.440 1.759

Other intelectual property rights (including software) (72.230) (51.617)

Difference on fixed assets revaluation *) 344.038 344.038

B. Supplementary Capital 832.851 900.550

Difference on fixed assets revaluation *) - -

General reservefrom allowance for possible losses on earning assets (maximum of 1.25% of risk weighted assets)

457.851 525.550

Subordinate Investment (maximum 50% of core-capital) 375.000 375.000

C. Additional Supplementary Capital - -

D. Temporary Investment in Shares - -

II. Total Core, Supplementary and Additional Supplementary Capital 6.942.002 7.844.125

III. Credit Risk-Weighted Assets 42.213.944 42.030.117

IV. Operational Risk-Weighted Assests 6.740.505 7.071.920

V. Market Risk-Weighted Assets 601.469 248.147

VI. Total Risk-Weighted Assets 49.555.918 49.350.184

VII. Total Adequacy Ratio - credit risk 16,44% 18,66%

VIII. Capital Adequacy Ratio - credit, operational and market risk 14,01% 15,89%

IX. Minimum Capital Adequacy Ratio 9,99%**) 9,99%**)

*) Bank performed revaluation on fixed asset in group of ‘land’. Bank has received approval from the tax office on the revaluation dated 8 January 2016.

**) In accordance with the provisions of regulation No.21/POJK.03/2014 where the minimum Capital Adequacy Ratio is associated with the Bank's risk profile.


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MATERIAL RELATIONS FOR CAPITAL GOODS IN 2017In 2017, there were no capital goods investment activities, therefore there was no information related to:1. Purpose of the relations;2. Fund sources expected to fulfill the relations;3. Denominated currency; and4. Steps planned by the Company to protect risk from related foreign currency position.

CAPITAL GOODS INVESTMENT IN 2017 In 2017, BSM did not conduct any capital goods investment activities. Therefore, there was no information available on realized capital goods investment on the last book year, that comprises:1. Types of capital goods investment;2. Purpose of capital goods investment;3. Value of capital goods investment taken on the last book year.

COMPARISON OF RBB TARGET 2017 AND ACHIEVEMENT 2017, AND PROJECTION OF 2018 In general, BSM performance in 2017 showed an improvement for several financial indicators compared to performance in 2016 mainly in Bank’s assets achievement, third party funds, financing, fee based income, and net income.

Achievement of Income for the Year, Funding (DPK) and FinancingRealization of income from fund management by Bank as Mudharib in 2017 reached Rp7.29 trillion, or achieved 103.49% of Bank Business Plan (RBB) 2017 target for income from fund management by Bank as Mudharib amounted to Rp7.04 trillion.

Bank successfully recorded income for the year 2017 amounted to Rp365.17 billion, or achieved 105.60% of Bank Business Plan (RBB) 2017 target for income for the year amounted to Rp345.80 billion.

Realization of total assets in 2017 reached Rp87/94 trillion, or achieved 104.83% of RBB target for assets 2017 amounted to Rp83.89 trillion. Bank successfully collected third party fund (DPK) amounted to Rp77.90 trillion, or achieved 105.19% of RBB target for DPK in 2017 amounted to Rp74.06 trillion.

On the financing aspect, achievement of BSM financing in 2017 was recorded Rp60.58 trillion, or achieved 100.01% of RBB target for financing in 2017 amounted to Rp60.58 trillion.

Projection of 2018 BSM had formulated Bank performance achievement target in RBB 2018 related to business volume and financial ratios achievement plan. Performance achievement projection in 2018 is as follows:1. Assets growth by 4.05%, reaching Rp91.51 trillion2. Income from fund management by Bank as Mudharib growth by 5.18%, reaching Rp7.66 trillion3. Income for the year growth by 75.18%, reaching Rp639.70 billion4. Return on Equity (ROE) reaching 6.19%, and Return on Assets (ROA) reaching 0.71%5. NPF gross of 3.95% and NPF Net of 2.80%6. Capital Adequacy Ratio (CAR) of 15.09%.


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Table of RBB Target in 2017, Realization in 2017 and RBB Target Projection in 2018

No Description RBB Target in 2017

Realization Target in

2017

RBB Projection

in 2018

RBB Achievement: Realization in

2017 (%)

Achievement of RBB Projection in 2018: Realization

in 2017 (%)

1 Comprehensive Profit and Loss

Income from Fund Management by Bank as Mudharib (trillion Rupiah)

7,04 7,29 7,66 103,49% 105,18%

Net Income (billion Rupiah) 345,80 365,17 639,70 105,60% 175,18%

2 Financial Position (trillion Rupiah)

Assets 83,89 87,94 91,51 104,83% 104,05%

Financing 60,58 60,58 67,85 100,01% 111,99%

Third Party Fund 74,06 77,90 80,98 105,19% 103,95%

3 Financial Ratio (in %)

Capital Adequacy Ratio (CAR) 14,88% 15,89% 15,09% 106,79% 94,97%

Return on Assets (ROA) 0,61% 0,59% 0,71% 96,72% 120,34%

Return on Equity (ROE) 5,44% 5,72% 6,19% 105,15% 108,22%

Non Performing Financing to Total Financing (NPF Net)

3,27% 2,71% 2,80% 82,87% 103,32%

Non Performing Financing to Total Financing (NPF Gross)

4,92% 4,53% 3,95% 92,07% 87,20%

structure. Meanwhile proceeds of BSM Net Income for 2017 will be decided in GMS 2017.

Table of Dividend Division per Book Year

Dividend PolicyBook Year

2015 2016 2017

Net Income Rp289,58 Billion

Rp325,41 Billion

Rp365,17 Billion

Distributed cash dividend

- - -

Total share 397.804.387 397.804.387 497.804.387

Dividend per share - - -

Division Dividend Ratio

- - -

GMS Date March 11, 2016

April10, 2017

Announcement Date March 11, 2016

April10, 2017

-

Payment Date - - -

*) Restated

INFORMATION AND MATERIAL FACTS OCCURRED AFTER ACCOUNTANT REPORTING DATE There was no information and material facts occurred after Accountant reporting date that influenced BSM, in addition to matters stated in Public Accountant Firm report as attached.

DIVIDEND POLICY Dividend PolicyIn paying dividend, BSM applies dividend policy as follows:1. Paying cash dividend from net income annually, which

amount is decided through GMS based on the Board of Directors’ recommendation.

2. Decision to pay dividend depends on income, financial condition and liquidity, compliance towards prevailing rules and regulation and other factors that are considered relevant by BSM’s Board of Directors after obtaining GMS approval.

Dividend Division Proceeds of BSM Net Income for the year 2015, 2016 and 2017, in accordance to Decision of General Meeting of Shareholders, BSM will not distribute any dividend to shareholders. This was taken to improve bank capital


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SHARE OwNERSHIP PROGRAM BY EMPLOYEE AND/OR MANAGEMENT (ESOP/MSOP)In 2017, BSM did not conduct Initial Public Offering (IPO) or stock issuance, therefore information on share ownership program by employee and/or management by the Company (ESOP/MSOP) is not available.

REALIZATION OF PUBLIC OFFERING PROCEEDS USAGE In 2017, BSM did not conduct stock issuance, securities or bonds, therefore information on public offering proceeds through stock issuance, securities or bonds is not available.

MATERIAL TRANSACTION wITH CONFLICT OF INTEREST AND/OR TRANSACTION wITH AFFILIATESBank implemented SFAS No. 7 (Revised 2010), “Disclosure of Related Parties” which requires disclosure of related party relationships, transactions and balance with related parties, including commitment, in the financial statements.

A party is considered as related party to the Bank if:a. Entities under the control of the Bank;b. Associate companies;c. Investors with voting rights that gives them significant

influence;d. Entities controlled by investors under point c above;e. Key employees and family members; andf. Entities that are controlled, joint controlled or

significantly influenced by Government.

No. Related parties Nature of relationship

1 Pemerintah Negara Republik Indonesia

Ultimate shareholder

2 PT Bank Mandiri (Persero) Tbk.

Shareholder

3 PT Mandiri Sekuritas Shareholder

4 PT Bank Sinar Harapan Bali Owned by the same shareholder

5 PT AXA Mandiri Financial Services

Owned by the same shareholder

6 PT Mandiri Axa General Insurance


7 PT Mandiri Manajemen Investasi


8 PT Mandiri Taspen Pos Owned by the same shareholder


9 PT Bank Tabungan Negara (Persero) Tbk. - Unit Usaha Syariah

State Owned Enterprises

10 Perum BULOG State Owned Enterprises

11 Perum Jaminan Kredit Indonesia


12 Perum Perumnas State Owned Enterprises

13 PT Adhi Karya (Persero) Tbk. State Owned Enterprises

14 PT Amarta Karya (Persero) State Owned Enterprises

15 PT Aneka Tambang State Owned Enterprises

16 PT Angkasa Pura I (Persero) State Owned Enterprises

17 PT Asuransi Kredit Indonesia State Owned Enterprises

18 PT Asuransi Ekspor Indonesia (Persero)


19 PT Asuransi Jasa Indonesia (Persero)


20 PT Asuransi Jiwasraya (Persero)


21 PT Balai Pustaka (Persero) State Owned Enterprises

22 PT Bank BNI State Owned Enterprises

23 PT Bank BRI State Owned Enterprises

24 PT Barata Indonesia (Persero)


25 PT Brantas Abipraya (Persero)


26 PT Garuda Indonesia (Persero) Tbk.


27 PT Hutama Karya (Persero State Owned Enterprises

28 PT Indah Karya (Persero State Owned Enterprises

29 PT Indofarma (Persero) State Owned Enterprises

30 PT Indosat Tbk. State Owned Enterprises

31 PT Indra Karya (Persero) State Owned Enterprises

32 PT Industri Kapal Indonesia State Owned Enterprises

33 PT Istaka Karya (Persero) State Owned Enterprises

34 PT Jakarta Industrial Estate Pulogadung (Persero)


35 PT Jamsostek (Persero) State Owned Enterprises

36 PT Jasa Marga (Persero) State Owned Enterprises

37 PT Kawasan Berikat Nusantara (Persero) SBU Non- Industri


38 PT Kimia Farma (Persero) Tbk


39 PT Kliring Berjangka (Persero


40 PT Krakatau Steel (Persero) Tbk


41 PT PAL Indonesia State Owned Enterprises


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42 PT Pegadaian Persero State Owned Enterprises

43 PT Pelabuhan Indonesia II (Persero)


44 PT Pelabuhan Indonesia IV (Persero


45 PT Pembangunan Perumahan (Persero) Tbk.


46 PT Pengembangan Pariwisata Indonesia (Persero) Indonesia


47 PT Perkebunan Nusantara IX (Persero)


48 PT Perkebunan Nusantara VI (Persero)


49 PT Perkebunan Nusantara XIII (Persero)


50 PT Permodalan Nasional Madani (Persero)


51 PT Pertamina (Persero) State Owned Enterprises

52 PT Pertani (Persero) State Owned Enterprises

53 PT Perusahaan Listrik Negara (Persero)


54 PT Pos Indonesia (Persero) State Owned Enterprises

55 PT Pupuk Sriwidjaja (Persero)


56 PT Sarana Multigriya Finansial (Persero)


57 PT Semen Baturaja (Persero) State Owned Enterprises

58 PT Semen Gresik (Persero) Tbk.


59 PT Semen Indonesia (Persero) Tbk.


60 PT Surveyor Indonesia (Persero)


61 PT Wijaya Karya (Persero) Tbk.


62 PT Tabungan Asuransi Pegawai Negeri (Persero)


63 PT Waskita Karya State Owned Enterprises

64 PT Balebat Dedikasi Prima Subsidiary of State Owned Enterprises

65PT Bank BNI Syariah Subsidiary of State Owned

Enterprises

66PT Reasuransi Nasional Indonesia

Subsidiary of State Owned Enterprises

67PT Asuransi Jasindo Syariah Subsidiary of State Owned

Enterprises

68PT Jamkrindo Syariah Subsidiary of State Owned

Enterprises


69PT Angkasa Pura Solusi Subsidiary of State Owned

Enterprises

70PT Angkasa Pura Support Subsidiary of State Owned

Enterprises

71PT Asuransi Bringin Sejahtera Artamakmur


72PT Bahana Artha Ventura Subsidiary of State Owned

Enterprises

73PT BNI Asset Management Subsidiary of State Owned

Enterprises

74PT Garuda Maintenance Facility Aero


75PT Jaminan Pembiayaan Askrindo Syariah


76PT Krakatau Bandar Samudera


77PT Mandiri Capital Syariah Subsidiary of State Owned

Enterprises

78PT PNM Investment Management


79PT PP Alat Subsidiary of State Owned

Enterprises

80PT PP Pracetak Subsidiary of State Owned

Enterprises

81PT Pupuk Kalimantan Timur Subsidiary of State Owned

Enterprises

82PT Pupuk Kujang Subsidiary of State Owned

Enterprises

83PT Rumah Sakit Pelni Subsidiary of State Owned

Enterprises

84PT Semen Padang Subsidiary of State Owned

Enterprises

85PT Tugu Pratama Indonesia Subsidiary of State Owned

Enterprises

86PT Yasa Industri Nusantara Subsidiary of State Owned

Enterprises

87PT. Pegadaian Syariah Subsidiary of State Owned

Enterprises

88PT BPD Aceh Regional Government

Owned Enterprises

89PT BPD Aceh Syariah Regional Government

Owned Enterprises

90PT BPD Jambi Regional Government

Owned Enterprises

91PT BPD Jambi Syariah Regional Government

Owned Enterprises

92PT BPD Kalimantan Barat Regional Government

Owned Enterprises

93PT BPD Kalimantan Barat UUS

Regional Government Owned Enterprises


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94PT BPD Kalimantan Timur Regional Government

Owned Enterprises

95PT BPD Riau Regional Government

Owned Enterprises

96PT BPD Sumatera Barat (Bank Nagari)


97PT BPD Sumatera Utara Regional Government

Owned Enterprises

98PT BPD Yogyakarta Regional Government

Owned Enterprises

99Perusahaan Daerah Air Minum


100Perusda Ketenagalistrikan Kalimantan Timur


101PT Bank Aceh Regional Government

Owned Enterprises

102PT BPD Jawa Tengah Regional Government

Owned Enterprises

103PT BPD Kalimantan Selatan Regional Government

Owned Enterprises

104PT BPD Kalimantan Tengah Regional Government

Owned Enterprises

105PT BPD Kalimantan Timur UUS


106PT BPD Maluku Regional Government

Owned Enterprises

107PT BPD Nusa Tenggara Barat Regional Government

Owned Enterprises

108PT BPD Nusa Tenggara Timur


109PT BPD Sulawesi Selatan Regional Government

Owned Enterprises

110PT BPD Sulawesi Tengah Regional Government

Owned Enterprises

111PT BPD Sumatera Barat Regional Government

Owned Enterprises

112PT BPD Sumatera Selatan dan Bangka Belitung


113 Karyawan Kunci Karyawan Kunci

Nature of transaction with government related parties are current accounts with other banks, liabilities due immediately, deposits from other banks, investment in marketable securities, subordinated notes issued, placements with other banks, deposits from customers, marketable securities, receivables and financing.

Balances of assets, liabilities, unrestricted investments, other operating income, administrative expenses, other operating

expenses, and personnel expenses arising from transactions with related parties are as follows:

(in Million Rupiah)

Transaction with Related Parties

2016 2017

Assets

Placements with other banks

108.225 221.722

Investment in marketable securities

6.402.219 9.854.319

Murabahah receivables 1.249.255 603.484

Mudharabah financing 67.421 178.291

Musyarakah financing 874.508 3.187.956

Temporary investment in shares

50.332 50.332

Acceptance receivables 34.728 64.485

Total 8.786.688 14.160.589

Percentage to total assets 11,15% 16,10%

Liabilities

Liabilitas due immediately 119.806 157.575

Wadiah demand deposits 355.090 689.879

Deposits from other banks 16.991 65.851

Acceptance - 17.946

Jumlah 491.887 931.251

Percentage to total liabilities

4,38% 6,88%

Subordinated notes issued

263.000 263.000

Total 263.000 263.000

Percentage to total subnotes

70,13% 70,13%

Unrestricted Investments

Mudharabah saving deposits

28.047 38.129

Mudharabah time deposits 941.444 990.515

Total 969.491 1.028.644

Percentage to total temporary syirkah funds

1,59% 1,54%

Other Main Operating Income

Income from retail sukuk 25.194 21.822

Income from SBSN 463.116 533.148

Income from FASBIS 137.224 152.790

Income from SBIS 188.543 229.133


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Transaction with Related Parties

2016 2017

Income from sharia obligation

24.058 49.940

Gain on sale of marketable securities-available-for-sale

56.982 57.253

Income from Term Deposit Foreign Currencies Sharia Bank Indonesia

7.092 7.974

Total 902.209 1.052.060

Other Operating Income

Fee based income from ATM Mandiri transaction

11.070 12.080

Fee income from bancaassurance

12.742 15.915

23.812 27.995

Total 926.021 1.080.055

Percentage to total other main operating income and other operating income

52,51% 53,99%

Operating Expenses

Profit sharing expenses from subordinated notes issued

8.355 26.300

Total 8.355 26.300

Percentage to total operating expenses

0,18% 0,50%

Personnel expenses

Salaries, bonus, tantiem, and other allowances

Tantiem 18.722 14.291

Salaries 33.817 38.028

Bonus 5.321 7.246

Other allowances 12.101 21.210

Total 69.961 80.775

Percentage to total personnel expenses

4,71% 5,05%

CHANGES ON LAwS AND REGULATIONS In 2017, there were no changes on laws and regulations that significantly influenced the Bank.

CHANGES ON ACCOUNTING POLICYPerubahan Penerapan Standar Akuntansi BaruNew standards, amendments and interpretations issued but not yet effective for the financial year beginning 1 January 2017 are as follows:- IFAS 31 “Interpretation of scope of SFAS 13: Investment Property”- Amendment to SFAS 1 “Presentation of Financial Statements”


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- Amendment to SFAS 101 “Presentation of Sharia Financial Statements”- Amendment to SFAS 102 “Accounting”- Amendment to SFAS 103 “Accounting for Salam”- Amendment to SFAS 104 “Accounting”- Amendment to SFAS 107 “Accounting”- Amendment to SFAS 108 “Accounting for Sharia Insurance Transaction”- Amendment to SFAS 3 “Interim Financial Statements”- Amendment to SFAS 24 “Employee Benefits”- Amendment to SFAS 58 “Non-Current Assets Held for Sale and Discontinued Operations”- Amendment to SFAS 60 “Financial Instrument: Disclosure”- IFAS 32 “Definition and Hierarchy of Financial Accounting Standard”

Implementation from those standards did not result on any substance changes to the Company’s accounting policies and total reported in on going period or previous year.

Impact of New Accounting Standard ImplementationOn the issuance of financial statements, Bank is still learning the impact that might arise from new standard and amendment implementation as well as its impact on the Bank financial statements.

INFORMATION OF BUSINESS SUSTAINABILITYBank believes its business sustainability in the future. This is based on the demography strength in Indonesia, total of upper medium economy muslim society that is increasing and becomes business potential for sharia banking. Better understanding of public on the sharia economy principle and its benefits for the society lives also support the bank business development in the future. On the other side, the Government support through the establishment of Sharia Finance National Committee (KNKS) will be able to drive the Sharia finance growth in Indonesia. In addition, the Government focus to in infrastructure development will provide opportunities for BSM to distribute financing to government infrastructure projects. Other than that, currently Indonesia is developing Global Halal Industry center that also becomes a potential for sharia finance in the future.

Meanwhile from the internal side, BSM has string support from shareholder (Bank Mandiri) and synergy with Mandiri Group. Currently, BSM is the biggest sharia bank. Position as the biggest sharia bank (assets, financing and funding) and placed on 18th position of the biggest national banking from assets aspect and has good liquidity potential and capital adequacy.

Matters that are Significantly Potential to Influence Business Sustainability Until the end of 2017, BSM did not have matters that are significantly potential to influence business sustainability. Important information to support that condition is as follows:


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• Based on the management calculation on December 31, 2017 and 2016, Bank has minimum capital adequacy ratio (CAR) of 15.89% and 14.01% respectively.

• On December 31, 2017 and 2016, Bank has Classified Productive Assets (APYD) to total productive assets ratio of 0.97 and 0.95 respectively.

• On December 31, 2017 and 2016, receivables, qardh financing and non non performing financing (gross) to total receivables, qardh financing and financing ratio were 4.53% and 4.92% respectively, meanwhile receivables, qardh financing and non performing financing (net) to total receivables, qardh financing and financing were 2.71% and 3.13% respectively.

• In Fund Distribution Maximum Limit (BMPD) report submitted by Bank to Bank Indonesia on December 31, 2017 and 2016, there were no receivables and financing that exceeded or violated BMPD provision.

Basic Assumption on Business SustainabilityThat assumption is based on BSM position, if seen from strengths (S), weaknesses (W), opportunities (O), and Threats (T), as well as identification.

BSM Strengths1. Strong support of parent entity and synergy with Mandiri Group.2. Human Resources that is more than 50% with age below 40 years old.3. Trusted by society as seen in awards from external such as The Most Trusted Companies and Service

Excellence as well as other awards.4. It is a sharia bank with the highest market share for assets, third party fund and financing.

BSM Opportunities1. High muslim population in Indonesia.2. High potential of sharia banking market as seen from the low market share of sharia bank compare to

conventional bank, which is still below 5%.3. Developing Bank business based on specific contract in sharia bank such as pawning, Ijarah Muntahiyaa bit

Tamlik, and Musyarakah Mutanaqisah.


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06

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INTRODUCTION To create a sound, prudent and reliable sharia banking industry, BSM as one of entity who manages sharia business activities must implement good corporate governance (GCG) and fulfill sharia principles. GCG implementation is one of the ways to protect stakeholders’ interest and improve compliance to prevailing laws and regulations as well as ethical values in sharia banking industry.

GCG is also tools to grow corporate integrity and manage trust from stakeholders. BSM is committed to continuously implementing good corporate governance to make BSM as a sound company and also participate in developing sharia banking industry in Indonesia.

The implementation of good corporate governance can strengthen the integrity of the company and maintain the trust of stakeholders. BSM is committed to continue the good corporate governance practices to make BSM a healthy company and to become a part of developing sharia banking industry in Indonesia.

GCG IMPLEMENTATION OBJECTIVEIn general, BSM implements GCG basic principles with aim and believe that it will guarantee the balance of overall business, therefore all interests, business or social, individual or collective, internal and external, short-term and long-term as well as shareholders and stakeholders interest will head towards balance point.

The specific objectives of GCG implementation are as follows:1. Optimizing the Company’s value so bank will have

strong competitive advantage, both nationally and internationally, to able to maintain its existence and sustainability to achieve BSM goals and objectives;

implementation of good Corporate governance (gCg) defined by BSM as tools and mechanism to maintain business sustainability and stakeholder’s trust, growing corporate synergy and improve shareholder value

2. Encouraging professional, efficient and effective corporate management and empowering function and improving independency of the Company’s organ;

3. Encouraging the Company’s organ in making decision and executing action based on high moral value and comply to prevailing laws and regulations, and awareness on the corporate social responsibility towards stakeholders interest and environmental preservation around BSM;

4. Improving BSM contribution in national economy;5. Improving shareholders trust towards BSM.

LEGAL BASIS OF GCG IMPLEMENTATIONBased on GCG principles, BSM is driven to continuously implementing a sound and sustain banking system and fulfill sharia principle. GCG implementation for BSM is a need in facing the current global competitive era. BSM greatly benefitted from the GCG implementation, because by implementing GCG then alignment of the Bank and stakeholders goals will be well maintained. The goal alignment will create conducive business climate and further encourage performance improvement.

To obtain benefit from optimal GCG implementation, GCG implementation must be taken in a targeted, planned, and in accordance with prevailing provision, sustainable and involving all elements of the Company. GCG implementation in BSM refers to the below provisions:1. Bank Indonesia Regulation No.11 / 33 / PBI / 2009 dated

7 December 2009 and Bank Indonesia Circular Letter No.12/13/DPbS dated 30 April 2010 on Implementation of Good Corporate Governance for BUS and UUS, namely: Application of the 5 basic principles - Transparency, Accountability, Responsibility, Professional and Fairness.

2. Circular Letter of Financial Services Authority (OJK) No. 10/SEOJK.03/2014 concerning Health Level Assessment


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of Sharia Commercial Bank and Sharia Business Unit dated June 11, 2014.

3. Circular Letter of Financial Services Authority (OJK) No. 39/SEOJK.03/2016 concerning Ability and Appropriateness Assessment for Controlling Shareholder Candidate, Board of Directors’ Member Candidate, and Board of Commissioners’ Member Candidate of the Bank.

COMMITMENT OF SUSTAINABLE CORPORATE GOVERNANCE IMPLEMENTATIONBank Syariah Mandiri (BSM) realizes the importance of Good Corporate Governance (GCG) to achieve Bank’s performance. GCG becomes material since it is basically designed to protect the stakeholders and shareholders’ interest. Consistent GCG implementation will strengthen the Bank’s competitive position, maximize Bank’s value, manage its sources and risk more efficiently and effectively, which at the end will strengthen the trust of shareholders and stakeholders, so BSM will be able top operate and grow sustainably in the long-term. BSM is fully committed to implement GCG in all levels of the organization by referring to various provisions and related requirements of GCG implementation. BSM GCG implementation optimization is continuously taken by strengthening infrastructure to achieve the best practice, test the reliability and adjust the system and procedure based on the business development and regulation/provision to support more effective GCG implementation, that is expected will be able to support the Company in facing business competition, improve effectiveness and efficiency in managing human resources to improve the Company’s values.

1. GCG Basic Policies BSM had conducted GCG principles internalization

to its prevailing operational policies. BSM realizes the continuous wider internalization of GCG principles is needed to improve the quality and scope of GCG implementation in each aspect of BSM activities. As the basic reference, BSM had internal regulation related to CGG that is stated in Corporate Governance Policy of PT Bank Syariah Mandiri with registration No. KBP/01-2016 in accordance to Regulation of Financial Services Authority No. 18/POJK.03/2014 concerning Integrated Corporate Governance Implementation for Financial Conglomerate.

2. Synergy with Parent Entity Referring to Regulation of Financial Services Authority

No. 18/POJK.03/2014 concerning Integrated Governance Implementation for Financial Conglomerate then BSM

as a subsidiary of Bank Mandiri also participates in good corporate governance implementation synergy. As part of the commitment on integrated governance with parent entity, BSM management becomes the member in Integrated Governance Committee and submits Integrated Governance report to Bank Mandiri periodically.

3. GCG Rating BSM periodically participates in Corporate Governance

Perception Index (CGPI) rating and survey conducted by The Indonesian Institute Corporate Governance (IICG). CGPI is research and rating program of GCG implementation in Indonesia with aim to encourage companies in improving their governance quality through continuous improvement. In 2017, BSM participated CGPI for 2016 with score of 86.34.

INTEGRATED CORPORATE GOVERNANCE wITH PARENT ENTITYBank Syariah Mandiri as Subsidiary from Mandiri Group participated in Integrated Governance Committee (TKT) that was established by Parent Entity (Bank Mandiri) and determined its members based on Decree Letter of PT Bank Mandiri Board of Directors No. KEP.DIR/136/2015 concerning Changes of Committees Membership under the Board of Commissioners of PT. Bank Mandiri (Persero) Tbk. This is supported by Decree Letter of Bank Syariah Mandiri Board of Directors No. 19/478-KEP/DIR dated October 30, 2017 concerning Determination and Appointment as Integrated Governance Committee Member of Mandiri Group. TKT Committee members from BSM comprises of:1. Mr. Ramzi A. Zuhdi as TKT Committee’s member from

Independent Commissioner.2. Mr. Dr. Muhammad Syafii Antonio, M.Ec as TKT Committee

Sharia Supervisory Board’s member.

Total and composition of Independent Commissioner that became the member of Integrated Governance Committee had been represented from several Subsidiaries in accordance to needs and prevailing regulations.

Relations of Parent Entity with Subsidiary are conducted through the discussion forums as follows:1. Integrated Risk Committee (IRC) IRC is executive committee who is responsible in

preparing among others Integrated Risk Management Policy and improvement of Integrated Risk Management


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policy based on execution evaluation result.a. Duties, Authorities and Responsibilities of IRC IRC Committee provides recommendation to the

Board of Directors on:1) Adequate process of identification, measurement,

monitoring, integrated Risk controlling, and Integrated Risk Management Information system;

2) Thorough internal controlling system to integrated Risk Management implementation;

3) Risk Management implementation in each Subsidiary.

b. IRC Meeting IRC meeting is held at least 3 (three) times in a year

or any time if needed upon a request of one or more committee members with voting rights or on the request of the Board of Directors or on written propose from related work unit by submitting material that will be discussed and coordinated with Committee Secretary. Throughout 2017, IRC Committee had conducted 5 (five) meetings with agenda of discussion focus as follows:1. Consolidated RBBR assessment semester II 2016

and integrated risk profile Q4 2016 (February 10, 2017).

2. Integrated risk profile assessment period Q1 2017 (April 18, 2017)

3. Consolidated RBBR assessment semester I 2017 and integrated risk profile Q2 2017 (August 8, 2017).

4. Integrated Risk Profile assessment period Q3 2017 (October 25, 2017).

5. Compliance risk rule rating changes as an onsite review follow up of Financial Services Authority (OJK) (December 20, 2017).

Bank Syariah Mandiri as Subsidiary had implemented direction in accordance to recommendation from Integrated Governance meeting.

2. Board Forum Bank Syariah Mandiri as Subsidiary periodically

participates the Board of Directors to several board forums organized by Parent Entity (Bank Mandiri) that conducted Quarterly and Semester.

GCG IMPLEMENTATION QUALITY STANDARDBSM continuously determining and implementing GCG best principles by referring to regulation set by Bank Indonesia (BI) or Financial Services Authority (OJK). This is taken so that

GCG Implementation Objective that had been planned can be well achieved.

SELFASSESSMENT PELAKSANAAN GCGAs part of BSM commitment to Circular Letter of OJK No. 10/SEOJK.03/2014 concerning Health Level Assessment of Sharia Commercial Bank and Sharia Business Unit, to endure GCG principles implementation then BSM periodically conducts GCG implementation self assessment.

GCG implementation self assessment had complied with SE OJK that comprises three governance aspects consisting governance structure, governance process and governance outcome. The assessment of those three governance aspects is taken towards:1. Implementation of the Board of Commissioners’ duties

and responsibilities;2. Implementation of the Board of Directors’ duties and

responsibilities;3. Completion and implementation of Committee’s duties;4. Implementation of Sharia Supervisory Board’s duties

and responsibilities;5. Implementation of sharia principle in fund collection

and fund distribution as well as services activities;6. Conflict of interest handling;7. Compliance function implementation;8. Internal audit function implementation;9. External audit function implementation;10. Maximum Limit of Fund Distribution (BMPD); and11. Transparency of financial and non financial condition

BUS, Good Corporate Governance implementation report and internal reporting.

BSM had submitted self assessment result of GCG implementation to OJK every semester. On semester I year 2017 with 1 assessment result or “excellent” predicate category. General summary of self assessment result in semester I 2017 was as follows:


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Rating Rating Definition

Individual 1 Generally, BSM management has implemented excellent Good Corporate Governance. This is reflected in the adequate application of the principles of Good Corporate Governance. The shortcomings appearing in the application of the principles of Good Corporate Governance are not significant and can be improved immediately by the BSM management.

Analysis

Governance Structure· BSM’s Independent Commissioner is 75% of the total members of the Board of Commissioners.· The Board of Directors has established Charter of the Board of Directors and has held the meeting of the Board of Directors at least 26

times in the first semester of 2017.· BSM has adequate internal policies, regulations, and infrastructures to support the bank’s activities. No fewer than 41 BSM internal

regulations have been updated and issued.· The members of the Committee generally have adequate and relevant competence to their positions to perform their duties and

responsibilities.· All members of Sharia Supervisory Board have received MUI’s recommendation and OJK’s approval.· The Bank has personnel in both compliance, auditing and product development functions that have knowledge and / or

understanding of sharia banking operations.· The Bank already has a Policy related to a conflict of interest and it is stipulated in the BSM’s Governance Policy which was updated on

March 31, 2016 and Operational Standards & Procedures of Human Capital effective on May 10, 2017.· BSM has adequate internal policies, regulations, and infrastructures to support the bank’s activities (MR, Operational, and Governance

Policis have been updated)· The organizational structure of the Bank’s Work Unit of Internal Audit is in conformity with applicable regulations.· BSM has appointed Public Accountant and Public Accounting Firm in accordance with the prevailing rules and regulations and has

been approved by the GMS.

Governance Process· The Board of Commissioners has conducted surveillance through the meetings held 47 times.· The Board of Directors has informed the Bank’s business plan to shareholders and all BSM’s units.· The Committee has conducted 46 meetings.· The products owned by the Bank are in compliance with the Fatwa issued by the National Sharia Board and are equipped with

adequate Standard Operating Procedures.· There is no conflict of interest between the Board of Commissioners, Board of Directors, or BSM’s Executive Officers.· BSM through Compliance Unit has developed a culture of compliance (zero tolerance) as a mitigation effort to minimize penalties

from regulators.· Internal Audit has provided recommendations in accordance with the problems in audit finding as a reference for improvement.· The appointed Public Accountant and Public Accounting Firm are able to work independently and professionally.

Governance Outcome· All decisions of the Board of Commissioners’ meeting are set forth and documented in the minutes of the meeting including the

dissenting opinions (if any).· The realization of BSM’s Performance including Assets, Third Party Funds and Financing has exceeded the targets set out in BSM’s RBB

(Bank’s Business Plan).· The Supervisory Report from the Sharia Supervisory Board has been submitted to the Financial Services Authority on time or no later

than 2 (two) months after the reporting period.· There are no significant regulatory violations (CAR, GWM, NOP, NPF are within the limits allowed).· BSM won the GCG Award as The Most Trusted Company, for 5 (five) times in a row (2011 - 2015).· The Work Unit of Internal Audit acts objectively in conducting audits.· The implementation of fund distribution by BSM is still within the limits allowed by the Regulator in accordance with the provisions

regulating the BMPD.· BSM has provided the information needed by stakeholders transparently and can be accessed easily.· Annual Publication and GCG Reports are submitted in a complete and timely manner and can be accessed on the website in

accordance with applicable regulations.


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In semester II 2017, self assessment result of GCG implementation was 1 or in the “excellent” category. In general summary of self assessment result in semester II 2017 was as follows:


Individual 1

Generally, BSM management has implemented excellent Good Corporate Governance. This is reflected in the adequate application of the principles of Good Corporate Governance. The shortcomings appearing in the application of the principles of Good Corporate Governance are not significant and can be improved immediately by the BSM management.

Analysis

Governance Structure· The composition of the Board of Commissioners is in accordance with the law and regulations, which is a total of 4 people consisting of 3

Independent Commissioners and 1 Commissioner.· BSM has adequate internal policies, regulations, and infrastructures to support the bank’s activities. No fewer than 112 BSM’s internal provisions

have been updated and published in 2017.· The Board of Directors shall consist of 7 (seven) members and shall have no dual positions as a member of the Board of Commissioners, a

member of the Board of Directors or an executive officer at other bank or institution.· All members of Sharia Supervisory Board have received MUI’s recommendation and OJK’s approval· All members of Sharia Supervisory Board have adequate integrity, competence and financial reputation and actively participate in the

Certification of Sharia Supervisory Board and Ijtima’ Sanawi organized by MUI’s National Sharia Board.· BSM has human resources in the function of product development with knowledge and / or understanding of sharia principles and banking

products in general.· BSM has issued Policies, Standard Procedures, etc., which can minimize the cause of a conflict of interest and there is no conflict of interest for

this reporting period.· The Bank already has a Policy related to a conflict of interest and it is stipulated in the BSM’s Governance Policy which was updated on March

31, 2016 and SPO Human Capital effective on May 10, 2017.· The resources of Compliance Unit have also participated in training in order to enhance and maintain individual competence and to face the

latest human resource challenges in the era of global competition.· The Bank has established Work Unit of Internal Audit that is directly responsible to the President Director and can communicate directly with

the Board of Commissioners.· The Bank has appointed a Public Accountant and Public Accounting Firm registered in the Financial Services Authority in accordance with

applicable laws and regulations and has been approved by the GMS.

Governance Process· The Board of Commissioners in carrying out its duties and responsibilities acts independently without intervention from the owner.· The Board of Commissioners has conducted surveillance through 40 meetings.· The Committee has conducted 25 meetings during the second semester of 2017.· BSM ensures that the products made do not violate sharia principles and legality based on the fatwa of the National Sharia Board and requests

sharia opinion from the Sharia Supervisory Board.· BSM has established code of conduct and carries out supervision of all employees, including Executive Officers.· The Compliance Unit performs its function independently on the operational work unit to establish an effective compliance function.· BSM through Compliance Unit has developed a culture of compliance (zero tolerance) as a mitigation effort to minimize penalties from

regulators.· The Bank has implemented an effective internal audit function by conducting routine audit processes and special audits of cases.· Internal Audit has provided recommendations for the problems in audit finding as a reference for improvement.· The appointed Public Accountant and Public Accounting Firm for audit implementation in 2017 are able to work independently and meet the

professional standards of public accountants and employment agreements and audit scope.· The Bank has accommodated the applicable regulations concerning the provision of funds to related parties in the Bank’s Financing Policy and

Guidelines.· BSM provides information on Bank’s Product information characteristics through promotional materials to the Customer accurately and

actually.

Governance Outcome· The Board of Directors has ensured follow-up to internal and external audit findings. In general, all the Work Unit of Internal Audit’s findings

have been completed / acted upon by the relevant Working Unit.· Decisions of the Committee have been set forth in the treatise including dissenting opinions (if any). During this time, decision making is

always done by prioritizing consensus deliberation.· The supervision report of Sharia Supervisory Board has been submitted to the Financial Services Authority on time or no later than 2 (two)

months after reporting period and submitted to the Board of Directors as recommendation of Sharia Supervisory Board to management so that management always pays attention and implements the Sharia principles in the bank’s operations and products.

· Any conflicts of interest have been disclosed from the Board of Directors to the Board of Commissioners in the annual report and each organizational decision is well documented in accordance with the duties of each work unit.

· The semester compliance report to the Financial Services Authority (OJK) is conducted on a timely basis and never subject to sanctions for late reports.

· BSM won the GCG Award as The Most Trusted Company for 6 (six) times in a row (2011 - 2016).· Implementation of the fund distribution by BSM is still within the limits allowed by the Regulator in accordance with the provisions regulating

the BMPD.· BSM has provided the information needed by stakeholders transparently and can be accessed easily.· Annual Publication and GCG Reports are submitted in a complete and timely manner and may be accessed on the website in accordance with

applicable regulations.


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BSM had completed self assessment result of Integrated Governance (TKT) to Parent Entity (Bank Mandiri) every semester. In semester I 2017 with scope 1.34 in “excellent” predicate category. General summary of self assessment result in semester I 2017 was as follows:


Individual 1,34

Generally, Bank Syariah Mandiri has implemented excellent Good Corporate Governance in accordance with the POJK comprehensively. This is reflected in the adequate fulfillment of the implementation of the principles of Integrated Governance. The Board of Directors has directed, monitored and evaluated the implementation of corporate governance and carried out its duties and responsibilities related to risk management in accordance with the jurisdiction of local authorities / supervisors. All BoC and BoD have adequate integrity, competence and financial reputation.

Analysis

Governance Structure· The structure and composition of the Board of Directors are in conformity with the provisions of the OJK, and no Directors have

dual positions.· All members of the Board of Commissioners have knowledge and understanding of the main business and key risks of the

company.· All members of Sharia Supervisory Board have obtained OJK’s approval.· Membership of the TKT Committee has been ratified in the TKT Committee’s Decree· The duties and responsibilities of the TKT Committee have been clearly articulated in the TKT Committee Charter.· The Compliance Unit has a sufficient number of human resources and has been certified.· The structure of the Compliance Unit is not factually related to the Bank’s operational processes.· 59.02% of the human resources of the Internal Audit has been nationally certified and 4.92% of it has been internationally certified.· The organizational structure is appropriate to support the implementation of risk management and internal control.· BSM has a Governance Policy approved by the Board of Directors and Board of Commissioners.· The conflict of interest policy is included in the Corporate Governance Policy.· BSM has a remuneration policy and SPO covering Reward Management, Compensation, Facilities, Training and Development

Program, and work climate.

Governance Process· The Board of Directors through IAG has periodically remind the work unit to immediately follow up on all internal and external

audit findings.· The Board of Commissioners intensively conducts supervision and recommendation to the Board of Directors and is well

documented.· In the first half of 2017, there has been 46 meetings of the Board of Commissioners· Sharia Supervisory Board has improved its attendance in the meeting of Sharia Supervisory Board to at least 85%.· In the period of January to June 2017, Sharia Supervisory Board has held 5 meetings, published 4 Sharia opinions and conducted

Uji Petik for 5 times.· The Company has established risk management in accordance with the provisions of OJK.· The implementation of good governance is reflected in the decline of violation of the provisions.· Bank continuously disseminates Corporate Governance to all levels of Bank and stakeholders.· BSM has established code of conduct and carries out supervision of all employees, including Executive Officers in annual disclosure

and routine audits.· The Board of Commissioners has conducted an active oversight of the remuneration policy reviewed annually.

Governance Outcome· The Board of Directors has ensured follow-up to internal and external audit findings. In general, all findings of Work Unit of Internal

Audit have been completed / acted upon by the relevant Work Unit.· The number of recurring findings decreases from the previous period.· Report on the implementation of IAG duties and responsibilities has been formulated and submitted regularly to the Board of

Commissioners, the Compliance Director of the Bank, and to the Director of Bank Mandiri appointed to perform the supervisory function of the Bank.

· During the first semester of 2017, there is no conflict of interest.


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In semester II 2017, self assessment result of Integrated Governance (TKT) with score of 1.35 in “excellent” category. In general, summary of self assessment result in semester II 2017 was as follows:


Individual 1,35

Generally, Bank Syariah Mandiri has implemented excellent Good Corporate Governance in accordance with the POJK comprehensively. This is reflected in the adequate fulfillment of the implementation of the principles of Integrated Governance. The Board of Directors has directed, monitored and evaluated the implementation of corporate governance and carried out its duties and responsibilities related to risk management in accordance with the jurisdiction of local authorities / supervisors. All BoC and BoD have adequate integrity, competence and financial reputation.

Analysis

Governance Structure· Director of BSM, Ade Cahyo Nugroho, has passed Fit and Proper Test from OJK.· President Commissioner and Independent Commissioner of BSM, Mulya E. Siregar, has passed Fit and Proper Test from OJK.· The Board of Directors has updated its code of conduct through Operational Standards and Procedres of Human Capital dated May 10,

2017.· The composition of the Board of Commissioners is in accordance with the law and regulation, which is 4 people, consisting of 3

Independent Commissioners and 1 Commissioner.· TKT Committee has been established and the membership have been appointed according to the Decree of the Board of Directors of

PT Bank Mandiri No. KEP.DIR/136/2015 on the Amendment of Membership of Committees under the Board of Commissioners of PT. Bank Mandiri (Persero) Tbk.

· The Compliance Unit has a sufficient number of human resources and has been certified.· The structure of the Compliance Unit is not factually related to the Bank’s operational processes.· 93.22% (55 people) of the human resources of the Internal Audit has been certified with details of the national level certification of 52

people (88.14%), and international level certification of 3 people (5.08%).· The organizational structure is appropriate to support the implementation of risk management and internal control.· BSM has a Governance Policy approved by the Board of Directors and Board of Commissioners· The policy of conflict of interest is included in the Corporate Governance Policy and Operational Porcedures and Standards of Human

Capital of BSM.· BSM has a remuneration policy and Operational Procedures and Standards covering Reward Management, Compensation, Facilities,

Training Program and Development, and Work Climate.

Governance Process· In the second half of 2017, 29 meetings of the Board of Directors have been held· The Board of Commissioners has given recommendation to the Board of Directors and has been well documented.· In the second semester of 2017, there have been 40 meetings of the Board of Commissioners· In the second semester of 2017, Sharia Supervisory Board has conducted Uji Petik for 7 times.· The TKT Committee has held TKT Committee Meeting for twice in 2017.· The Risk Management Work Unit is independent of the operational work unit (risk-taking unit) and of the work unit performing

compliance and control functions.· Bank continuously disseminates Corporate Governance to all levels of Bank and stakeholders.· All employees and Directors have the obligation to complete Annual Disclosure.· The Board of Commissioners has conducted an active oversight of the remuneration policy reviewed annually.

Governance Outcome· The Board of Directors has ensured follow-up to internal and external audit findings. In general, all findings of Work Unit of Internal

Audit have been completed / acted upon by the relevant Work Unit.· The supervisory report from Sharia Supervisory Board to OJK is delivered earlier than the prescribed time limit.· The Compliance Unit has submitted a report on the implementation of compliance function to OJK on time.· The number of significant findings decrease.· Report on the implementation of IAG duties and responsibilities has been formulated and submitted regularly to the Board of

Commissioners, forwarded to the Audit Committee, the President Director, the Compliance Director of the Bank, and the Director of Bank Mandiri appointed to perform the supervisory function of the Bank.

· No violation of conflicts of interest happened during the second half of 2017.


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GCG RATING – CGPI AwARDBSM had participated Corporate Governance Perception Index (CGPI) rating and survey every year. CGPI is research program and GCG rating and Corporate Governance quality assessment. Assessment result for 2016 was 86.34 with assessment steps comprising of Self Assessment, Documentation System and Observation.

BSM participation in CGPI program aims to:a. Evaluate GCG implementation independently to achieve

optimum GCG implementation.b. Part of responsibility, transparency and commitment of

BSM to stakeholders on GCG implementation.

Benefits that will be achieved from CGPI implementation are:a. Improving inadequate internal factor of the Company to

improve GCG implementation quality.b. Mapping the Company’s strategic issues to improve GCG

implementation quality.c. Improving awareness and commitment of the Company’s

internal management in implementing GCG.d. Improving public trust to the Company.

BSM had participated CGPI program since 2011 until 2016. CGPI program assesses GCG implementation for on going year. Throughout six period (assessment period 2011-2016), BSM participation in CGPI program, BSM earned “The Most Trusted Companies” predicate. Achievement of “The Most Trusted Companies” earned consecutively showed BSM commitment in implementing GCG continuously.

2011 2013 20152012 2014 2016

85,45

86,51

86,55 85,6386,33 86,31

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QUALITY IMPROVEMENT PLAN OF CORPORATE GOVERNANCE PLANBSM realizes that continuous corporate governance plays important role in encouraging corporate values establishment, improving risk management, strengthening the Company’s internal condition, driving business performance, and improving positive reputation or image as company who manages trust from shareholders and stakeholders as well as contribute in national economy.

In general, in 2018 BSM will strengthen the implementation of Governance, Risk, and Compliance (GRC) that will improve governance integration, risk management, and compliance function with aim to improve bank health, minimize internal weakness, and able to face significant negative influence from business condition dynamic changes and other external factors.

Initiative to improve GCG quality in 2018 will be taken by conducting regular review and improvement of regulation and governance policy by following regulation dynamic changes from Financial Services Authority and other regulations as well as taking into account and learning best practices and corporate governance guidance/framework from international institution (ASEAN Corporate Governance Scorecard).

Process improvement is taken continuously by following up the weaknesses finding during governance assessment process taken with self-method or assessment by third party. Governance implementation result will be aimed to improve transparency of the Company’s condition, customer protection, compliance function improvement, issues


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settlement such as fraud and Bank’s performance improvement.

CORPORATE GOVERNANCE STRUCTUREBSM corporate governance structure referred to Law of Limited Company No. 40 Year 2007 and Regulation of Bank Indonesia No. 11/33/PBI/2009 concerning Good Corporate Governance Implementation for Sharia Commercial Bank and Sharia Business Unit.

Corporate governance organ in BSM is developed to ensure effectiveness of corporate governance principles implementation with clear roles and responsibilities to create check and balance control mechanism.

BSM Governance Structure

Transparency Accountability

DPS

Investor Relations

Corporate Secretary

CSR

SKAI

Corporate Value

Risk Management

Remuneration & Nomination

Committee

Communication

Compliance

Board of Directors GMS

Committee


Responsibility

ORGAN STRUCTURE

SUPPORTING ORGAN STRUCTURE

Professional Fairness

Komite Pemantau Risiko

Audit Committee

The Board of Commissioners in implementing its duties and responsibilities had established committees to assist and improve supervision function performed by the Board of Commissioners. Committees established consists of:a. Audit Committeeb. Risk Monitoring Committeec. Remuneration & Nomination Committee

Committees established consist of the Board of Commissioners and independent parties and professionals in its field.

Throughout 2017, the three committees had shown good performance and provided great contribution to BSM growth. In addition to right work program implementation, each committee’s function is also continuously improved to support the


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Board of Commissioners’ duties and responsibilities. With the assistance of those three committees, the Board of Commissioners always encourages good corporate standard implementation thoroughly in BSM.

The Board of Directors is fully responsible on bank management implementation in based on its authorities and responsibilities as stipulated in the Company’s Articles of Association and prevailing rules and regulation. In implementing GCG, the Board of Directors must possess function at least:a. Internal Auditb. Risk Management and Risk Management Committee;

andc. Compliance

Sharia Supervisory Board (DPS) is board who is in charge to provide advice to the Board of Directors and supervise Bank activities to be in accordance with Sharia Principles. The result of DPS supervision is submitted to Financial Service Authority every semester.

In addition, DPS also provides guidance and matters strengthening on “Sharia Contract and Banking Product” to branch office staff, by organizing Sharia Clinic Forum to answer complaints and receive input to improve fulfillment quality of sharia aspects including standard contracts used in funding, financing products and services. Therefor it is expected to keep growing from business aspect and from sharia aspect is fulfilled too. Because this is part of added values and fundamental strengths for Bank Syariah Mandiri, moreover Bank Syariah Mandiri has Corporate Plan 2018-2020, that is strengthened with PAS (Confident, Enthusiast, and Spirit) culture internalization, that made Bank Syariah Mandiri becomes a “Leading, Modern and Safety”.

CORPORATE GOVERNANCE MECHANISMTo obtain benefits from optimal GCG implementation, GCG implementation must be implemented in targeted and planned manner and in accordance with prevailing provisions, continuously and involve all of the Company’s elements. BSM is referring to Regulation of Bank Indonesia No. 11/33/PBI/2009 concerning Good Corporate Governance Implementation for Sharia Commercial Bank and Sharia Business Unit.

GCG Implementation Steps

BSM implements GCG through several steps starting from:1. GCG Commitment Initial step in implementing GC is building commitment

of the Company’s management to become part of GCG implementation. Part of joint GCG commitment implementation is started by building foundation that becomes a basis for GCG commitment implementation such as: the Company’s Articles of Association, the Company’s Vision and Mission, Code of Conduct, and GCG charter.

2. GCG Structure BSM completes and positions the right resources on the

corporate structure and improve various supporting infrastructures to ensure effective governance process.

3. GCG Mechanism GCG principles are attached in policies, guidance and

work procedure, as well as other internal regulations to ensure GCG principles implementation in governance process.

4. Dissemination and Evaluation To ensure the Company’s management in implementing

internalized GCG principles in corporate system, then the next step is to disseminate it to the Company’s management. By disseminating it, the Company’s management is expected to understand and well implement GCG in performing their duties and


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responsibilities. Evaluation is taken to monitor GCG implementation and improve any lack to improve GCG implementation in the future continuously.

5. Continuity GCG implementation success can not be obtained in instant, consistency and continuity in implementing

GCG principles are important keys in implementing GCG. Evaluation conducted is one of the ways to improve on going GCG implementation. In addition to evaluation, innovation is GCG implementation also part of the key in GCG continuity.

GCG implementation is a long-term process that generate sustainable value, therefore Bank must perform it to face business competition, improve effectiveness and efficiency in managing resourcing, maximizing corporate value, therefore BSM is able to operate and grow sustainably. Therefore, BSM continuously trying optimally to conduct GCG principles internalization into system and procedure as well as establishing appropriate behavior To create culture that upholds professionalism, integrity, service quality and prudential banking.

GENERAL MEETING OF SHAREHOLDERSGMS is the Company’s organ that own authorities that is not given to the Board of Directors or Commissioners as stipulated in Law of Limited Company and/or Articles of Associations. In GMS forum, Shareholders has the rights to obtain explanation related to the Company from the Board of Directors and/or Board of Commissioners, as long as related to meeting agenda and not conflicted with the Company’s interest.

Information of Majority and Controlling ShareholderBSM is a subsidiary of State Owned Enterprise (SOE0 with the highest share ownership hold by PT Bank Mandiri (Persero) Tbk. Therefore, BSM Controlling Shareholder is PT Bank Mandiri (Persero) Tbk. As part of GCG implementation commitment, Shareholder is not involved in the Company’s operational activities.

GMS in 2017Based on provision in Law No. 40 Year 2007 concerning Limited Company, General Meeting of Shareholders (GMS) consists of Annual GMS and Extraordinary GMS. Annual GMS must be held latest within 6 (six) months after ended year and Extraordinary GMS could be held at any time based on the Company’s interest needs.


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No. Number of Deed

Date of Deed

Deed Agenda Decision

1 01 May 2, 2017

Resolution of Annual Meeting of the General Shareholders of PT Bank Syariah Mandiri

Stipulation of Changes of the Company's Board of Directors

Unanimous meeting on the basis of musyarawah to decide the followings:1. Honorable discharge of:

a) Ventje Rahardjob) Zulkifli Djaelanic) Agus Sudiartod) Ir. Putu Rahwidhiyasae) Fahmi Ridho

2. Acceptance of the resignation of Agus Fuad3. Appointment of:

a) Mulya Effendi Siregarb) Dikdik Yustandic) Toni Eko Boy Subarid) Achmad Syafiie) Ade Cahyo Nugroho

4. Reappointment of Ir. Putu Rahwidhiyasa as the Director of Compliance

5. Provision of authority and power to the Board of Directors of the Company to follow up on the Meeting Resolution related to report to the regulators and other relevant agencies.

2 02 May 2, 2017

Resolution of Annual Meeting of the General Shareholders of PT Bank Syariah Mandiri

Changes in the Composition of the Sharia Supervisory Board of the Company

1. Reappointment of Dr. Hj. Mohamad Hidayat and Dr. Muhammad Syafii Antonio;

2. Reappointment of Dr. Kh. Ma’ruf Amin as Chairman of the Sharia Supervisory Board of the Company

3 08 April 10, 2017

Minutes of the Annual Meeting of General Shareholders of PT Bank Syariah Mandiri

1. Approval of the Annual Report and Ratification of the Company’s Financial Statements, as well as the approval of the Supervisory Report of the Board of Commissioners ending on December 31, 2016

2. Approval of the Use of the Company’s Net Income for the Fiscal Year ending on December 31, 2016

1. Unanimous meeting on the basis of musyarawah to decide the followings:a) Approval of the Company’s Annual Report including the

Supervisory Report of the Board of Commissioners of the Company and ratification of the Company’s Financial Report for the Fiscal Year ending on 31 December 2016, audited by Public Accounting Firm Tanudiredja, Wibisana, Rintis, and Partners (member of Pricewaterhouse Cooper) with Unmodified Opinion.

b) Provision of full discharge of responsibility (volledig acquit et de charge) to the members of the Board of Directors and Board of Commissioners of the Company who served in 2016 for the acts of management and supervision carried out during Fiscal Year 2016, as long as they are not criminal acts and are reflected in the Company’s annual report and financial report.

c) Granting of full discharge of responsibility to Agus Dwi Handaya from January 1, 2016 until September 9, 2016 as Director of the Company.

2. Unanimous meeting on the basis of musyarawah to decide the approval of the use of the Company’s Net Income for the Fiscal Year 2016 amounted to Rp325,413,775,831 as follows:a) The number of dividends distributed to Shareholders is NIL.b) 30.73% of the Company’s Net Profit or equals to

Rp100,000,000,000 is set aside as general reserve fund as referred to in Article 70 of UUPT.

c) 69.27% of the Company’s Net Profit or equals to Rp225,413,775,831, - is stipulated as retained earnings.


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No. Number of Deed

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Deed Agenda Decision

3. Approval of the Appointment of a Public Accounting Firm to Audit the Company’s Financial Statements for Fiscal Year Ending on December 31, 2017

4. Approval of Salary Determination of Members of the Board of Directors, Honorarium of Members of the Board of Commissioners, Tantiem and the Determination of Other Facilities for All Members of the Board of Directors and Members of the Board of Commissioners of the Company

5. Approval of Determination of Honorarium and Facilities / Benefits for Sharia Supervisory Board

6. Determination of Changes of the Company’s Board of Directors

3. Unanimous meeting on the basis of musyarawah to decide the followings:a) Approval of the appointment of Public Accounting Firm

Tanudiredja Wibisana, Rintis, and Partners (a member firm of PricewaterhouseCoopers) as Independent Auditor who would audit the Company’s Financial Report for the financial year ending on December 31, 2017

b) Authorization of the Board of Commissioners of the Company to determine the honorarium and other requirements for the Public Accounting Firm, and to establish a replacement Public Accounting Firm in the case of Public Accounting Firm Tanudiredja, Wibisana, Rintis and Partners (a member of PricewaterhouseCoopers) for any reason may not complete the audit of the Company’s Financial Statements for the financial year ending on December 31, 2017

4. Unanimous meeting on the basis of musyawarah by first obtaining the approval of the majority shareholders of the Company to determine:a) The amount of tantiem for members of the Board of

Directors and members of the Board of Commissioners of the Company in 2016

b) The amount of salary and honorarium for members of the Board of Directors and members of the Board of Commissioners of the Company in 2017

c) The amount and type of allowances and facilities of members of the Board of Directors and members of the Board of Commissioners of the Company in 2017

5. Provision of authority and power to the Board of Commissioners of the Company who gaineed the approval of the majority shareholders of the Company to determine the amount of honorarium and the facilities / allowances for the Sharia Supervisory Board of the Company

6. Unanimous meeting on the basis of musyawarah to decide the followings:a) Honorable discharge of Ventje Rahardjo Soedigno as the

President Commissioner of the Company, Zulkifli Djaelani as Independent Commissioner of the Company, Agus Sudiarto as President Director of the Company, Putu Rahwidhiyasa as Compliance Director of the Company, as well as Fahmi Ridho as Director of the Company who has terminated their terms of office since the close of Annual General Meeting of Shareholders with the Fiscal Year of 2016

b) Acceptance and approval of the resignation of Agus Fuad from his position as Commissioner of the Company

c) Approval of the appointment of:i) Mulya Effendi Siregar as the President Commissioner of

the Companyii) Dikdik Yustandi as Commissioner of the Companyiii) Toni Eko Boy Subari as President Director of the

Companyiv) Achmad Syafii as Director of the Companyv) Ade Cahyo Nugroho as Director of the Company

d) Approval of the reappointment of Putu Rahwidhiyasa as the Compliance Director of the Company as of the date of the resolution of the Annual GMS 2016 and will expire on the closing of the third Annual GMS since its appointment

e) Provision of authority and power to the Board of Directors of the Company to follow up on the Meeting Resolution related to report to the regulators and other relevant agencies.


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Decision outside the General Meeting of Shareholders

No. Number of Deed

Date of Deed

Deed Agenda Desicion

1. 85 November 30, 2017

Declaration of Decision Outside the General Meeting of Shareholders of PT Bank Syariah Mandiri

Results of Mulya Effendi Siregar's Ability and Compliance Assessment as the Candidate for Independent/President Commissioner of PT Bank Syariah Mandiri

Affirmation of the Company's Board of Commissioners Mulya Effendi Siregar as President Commissioner and Independent Commissioner as of April 10, 2017

2. 22 December 12, 2017

Declaration of Decision Outside the General Meeting of Shareholders of PT Bank Syariah Mandiri

1. The increase in the Company’s authorized capital from Rp.2,500,000,000,000, consisting of 500,000,000 shares, to Rp3,000,000,000,000, consisting of 600,000,000 shares with a nominal value of each of the shares of Rp.5,000.

2. The increase in issued and paid-up capital of the Company in cash amounting to Rp.500,000,000,000 or equivalent to 100,000,000 shares to be issued from the portfolio; that the issued and paid-up capital shares to be issued will be taken entirely by PT Bank Syariah Mandiri (Persero) Tbk., totaling 100,000,000 shares, while PT Mandiri Sekuritas as the other shareholder of the Company hereby declares waiving its right to take part in the new shares issued by the Company, and hereby approves PT Bank Mandiri (Persero) Tbk. to take all new shares issued by the Company, totaling 597,804,387 shares or equivalent to a nominal value of Rp.2,989,021,935,000,-; 100% of the nominal value of each of the above issued and paid shares or in the sum of Rp.2,989,021,935,000,- has been fully paid to the Company by the Shareholders with the following details:a. Rp2,489,021,935,000.-;b. Rp500,000,000,000.-

Extraordinary GMS Throughout 2017, BSM did not held Extraordinary GMS.

BOARD OF COMMISSIONERSBased on Law No. 21 year 2008 concerning Sharia Banking and Regulation of Bank Indonesia No. 11/33/PBI/2009 concerning GCG Implementation for Sharia Commercial Bank and Sharia Business Unit, the Board of Commissioners had continuously implemented its duties and responsibilities professionally and independently based on good corporate governance. The Board of Commissioners is appointed by GMS and participated in fit and proper test step first based on Financial Services Authority (OJK), Bank Indonesia and prevailing rules and regulations,

The Board of Commissioners is the Company’s organ who is responsible collectively to supervise and provide advice to the Board of Directors as well as ensure Bank Mandiri Syariah (Bank) had implemented Good Corporate Governance (GCG) in all levels of the organization.

The Board of Commissioners has adequate understanding and competency, so in facing any issues that arise in Bank business activities, is able to make decision independently, encourage Bank performance improvement, and effectively


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reviewing and providing constructive input towards the Board of Directors’ performance. The Board of Commissioners has clear authorities and responsibilities with each function as mandated in Articles of Associations and prevailing laws. The Board of Commissioners also has board manual that is evaluated and updated regularly.

The Board of Commissioners is responsible to General Meeting of Shareholder (GMS). The Board of Commissioners’ responsibility to GMS is part of its supervision accountability on the Company’s management to implement GCG principles.

Penilaian Kemampuan dan KepatutanFit and proper test refers to regulation that stated the Board of Commissioners’ member candidate must pass the fit and proper test and obtaining approval from Bank Indonesia/OJK prior to performing their duties and functions in their position.

No Name Positiont Position period based on GMS Fit and Proper

GMS Deed Period I GMS Deed Period II

1 Mulya Effendi Siregar

President Commissioner/Independent

No.01 dated May 2, 2017, AGMS dated April 10, 2017

April 10, 2017 – AGMS year 2020

– – Financial Services Authority No. KEP_184/D.03/2017 dated September 18, 2017.

2 Ramzi A. Zuhdi

Independent Commissioner

No. 16 dated June 29, 2010, AGMS dated June 29, 2010

June 29, 2010 – April 1, 2015

No. 30, AGMS dated April 1, 2015

April 1, 2015 – AGMS Year 2018

Bank Indonesia No. 12/11/GBI/DPbS dated August 24, 2010.

3 Bambang Widianto

Independent Commissioner

No. 14 dated June 20, 2013, AGMS dated May 29, 2013

May 29, 2013 – AGMS Year 2018

– – Financial Services Authority No. KEP-76/D-03/2014 dated August 25, 2014.

4 Dikdik Yustandi*)

Commissioner No. 01 dated May 2, 2017, AGMS dated April 10, 2017

April 10, 2017 – AGMS Year 2020

– – –


Risk Management Certification ImplementationThe Board of Commissioners of BSM had fulfilled its duty to implement Risk Management Certification as shows on the table below:

No Name Position Risk Management Certification

1 Mulya Effendi Siregar

President Commissioner/Independent

a. USMR Level 5, BSMR, October 6, 2016b. Refreshment, BSMR, July 1, 2014c. USMR the Board of Directors’ Executive Program, BSMR November

30, 2007

2 Ramzi A. Zuhdi Independent Commissioner

a. Refreshment Level 5, LSPP, February 28, 2017b. US Assessor Competency, BNSP, February 23, 2017c. Upgrading methodology Assessment for Assessor Competency,

LSPP, December 3, 2016d. Refreshment Level 5, BARA, November 28, 2014e. US Asessor Kompetensi, BNSP, 10 Desember 2013f. Refreshment Level 5, BARA, 10 Juli 2012

3 Bambang Widianto Independent Commissioner

a. Refreshment Level 2, BARA, March 24, 2017b. USMR Level 2, LSPP, December 21, 2013c. USMR Level 1, LSPP, December 14, 2013


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No Name Position Risk Management Certification

4 Dikdik Yustandi*) Commissioner a. Refreshment USMR Level 4, Mandiri University, September 23, 2016b. Refreshment USMR Level 4, BARA, February 28, 2014c. USMR Level 4, LSPP, July 28, 2012d. USMR Level 1, BSMR February 28 2006

Total and Composition of the Board of Commissioners The Board of Commissioner is appointed by GMS and participated in fit and proper test first based on regulation of Financial Services Authority (OJK), Bank Indonesia, and prevailing rules and regulations.

The Board of Commissioners has skills to perform mandated responsibilities. The Board of Commissioners has adequate understanding and competency, to face any issues that arise in Bank business activities, make decision independently, drive Bank performance improvement, and effectively conducting review and providing constructive input towards the Board of Directors’ performance.

Throughout 2017, the Board of Commissioners’ composition of BSM experienced changes as shown in table below:1. Period of January 31, 2017 to April 10, 2017, as follows:

Name Position Position Period

Ventje Rahardjo President Commissioner May 07, 2014 – April 10, 2017

Ramzi A. Zuhdi Independent Commissioner June 29, 2010 – present

Agus Fuad Commissioner May 29, 2013 – April 10, 2017

Bambang Widianto Independent Commissioner May 29, 2013 – present

Zulkifli Djaelani Independent Commissioner May 07, 2014 – April 10, 2017

2. Periode 10 April 2017 s.d. saat ini, sebagai berikut:

Name Position Position Period

Mulya Effendi Siregar President Commissioner/Independent April 10, 2017 – present

Ramzi A. Zuhdi Independent Commissioner June 29, 2010 – present

Bambang Widianto Independent Commissioner May 29, 2013 – present

Dikdik Yustandi *) Commissioner April 10, 2017 – present


Curriculum vitae of the Board of Commissioners’ member in 2017 can be senn in Company Profile Chapter on page 74.

That total and composition had been adjusted with BSM needs and expected to perform supervision function effectively, objectively, and independently as well as does not have conflict of interest that will distract its ability to perform the duties and responsibilities.

Diversity of the Board of Commissioners’ CompositionThe Board of Commissioners’ composition had fulfilled diversity aspect, which is combination from independency, and skill aspects. Related to BSM’s Board of Commissioners skills had been explained on Board of Commissioners’ Profile in this Annual Report.

All of Board of Commissioners of BSM has good integrity, competency and financial reputation. That had been proven as the majority of Board of Commissioners of BSM had obtained approval from Financial Services Authority.


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Orientation Program for the Board of CommissionersDue to diverse backgrounds of the Board of Commissioners’ members, BSM always organizes Orientation Program for new members of the Board of Commissioners with expectation that members of the Board of Commissioners could know each other and cooperate as a solid, comprehensive and effective team and this program introduces BSM condition in general.

In line with the Board of Commissioners and Directors’ Manual (Board Manual), Orientation Program for the Board of Commissioners comprises of:1. Good Corporate Governance principles and Business Ethics implementation in the Company.2. Description on the Board of Commissioners and Directors’ duties and responsibilities as well as prohibited actions.3. Overview on the Company related to goals, characters, and the Company’s scope of activities, financial performance,

strategies, the Company’s short and long-term plan, risks, internal control and other strategic issues.4. Description related to delegated authorities, internal and external audit, internal control system and policy as well as

Audit Committee.

In 2017, the new appointed members of the Board of Commissioners were Mr. Mulya Effendi Siregar and Mr. Dikdik Yustandi. Orientation Program was conducted for both members of the Board of Commissioners.

Independent Commissioner and Independency of the Board of CommissionersTotal active Independent Commissioner in the Company was 3 people from total member of the Board of Commissioners of 4 people or 75% of total Commissioner, therefore it has fulfilled minimum composition provision of 50% based on POJK No. 55/POJK.03/2016 concerning Governance implementation for Commercial Bank. The Company’s Independent Commissioner was held by Mr. Mulya Effendi Siregar, Mr. Ramzi A. Zuhdi, and MR. Bambang Widianto.

Statement of Independent CommissionerEach Independent Commissioner of BSM has made Independency Statement Letter and been submitted to OJK as follows:


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Criteria of Independent Commissioner:Based on Regulation of Financial Services Authority Number 33/POJK.04/2014 concerning criteria of Independent Commissioner that is also used by the Company comprises as follows: 1. Not an individual who work or has authorities and responsibilities to plan, lead, control or supervise Public Company’s

activities within the last 6 (six) years, unless re-appointment as Independent Commissioner of Public Company on the next period;

2. Do not have shares directly or indirectly to the Public Company;3. Do not have Affiliation relations with the Public Company, member of the Board of Commissioners, member of the

Board of Directors, or majority shareholder of the Public Company;4. Do not have business relations directly or indirectly to the Company’s business activities.

Share Ownership, Financial Relation and Family of the Board of CommissionersMember Composition of BSM’s Board of Commissioners for period January 1, 2017 until April 10, 2017 consists of 5 (five) members which is 1 (one) as President Commissioner and 4 (four) as Commissioners, meanwhile for period of April 10, 2017 until present, total members of BSM’s Board of Commissioners is 4 (four) members which is 1 (one) President Commissioner and 3 (three) Commissioners, with 3 (three) or 75% of the Board of Commissioners’ members are Independent Commissioners.

Until December 31, 2017, the Board of Commissioners does not have shares in BSM or other companies.Share Ownership of the Board of Commissioners (Period of January 1, 2017 – April 10, 2017) is described on the table below:

Name Position Share in BSM Share in Other Companies

Ventje Raharjo President Commissioner None None

Ramzi A. Zuhdi Independent Commissioner None None

Agus Fuad Commissioner None None

Bambang Widianto Independent Commissioner None None

Zulkifli Djaelani Independent Commissioner None None

Share Ownership of the Board of Commissioners (Period of April 10, 2017 – Present) is described on the table below:

Name Position Share in BSM Share in Other Companies

Ventje Raharjo President Commissioner None None

Ramzi A. Zuhdi Independent Commissioner None None

Bambang Widianto Independent Commissioner None None

Dikdik Yustandi Commissioner None None

All members of the Board of Commissioners has no financial, management, share ownership relations and/or family relations until second degree with Controlling Shareholder, among members of the Board of Commissioners and/or Board of Directors’ members or financial relations and//or share ownership relations with Bank that could influence its independency.


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Double Position of the Board of Commissioners Each member of the Board of Commissioners does not committed infringement on double position provision. Double Position by the Board of Commissioners’ members currently is still allowed by Double Position provision as follows:

Name Position Double Position

Mulya Effendi Siregar President Commissioner/Independent Commissioner

Do not have double position

Ramzi A. Zuhdi Independent Commissioner Do not have double position

Bambang Widianto Independent Commissioner Deputy Chief of Vice President Secretary in Human Development and Development Equality Policy Support

Dikdik Yustandi Commissioner SVP Corporate Banking II, Bank Mandiri

Board CharterThe Board of Commissioners has Board Manual based on provision of Bank Indonesia/Financial Services Authority and had been updated regularly, with the latest improvement as stipulated in Decree Letter of BSM Board of Commissioners No. KEP.KOM/001/2014 dated December 24, 2014 concerning BSM Board of Commissioners Manual.

With Board Manual of the Board of Commissioners, the Board of Commissioners’ duties execution is expected to be more targeted and effective and could be used as one of assessment tools of the Board of Commissioners’ performance. The manual stipulates various aspects of the Board of Commissioners among others including provision on:

Matters that are stipulated in Board Manual of the Board of Commissioners are:

a. Chapter I General Provisionb. Chapter II Structure, Duties, Obligations and Authorities

of the Board of Commissioners1) The Board of Commissioners’ Structure2) The Board of Commissioners’ Duties3) The Board of Commissioners’ Obligations4) The Board of Commissioners’ Rights and Authorities5) Information, Bank Confidentiality, and Conflict of

Interestc. Chapter III Supporting Professional Committees and

Other Supporting Institutiond. Chapter IV The Board of Commissioners’ Meeting

1) Type and Quorum of Meeting2) Participants of the Board of Commissioners’ Meeting 3) Chairman of the Meeting4) Meeting Agenda5) Meeting Decision

6) Minutes of Meeting7) Meeting8) Secretary of the Board of Commissioners

e. Chapter V Task Division1) Routine Task 2) Work Time of Commissioner3) Document Signing4) Continuous Education5) Performance Evaluation of the Board of

Commissionersf. Chapter VI Changesg. Chapter VII Closing

Supervision Task of the Board of CommissionersTask and supervision of the Board of Commissioners’ members are as follows:

Name Supervision Focus

Mulya Effendi Siregar

• HeadofRiskControllingCommittee• MemberofAuditCommitteeand

Remuneration and Nomination Committee

Ramzi A. Zuhdi

• HeadofAuditCommittee• MemberofRiskControllingCommittee

and Remuneration and Nomination Committee

Bambang Widianto

• HeadofRemunerationandNominationCommittee

• MemberofAuditCommitteeandRiskMonitoring Committee

Dikdik Yustandi

• MemberofAuditCommittee,Risk Controlling Committee and Remuneration and Nomination Committee


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Duties and Responsibilities of Board of CommissionersThe Board of Commissioners has duties of:a. Supervising Bank management taken by the Board of

Directors and providing advice to the Board of Directors including on work plan, Bank development, Articles of Association implementation and GMS Decision and/or Extraordinary GMS and prevailing rules and regulations;

b. Performing duties, authorities and responsibilities in accordance to provision in Articles of Association and GMS Decision and Extraordinary GMS effectively and efficiently as well as maintain communication effectiveness between the Board of Commissioners and Directors, External Auditor and Bank Supervision Authority or Capital Market;

c. Managing Bank interest by taking into account interest of Shareholders and responsible to GMS;

d. Investigating and reviewing annual report prepared by the Board of Directors and signing the annual report;

e. Providing opinion and advice on annual Bank Business Plan proposed by the Board of Directors and ratifying based on provision in Articles of Associations;

f. Monitoring Bank activities progress;g. Providing input and advice to Shareholders on issues

that are considered important for Bank management;h. Reporting immediately to GMS if there is any indication

on Bank performance slowdown with advice on improvement actions that need to be taken;

i. Informing Bank Indonesia latest by 7 (seven) work days after the findings of (a) violation on regulations and laws in finance and banking; and (b) a condition that endanger Bank business sustainability;

j. Proposing to GMS the appointment of Public Accountant who will investigate on Bank accounting.

The Board of Commissioners’ Meeting The Board of Commissioners continuously performing its duties and responsibilities professionally and independently based on good corporate governance. The Board of Commissioners is committed to proactive in performing bank supervision function, both on formulation process of strategic plan, business plan preparation and implementation, performance monitoring, risk management implementation, good corporate governance and compliance to sharia principle.

In performing its function and responsibilities, the Board of Commissioners is supported by supporting Committees comprising of Audit Committee, Risk Controlling Committee, and Remuneration and Nomination Committee. Duties and

responsibilities implementation effectiveness of the Board of Commissioners is taken in written and oral in formal forum such as Meeting or informal. Meetings held are the Board of Commissioners’ Meeting with the Board of Directors (Rakomdir), Joint Meeting of the Board of Commissioners, Board of Directors and Sharia Supervisory Board (Ragab), and Committees’ Meeting. Throughout 2017, those meetings were held 88 (eighty eight) times or >100% if compared to obligation to organize meeting and attendance level of the Board of Commissioner as stipulated in PBI No. 11/33/PBI/2009 concerning Good Corporate Governance implementation for Sharia Commercial Bank. The meeting discussion is on regular evaluation on RBB target achievement realization in 2017, discussion on developing issues, challenges faced, strategies/action plan that will be taken, and others.

The Board of Commissioners’ Meeting could be divided into:a. The Board of Commissioners’ Meeting Meeting held by the Board of Commissioners to discuss

duties and responsibilities of the Board of Commissioners to supervise and provide advice to the Board of Directors.

b. The Board of Commissioners’ Meeting with the Board of Directors and SEVP (Rakomdir)

The Board of Commissioners’ meeting with the Board of Directors & SEVP or Supervisor Director/SEVP with agenda of monthly bank business plans achievement, Bank latest issues, Bank strategic initiatives such as corporate plan, core banking system and others.

c. Joint Meeting between the Board of Commissioners, Board of Directors, SEVP and Sharia Supervisory Board (Ragab)

The Board of Commissioners’ joint meeting with the Board of Directors and Sharia Supervisory Board with Bank performance agenda, Bank latest issues, Bank strategic initiatives, compliance towards sharia principle on Bank business activities, etc.

d. Committees’ Meeting Meeting held by Committees (Audit Committee,

Risk Controlling Committee, and Remuneration and Nomination Committee) based on each duties and responsibilities to support the Board of Commissioners in conducting supervision and providing advice to the Board of Directors.


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Meeting RecapitulationThroughout 2017, total meeting held by the Board of Commissioners was 88 (eighty eight) times of meeting. Below is the meeting details taken by the Board of Commissioners’ member:

Meeting Recapitulation and Total Attendance of the Board of Commissioners (January 1, 2017 – April 10, 2017)

No. Meeting TypeTotal

Meeting


Ventje Raharjo

Ramzi A. Zuhdi

Bambang widianto

*)Agus Fuad

Zulkifli Djaelani

1 Meeting of the Board of Commissioners with Board of Directors and/or Sharia Supervisory Board (Rakomdir/Ragab)

7 7 7 3 7 7

2 Audit Committee Meeting 6 6 6 2 5 6

3 Risk Monitoring Committee Meeting

14 14 14 5 14 14

4 Remuneration and Nomination Committee Meeting

2 2 2 2 2 2

Total 29 29 29 12 28 29

Notes:*) Do not have concurrent position as Risk Monitoring Committee Member

Meeting Recapitulation and Total Attendance of the Board of Commissioners (April 10, 2017 – present)

No. Meeting TypeTotal

Meeting



Ramzi A. Zuhdi

Bambang widianto *)

Dikdik Yustandi

1 Meeting of the Board of Commissioners with Board of Directors and/or Sharia Supervisory Board (Rakomdir/Ragab)

21 21 21 18 14

2 Audit Committee Meeting 12 12 12 4 8

3 Risk Monitoring Committee Meeting 24 24 22 8 17

4 Remuneration and Nomination Committee Meeting

2 2 2 2 1

Total 59 59 57 32 40

Agenda, Date and Participant of the Board of Commissioners and Board of Directors’ Meeting Below is the description of Agenda, Date and Participant of Board of Commissioners’ Internal Meeting throughout 2017.


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No. Meeting Agenda DateJan – April 10, 2017 April 11 – Dec 2017

VR RZ AF Bw ZD MES RZ Bw DY

1 BSM’s Performance until Dec 31, 2016 (audited)

Jan 16, 2017

ü ü ü - - - - -

2 The Organization of BSM’s Extraordinary GMS and the Annual General Meeting of Shareholders of the 2016 Fiscal Year

Jan 18, 2017

ü ü ü ü ü - - - -

3 BSM’s Performance as of January 31, 2017

Feb 17, 2017

ü ü ü - ü - - - -

4 Application for BSM Financing Approval to BSM Kopkar

Mar 13, 2017

ü ü ü ü ü - - - -

5 BSM’s Performance as of February 28, 2017

Mar 15, 2017

ü ü ü - ü - - - -

6 Evaluation of BSM’s Performance as of March 31, 2017

Apr 6, 2017

ü ü ü ü ü - - - -

7 Preparation of Bank Mandiri’ Subsidiary Board Forum regarding BSM’s performance as of March 31, 2017

May 2, 2017

- - - - - ü ü ü ü

8 Evaluation of BSM’s Performance as of April 30, 2017

May 24, 2017

- - - - - ü ü ü ü

9 Stress Test on the Impact of Financing Quality on Adequacy of BSM’s CKPN and Capital

Jun 2, 2017

- - - - - ü ü ü -

10 Evaluation of BSM’s Performance as of May 30, 2017 and Action Plan

Jun 15, 2017

- - - - - ü ü ü ü

11 Evaluation of BSM’s Performance as of June 30, 2017 and Action Plan

Jul 20, 2017

- - - - - ü ü

12 Evaluation of BSM’s Performance as of July 31, 2017 and Action Plan

Aug 24, 2017

- - - - - ü ü ü ü

13 Change in Organizational Structure Sep 14, 2017

- - - - - ü ü ü ü

14 Evaluation of BSM’s Performance as of August 31, 2017 and Action Plan

Sep 28, 2017

- - - - - ü ü -

15 Evaluation of BSM’s Performance as of September 30, 2017 and Action Plan

Oct 19, 2017

- - - - - ü ü ü -

16 BSM’s Performance as of October 31, 2017 (Performance and Action Plan Evaluation) and 2018 Bank Business Plan

Nov 16, 2017

- - - - - ü ü ü

17 Discussion of Bank Syariah Mandiri’s Bank Business Plan for 2018-2020

Nov 24, 2017

- - - - - ü ü ü -

18 BSM’s Performance as of November 30, 2017 (Performance and Action Plan Evaluation)

Dec 21, 2017

- - - - - ü ü ü -

19 Additional Write Off Budget for 2017 and Impact on BSM Performance as of 31 December 2017

Dec 28, 2017

- - - - - ü ü ü ü


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The Board of Commissioners’ DecisionsUntil December 31, 2017, the Board of Commissioners had issued supervision and advisory decision related to:a. Financing to BSM Related Parties.b. Changes on BSM Organizational Structure.c. Changes on the Board of Commissioners’ Supporting

Committees Member.d. Addition of Write Off Budget in 2017.e. Bank Business Plan in 2018.f. The Board of Directors’ Action to Tie the Company as

Guarantor of Mandiri Corporate Card Issuance.g. The Board of Directors’ Leaves Implementation.

The Board of Commissioners’ Recommendation and ApprovalSettlement follow up in every decision of the Board of Commissioners’ Meeting with the Board of Directors as stated in Minutes of Meeting is always monitored on the following meeting.

The Board of Commissioners’ Duties Execution ReportThroughout 2017, the Board of Commissioners had provided guidance as follows:a. Corporate Plan

1) Evaluating Corporate Plan 2016 – 2020, since there is quite big gap between BSM performance realization with Corporate Plan target in 2017.

2) Ensuring evaluation result to Corporate Plan target in 2020 to be challenging yet achievable.

b. Financing1) Improving domination of BSM financing distribution

portfolio on productive segment and real sector (such as Micro and Business Banking), since it is in line with Sharia Banking “soul”. However, the Board of Directors needs to be well prepared, especially on business process, targeted market, and HR capability to be able to produce healthy and qualified portfolio.

2) Distributing financing on wholesale banking segment that focuses on targeted market by BSM or through cooperation with Parent Entity, such as SOEs and Government projects (such as infrastructure, etc.) and Islamic Sector Solution (such as Islamic University, Islamic Hospital, etc).

3) Ensuring there is no violation on targeted market by Head Office work unit and/or BSM distribution channel unless obtaining approval from the Board of Directors.

4) Determining and providing authority limitation on

financing decision to employee/officer appropriately, and reviewing authority providence regularly.

5) Ensuring business process (including service level agreement/SLA0 of BSM financing to be able to compete with other banks and creating qualified financing.

6) Conducting strong trade checking related customer business condition prior to providing financing and conducting tight monitoring on the customer business progress.

7) Ensuring the function of 3 (three) work unit functions of financing process pillar (Business Unit, Financing Risk Unit, and Central Operation Unit) had performed effectively, so that BSM business growth quality could be maintained and sustained. The Board of Directors to perform review on the effectiveness regularly.

8) Determining minimum spread margin (above margin revenue if third party fund placed with Bank Indonesia and/or securities) in financing distribution to customers with good performance with low risk, such as SOEs Company, etc.

9) Communicating well with other banks to minimize financing margin war by customers.

10) Improving financing distribution with contract use other than murabahah (diversification).

11) Optimizing BSM cost of fund strength in pricing competition with competitor in distributing financing to customers with “grade A” (the best) performance, so the financing could grow faster and sustained.

12) Evaluating BSM BMPD in house limit determination to accommodate BSM opportunity in distributing financing with bigger amount to customers especially SOE with excellent performance.

13) Improving promotion to BSM service to improve BSM positioning by Customers.

c. Financing Quality1) Strengthening financing administration function as

early warning signal, if customers’ business condition slowdown occurred.

2) Improving financing watch list implementation and determining account strategy, so the customer’s financing quality could be maintained in perform collectability.

3) Improving billing to non-performing financing (NPF) and write off (WO) customers based on the set target.

4) Determining resources division (human resources, time, etc) well to improve financing quality growth, monitoring, controlling and improvement.


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d. Third Party Fund1) Improving continuously low cost fund growth;2) Determining the appropriate margin on third parties

placement to withdraw and/or maintain existing third parties fund by taking into account income spread margin target expected by BSM.

e. Fee Based Income1) Improving fee based income realization, such as by

improving Islamic sector solution transaction-umrah, gold pawning business, currency exchange (dhi. SAR Saudi Arabia), improving transaction on electronic banking, cash management, etc.

2) Ensuring BSM e-channel services quality to be excellent and safe without any barrier in using it by Customers.

f. Human Resources1) Evaluating the Board of Directors’ task division

and SEVP especially its supervision on BSM HR management and development to be more focus and optimal.

2) Improving HR competency and capability in a targeted, equal and sustain manner to improve BSM HR productivity.

3) Requiring Group Head to conduct sharing session on lesson learned of non-performing financing, etc.

4) Conducting the right and strict action to HR who conducts any violation and/or fraud.

5) Ensuring efficiency program on employee employees by taking into account competitiveness factor in market, especially marketing employee.

6) Providing opportunities to conduct pro-hire employment with capability, good leadership and able to drive the organization to grow based on the set target. On the other side, the Board of Directors is expected to continuously improving BSM existing HR capability.

7) Ensuring human capital management strategy that accommodates millennial generation employee needs, to improve loyalty to BSM.

8) Placing employee based on capability owned.9) Improving business unit human resources (HR)

capability and confidence to own ability in communication and maintaining relationship with BSM customers’ Board of Directors without assistance from BSM Wholesale Banking Director.

10) Internalizing to all BSM employees that BSM is the only Sharia Bank within Bank Category III, therefore

it is expected to improve the employees’ confidence and proud and impacted on their performance improvement.

11) Developing and internalizing corporate culture to all employees.

g. Information Technology1) Completing BSM IT problems and conducting

development based on current customers needs, so IT of BSM will be able to support RBB Target achievement of BSM in 2018.

2) Ensuring BSM IT to have strong security level and able to mitigate each operational risk exposure.

3) Conducting strong synergy with parent entity, including using Parent Entity infrastructure (system, application, policy, procedure, HR, etc.) to settle BSM IT project.

4) Optimizing IT committee project to Board of Directors’ level.

5) Conducting service improvement through banking digital.

h. Internal Control System1) Strengthening recruitment process to anticipate

employee recruitment with less integrity.2) Evaluating root cause of fraud and mitigating and

strengthening each business process step which identified with low internal control.

3) Improving automation system function (information technology) in losing the employee opportunities in fraud.

4) Preparing steps in creating zero fraud by taking into account events that existed.

5) Ensuring implementation of anti fraud strategy taken discipline.

i. Compliance1) Ensuring update to BSM internal provisions in

accordance to regulation issued by Regulator and/or Government.

2) Conducting automation and/or determining workflow with strong internal control related to obligation to submit Bank report especially to Regulator to ensure right, valid and on time report.

3) Ensuring each business activity taken (including the use of contracts) had been in accordance with sharia principle.

4) Ensuring BSM new products and activities to obtain sharia opinion first prior to implementation.


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5) Communicating with DPS to create new unique and sharia product and activities innovation.

j. Sustainable Finance Preparing and/or making sustainable finance action

plan as stated in POJK No. 51/POJK.03/2017, in which provision must be implemented for Bank Category III including BSM on early 2019.

Performance Assessment on Supporting Committee in Task Implementation of the Board of CommissionersPerformance assessment on the Board of Commissioners’ Committee is determined based on duties as stated in Committee Charter and Committee Work Program.

However, meeting plan could be changed if considered necessary by one of several Commissioners and other related parties. The Board of Commissioners considered that Audit Committee, Risk Monitoring Committee and Remuneration and Nomination Committee had well implemented their duties throughout 2017.

Performance Assessment of the Board of CommissionerstEvaluation procedure on the Board of Commissioners’ performance is taken in GMS forum. GMS is meeting attended by Shareholders who fulfill quorum requirement and organized by the Board of Directors on the request of the Board of Commissioners, the Board of Commissioners or shareholders who represent 1/10 part of total shares to take decision and/or to take decision on matters that its authorities are not given to the Board of Directors and Commissioners. Assessment on the Board of Commissioners’ performance taken with several measurement tools such as:- Criteria of the Board of Commissioners’ Performance

Assessment- Self Assessment of Bank GCG

Assessment Criteria of the Board of Commissioners’ PerformanceEvaluation criteria used to assess the Board of Commissioners’ performance and the Board of Commissioners’ Members is the function execution of the Board of Commissioners in conducting supervision and providing advice to the Board of Directors for the interest of BSM and Shareholders especially related parties in general.

AssessorAssessment of the Board of Commissioners’ performance taken by Shareholders in GMS forum based on its duties implementation responsibility based on prevailing rules and regulation. The Board of Commissioner will be responsible on their performance in period 2017 in GMS that will be held in 2018.

Training Program of the Board of CommissionersTo improve and develop competency to support their duties and responsibilities, the Board of Commissioners had participated in several activation including: 1. Strengthening Sharia Banking to support qualified

Indonesia Economic, Jakarta, Bank Indonesia, November 27, 2017.

2. Fostering Inclusive Economic Growth and Improving Resiliency through Closer Collaboration and Coordination, Surabaya, Bank Indonesia, November 7-9, 2017.

3. Sharia Banking Basic Training, KARIM Consulting Indonesia, Jakarta, April 26, 2017.

4. Refocusing on Credit Risk Management, Credit Risk Model, Pricing and Being Prepared for Upcoming Regulations, Banker Association for Risk Management (BARa), Jakarta, March 23-24, 2017.

5. Public Class Refreshment LSPP Level 5, Managing Information Technology and Communication Risk, LSPP, Bandung, February 28, 2017.

THE BOARD OF DIRECTORSThe Board of Directors is Main Organ who is authorized and fully responsible on the Company’s management for the interest of BSM, based on the Company’s goals and objectives and represent BSM, both inside and outside the court based on Articles of Association provision. The Board of Directors in general has duties to perform all actions related to the Company’s management with limitations as stipulated in rules regulations, Articles of Associations and/or GMS decision as well as its responsibility to GMS.

The Board of Directors is central party as the Company’s executive organ who owns the biggest responsibility portion in realizing good corporate governance. Therefore, BSM had appointed one Director as the Company’s GCG in charge that attached to the Compliance Director.


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Total and Composition of the Board of DirectorsComposition of BSM Board of Directors’ member consists of 7 (seven) people, one President Director and 6 (six) Directors, who are appointed based on GMS. The Board of Directors’ appointment had been through GMS mechanism and fit and proper test to obtain approval from Financial Services Authority.

The Board of Directors collectively has skills to implement mandated responsibilities, and consists of members with adequate understanding, has competency to be able to face issues arise in business, make decision independently and drive the Company’s performance improvement.

Composition the Board of Directors (January 1, 2017 – April 9, 2017)

No Name Position Legal Basis Appointment Period Fit & Proper Test Pass

1. Agus Sudiarto President Director

Deed No. 02, GMS dated May 7, 2014

May 2014 to May 2017 Kep-84/D03/2014, September 12, 2014

2. Fahmi Ridho Director Deed No. 02, GMS dated May 7, 2014

May 2014 to May 2017 Kep-99/D03/2014, OCotber 10, 2014

3. Putu Rahwidhiyasa

Director Deed No. 02, GMS dated May 7, 2014

May 2014 to May 2017 Kep-100/D03/2014, October 10, 2014

4. Choirul Anwar Director Deed No. 30, GMS dated April 1, 2015

April 2015 to April 1, 2018

Kep-49/D-03/2015, August 24, 2015

5. Edwin Dwidjajanto

Director Deed No. 30, GMS dated April 1, 2015


Kep-50/D-03/2015, August 24, 2015

6. Kusman Yandi Director Deed No. 30, GMS dated April 1, 2015


Kep-51/D-03/2015, August 24, 2015

On April 10, 2017, GMS was approved to be held that decided management changes by dismissing with honor Mr. Agus Sudiarto and Mr. Fahmi Ridho on April 10, 2017. Therefore the composition of the Company’s Board of Directors members are as follows:

The Composition of the Board of Directors (Period April 10, 2017 – present)

No Name Position Legal Basis Appointment Period Fit & Proper Test Pass

1. Toni Eko Boy Subari

President Director

Deed No. 01, GMS, dated May 2, 2017

May 2017 to May 2020 Kep-20/D.03/2018, February 15, 2018

2. Achmad Syafii Director Deed No. 01, GMS, dated May 2, 2017

May 2014 to May 2020 Kep-21/D.03/2018, February 15, 2018

3. Putu Rahwidhiyasa

Director Deed No. 01, GMS, dated May 2, 2017

May 2017 to May 2020 Kep-100/D03/2014, October 10, 2014

4. Choirul Anwar Director Deed No. 01, GMS, dated May 2, 2017

April 2015 – April 1, 2018

Kep-49/D-03/2015, August 24, 2015

5. Edwin Dwidjajanto


April 2015 – April 1, 2018

Kep-50/D-03/2015, August 24, 2015

6. Kusman Yandi Director Deed No. 01, GMS, dated May 2, 2017

April 2015 – April 1, 2018

Kep-51/D-03/2015, August 24, 2015

7. Ade Cahyo Nugroho


May 2017 to May 2020 Kep-2/D.03/2018, January 4, 2018

Brief curriculum vitae of the Board of Directors’ members could be seen on Company Profile Chapter on page 80.


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Diversity of the Board of Directors’ CompositionThe Board of Directors’ composition had fulfilled diversity aspect which is a combination of independency and skills. Related to BSM Board of Directors’ skills had been explained on the Board of Commissioners and Directors’ Profile in this Annual Report.

All of BSM Board of Directors has good integrity, competency and financial reputation. That had been proven that all of BSM Board of Directors’ members had obtained approval from Financial Services Authority and had passed fit and proper test.

Orientation ProgramTo assist and ease the new member of the Board of Directors in adapting based on the Company’s goals and work culture values, the Company conducts orientation activities based on prevailing provision in the Company.

The Board of Directors’ IndependencyIndependency becomes one of important matters must owned by the Board of Directors especially related to decision making and action that needed to be taken to be inline with the goals and for the sake of BSM.

Family Relations and the Board of Directors Financial with the Board of Commissioners’ members, other Board of Directors’ members and/or Controlling ShareholderThroughout 2017, the Board of Directors did not have family or financial relations with the Board of Commissioners’ members, Board of Directors’ members and/or Controlling Shareholder.

Name

Family Relations with Finance Relations with


Board of Directors

Controlling Shareholder


Board of Directors

Controlling Shareholder

Yes Not Yes Not Yes Not Yes Not Yes Not Yes Not

Toni Eko Boy Subari

- ü - ü - ü - ü - ü - ü

Achmad Syafii - ü - ü - ü - ü - ü - ü

Putu Rahwidhiyasa - ü - ü - ü - ü - ü - ü

Choirul Anwar - ü - ü - ü - ü - ü - ü

Edwin Dwidjajanto - ü - ü - ü - ü - ü - ü

Kusman Yandi - ü - ü - ü - ü - ü - ü

Ade Cahyo Nugroho

- ü - ü - ü - ü - ü - ü


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Share OwnershipThroughout 2017, the Board of Directors did not have shares in BSM, other banks and other companies. Members were from the Board of Directors which is a party that does not have BSM affiliation and/or Controlling Shareholders.

Share Ownership of the Board of Directors (Period of January 1, 2017 – April 9, 2017) described on table below:

Name Position Share in BSM Share in other Banks

Share in Other Companies

Agus Sudiarto President Director None None None

Fahmi Ridho Director None None None

Putu Rahwidhiyasa Director None None None

Choirul Anwar Director None None None

Edwin Dwidjajanto Director None None None

Kusman Yandi Director None None None

Share Ownership of the Board of Directors (Period of April 10, 2017 – present)



Toni Eko Boy Subari President Director None None None

Achmad Syafii Director None None None

Putu Rahwidhiyasa Director None None None

Choirul Anwar Director None None None

Edwin Dwidjajanto Director None None None

Kusman Yandi Director None None None

Ade Cahyo Nugroho Director None None None

Concurrent Position of the Board of Directors’ member on other companies or institutionsBSM Board of Directors did not have concurrent positions as the member of the Board of Commissioners, Board of Directors or Executive Officer on 1 (one) Bank, other companies and/or institutions.



Toni Eko Boy Subari President Director No No No

Achmad Syafii Director No No No

Putu Rahwidhiyasa Director No No No

Choirul Anwar Director No No No

Edwin Dwidjajanto Director No No No

Kusman Yandi Director No No No

Ade Cahyo Nugroho Director No No No


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Board of Directors’ Charter (Board Charter)The Board of Directors had owned and improved the Board of Directors’ Charter ratified on December 24, 2014. The charter stipulates main duties, organization structure, work ethics and the Board of Directors’ meeting.t

Content of the Board of Directors’ Charter The charter stipulates the Board of Directors’ Work Ethics, Meetings Arrangement, the Board of Directors’ Changes and other Provisions that had fulfilled GCG principles. Matters stipulated in the Board of Directors’ Charter are:

Validity SheetI. Introduction

A. BackgroundB. Goals and ObjectivesC. Legal Basis

II. General ProvisionA. Introduction

III. The Board of Directors’ Work EthicsA. Banker Code of ConductB. The Board of Directors’ Work Ethics Implementation

IV. Office HourV. Meeting Arrangement

A. Type of MeetingB. Meeting Manual

VI. Provision on the Board of Directors’ ChangesA. Replacement DirectorB. Term of OfficeC. Other Provisions

VII. Closing

Assessment of the Board of Directors’ PerformanceProcedure on the Board of Directors’ performance evaluation is taken in GMS forum. GMS is meeting attended by Shareholders who fulfilled quorum requirement and held by the Board of Directors on the request of the Board of Commissioners, Board of Directors or shareholders who represent 1/10 part of total shares to take decision and/or to take decision on matters under its authorities that are not given to the Board of Directors or Commissioners.

Evaluation result on the Board of Directors’ performance in overall and performance of each member of the Board of Directors individually becomes inseparable part with compensation and incentive scheme for the Board of Directors’ members.

Implementation of the Board of Directors’ assessment is taken with several measurement tools of:- Key Performance Indicator- Bank GCG Self-Assessment

Key Performance Indicator (KPI) of the Board of DirectorsAssessment of the Board of Directors’ performance uses aspects stated in KPI as follows:1. Achievement target of 50% on financial performance

comprising of: profit, financing quality, Recovery ex. Wo and Fee Based Income.

2. Achievement target of 35% on operational performance comprising of: financing position, CASA, DPK and Customer Satisfaction Index,

3. Achievement target of 5% on strategic initiatives implementation.

4. Achievement target of 10% on employee productivity.


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Recapitulation of Board of Directors Meeting (RADIR)During 2017, there were 56 (fifty-six) meetings conducted by the Directors. The following is the details of the meetings held by the members of the Board of Directors.

FIRST TRIMESTER OF 2017

No. Number of Meeting Date Agenda Participating Director

1.19/001/RADIR January 4, 2017 • Directors&SEVP’sSharingSession

• PerformanceasofDecember2016• UpdateontheCommitteeofNational

Working Meeting• ManagerialEmployeeCommittee• CommitteeofROHead&AreaManager

Performance Review

Agus Sudiarto, Putu Rahwidhiyasa, Kusman Yandi, Edwin Dwidjajanto, Niken Andonowarih, Ade Cahyo Nugroho.

2. 19/002/RADIR January 10, 2017 • Directors&SEVP’sSharingSession• CommitteeofRegionHeadandAreaManager

Performance Review• ProgressofPurchasingBuildingAssetin

Pekanbaru Office Area• Others(TheFirstIndonesianIslamicUniversity

(IIUC)

Agus Sudiarto, Agus Dwi Handaya, Putu Rahwidhiyasa, Choirul Anwar, Fahmi Ridho, Kusman Yandi, Edwin Dwidjajanto, Niken Andonowarih, Ade Cahyo Nugroho.

3. 19/003/RADIR January 17, 2017 • Directors&SEVP’sSharingSession• 2017EGMSand2016AGMS• RundownoftheBSM’s2017NationalWorking

Meeting• ComplianceManagerialManager• TROUpdateProgressasofDecember2016• ProgressofPurchasingBuildingAssetin

Pekanbaru Office Area


4. 19/004/RADIR January 24, 2017 • Directors&SEVP’sSharingSession• Updateon2016GMSAgenda• OrganizationalBriefing


5. 19/005/RADIR January 31, 2017 • Directors&SEVP’sSharingSession• BoardForumQIV2016• SubmissionMechanismforOrganizational

Structure Alignment


6. 19/006/RADIR February 7, 2017 • Directors&SEVP’sSharingSession• FinancingPerformanceasofJanuary2017• 2017RegionalWorkingMeeting• CarOwnershipProgram(COP)• MethodofCalculatingEmployeePerformance

Appraisal as a Basic Bonus for 2016• ReviewofFDRDevelopment


7. 19/007/RADIR February 16, 2017 • Directors&SEVP’sSharingSession• RakomdirPreparation• FinancingCooperationProgramThrough

Sales Assets (Sell Down) from Bank Mandiri

Agus Sudiarto, Agus Dwi Handaya, Putu Rahwidhiyasa, Choirul Anwar, Fahmi Ridho, Niken Andonowarih, Ade Cahyo Nugroho.


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FIRST TRIMESTER OF 2017

No. Number of Meeting Date Agenda Participating Director

8. 19/008/RADIR February 21, 2017 • Directors&SEVP’sSharingSession• CarOwnershipProgram(COP)• Umrahgiftprogramforemployees• Proposalfor2017InhealthHealthInsurance

Premiums• AssessmentofWorkUnitPerformance• BSMCardVisaProgress• FDRImprovementProgram• OptimizationofBank-OwnedServiceVehicles

& Operations


9. 19/009/RADIR February 28, 2017 • Directors&SEVP’sSharingSession• CommunicationStrategy• EmployeeDisplayStudy• PresentationofWatsonTowerSurveyResults• 2016AreaPerformancePredicate• UpdateonPressConferenceMaterials• DisplayandRejuvenationofOfficeArea

Standards• ProposalonGrantingSpecialRateSavings

BSM to the OJK Payroll services• ReviewofBank’sOnlinePaymentPoint(PPOB)


10. 19/010/RADIR March 7, 2017 • Directors&SEVP’sSharingSession• PerformanceQuickReportFebruari28,2017• HCGPresentation• UpdateonBSM’sE-bankingBusiness


11. 19/011/RADIR March 14, 2017 • HCGPresentationregarding2016Bonuses Agus Sudiarto, Agus Dwi Handaya, Putu Rahwidhiyasa, Choirul Anwar, Fahmi Ridho, Kusman Yandi, Edwin Dwidjajanto, Niken Andonowarih, Ade Cahyo Nugroho.

12. 19/012/RADIR March 21, 2017 • Directors&SEVP’sSharingSession• BSM’s2017CulturalProgram• GEGERprogram• Progressofthe2016-2020BSMCorePlan

Initiative for February 2017• ProposalrelatedtoCapitalOrganizational

Structure• HCGPresentation

Agus Sudiarto, Agus Dwi Handaya, Putu Rahwidhiyasa, Choirul Anwar, Kusman Yandi, Edwin Dwidjajanto, Niken Andonowarih, Ade Cahyo Nugroho.

13. 19/013/RADIR March 30, 2017 • Directors&SEVP’sSharingSession• SpecialAuditResultsforPawnFinancingat

Palembang Branch• Km5• ReviewofLimitofFundsforCoreDepositors

(KMR)



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SECOND TRIMESTER OF 2017No. Date Agenda Number of Meeting Participating Director

14. April 4, 2017 • Directors&SEVP’sSharingSession• AnnualGMSforthe2016FiscalYear• FinancingPerformanceasofMarch31,2017• QuickReportPerformanceasofMarch31,2017• ResultsofFollow-UpMonitoringofBPK-RI’s

Examination towards BSM in 2015• OJKDMTL• BUSPerformancePositionasofDecember2016• 2016BonusRealizationReport• CarOwnershipProgram(CP)• PerformanceofInhealthHealthInsurance

19/014/RADIR Agus Sudiarto, Putu Rahwidhiyasa, Fahmi Ridho, Edwin Dwidjajanto, Kusman Yandi, Choirul Anwar, Ade Cahyo Nugroho, Niken Andonowarih

15. April 11, 2017 • 2016Performance&TW12017WholesaleBanking Directorate

19/015/RADIR Toni E. B. Subari, Putu Rahwidhiyasa, Edwin Dwidjajanto, Kusman Yandi, Choirul Anwar, Ade Cahyo Nugroho, Niken Andonowarih

16.April 18, 2017 • Directors&SEVP’sSharingSession

• 2010-2015BSM’sCorporatePlanInitiativeandProgress of 2016-2020 BSM’s Corporate Plan Initiative

• RetailEvaluationFinancingQ12017

19/016/RADIR Toni E. B. Subari, Ahmad Syafii, Putu Rahwidhiyasa, Edwin Dwidjajanto, Kusman Yandi, Choirul Anwar, Ade Cahyo Nugroho, Niken Andonowarih

17. April 25, 2017 • Directors&SEVP’sSharingSession• BSMManagementLetterin2016byPWC• WismaMandiriIBuildingRenovationProject• BSMITupdates• Proposalfor2017InhealthHealthInsurance

Premiums


18. May 2, 2017 • Directors&SEVP’sSharingSession• PreparationoftheBoardForum• YayasanBangunSejahteriaUmat’sWork

Program of CSR-CSG LAZNAS• ShortForm-CapitalStrategyRoadmapStudy

19/018/RADIR Toni E. B. Subari, Ahmad Syafii, Putu Rahwidhiyasa, Edwin Dwidjajanto, Kusman Yandi, Ade Cahyo Nugroho, Niken Andonowarih

19. May 5, 2017 • TimeSignalRamadanTVProgramMaghribAdhan

19/019/RADIR Toni E. B. Subari, Ahmad Syafii, Putu Rahwidhiyasa, Edwin Dwidjajanto, Kusman Yandi, Niken Andonowarih

20. May 9, 2017 • Directors&SEVP’sSharingSession,CA’sleave• MuhasabahManagementPreparationPart2• BSMCorporateEvent2017• Extensionof2017-2018InhealthHealth

Insurance Cooperation• JobGrade• WholesaleBankingPrognosisMay-June2017

19/020/RADIR Toni E. B. Subari, Ahmad Syafii, Putu Rahwidhiyasa, Kusman Yandi, Ade Cahyo Nugroho, Niken Andonowarih

21. May 16,2017 • Directors&SEVP’sSharingSession• RiskProfileofBSM1stTrimester• EvaluationofFinancingasofApril2017• PerformanceUpdateofPTBankSyariahMandiri

1st Trimester of 2017• ManagementStrategyforOutletNetworks• SeniorAdvisoratBankSyariahMandiri

19/021/RADIR Toni E. B. Subari, Ahmad Syafii, Putu Rahwidhiyasa, Edwin Dwidjajanto, Kusman Yandi, Ade Cahyo Nugroho, Niken Andonowarih


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SECOND TRIMESTER OF 2017No. Date Agenda Number of Meeting Participating Director

22. May 23, 2017 • Directors&SEVP’sSharingSession• Update2017PWG:Business&Productivity• SARSalesTarget&Program• AccessingCustomerInformationforTax

Purposes• Case/LitigationReserves


23. May 30, 2017 • Directors&SEVP’sSharingSession• FinancingPerformanceMay26,2017• SARSalesTarget&Program• MicroBusinessProductivity&QualityReviewin

2017• WholesaleBankingFinancing


24. June 6, 2017 • Directors&SEVP’sSharingSession• RealizationofDMTLCompletionProgressReport

May 31, 2017• 2017TradeStrategyandWorkProgram• AnticipatingBPKHOperations• Re-segmentationofPTBankSyariahMandiri’s

Corporate Banking Account Management• ProposedIntegratedSalesStrategyIncludeArea

Organizations

§ 19/024/RADIR Toni E. B. Subari, Ahmad Syafii, Putu Rahwidhiyasa, Edwin Dwidjajanto, Kusman Yandi, Choirul Anwar, Ade Cahyo Nugroho, Niken Andonowarih

25. June13, 2017 • Directors&SEVP’sSharingSession• ProposalRegardingBSMSavingsAdministration

Costs• StrategyforCollectingRetailDepositGroup

Funds for 2017: Anticipation of BPKH Formation• SubmissionofNSICCSProjectProgressand6

Digit PIN• SubmissionofBSMCARDVISAProgress• FinancingPerformances.d.May2017• FinancingandFBITargetChallenge2017


26. June 20, 2017 • Revitalization&RenovationofRoomsatWismaMandiri I

• Directors&SEVP’sSharingSession• June2017PerformanceProgress• Research,Observation,andBenchmarkCorplan

# 2 Initiative Report by Mark Plus Consultants• ImplementationofLimitedOperational

Activities• ProgressofPangkalPinangBranchSpecialAudit

Results



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THIRD TRIMESTER OF 2017No. Date Agenda Number of Meeting Participating Director

27. July 4, 2017 • Directors&SEVP’sSharingSession• FinancialReportScenariosand

Projections June-Dec 2017• 2017KeyPerformanceIndicatorfor

PT Bank Syariah Mandiri• AlignmentoftheHeadOffice

Organizational Structure

19/027/RADIR Toni E. B. Subari, Achmad Syafii, Putu Rahwidhiyasa, Edwin Dwidjajanto, Kusman Yandi, Choirul Anwar, Ade Cahyo Nugroho, Niken Andonowarih.

28. July 11, 2017 • Directors&SEVP’sSharingSession• EmploymentAgenda• HumanResourceManagementUpdate• PilotIntegratedSalesStrategyPlan

19/028/RADIR Toni E. B. Subari, Achmad Syafii, Putu Rahwidhiyasa, Kusman Yandi, Choirul Anwar, Ade Cahyo Nugroho.

29. July 18, 2017 • Yield&COFManagement(KMR) 19/029/RADIR Toni E. B. Subari, Achmad Syafii, Putu Rahwidhiyasa, Kusman Yandi, Choirul Anwar, Ade Cahyo Nugroho.

30. July 19, 2017 • Directors&SEVP’sSharingSession• SubmissionofResearchResultsonPawn

and Gold Installment Businesses• ProgressCompletionofthe2016-2020

BSM Corporate Plan Initiative• UpdateontheMid-YearMeetingPlan• CSG(Calendar)Update

19/030/RADIR Toni E. B. Subari, Achmad Syafii, Putu Rahwidhiyasa, Kusman Yandi, Choirul Anwar, Ade Cahyo Nugroho, Niken Andonowarih.

31. July 25, 2017 • Directors&SEVP’sSharingSession• Q2/2017BoardForumUpdate• StrengtheningtheInternalControlBank• BSM’sWorkCultureProgramforthe2nd

Semester of 2017• SubmissionofDebitBalancedThird

Party Funds• BankSyarianMandiri’sSoundnessLevel

as of June 30, 2017


32. August 1, 2017 • Directors&SEVP’sSharingSession• ApplicationforApprovalofOutlet

Network Classification• BankMandiri’sAuditMeetingEntrance

2017• EmploymentUpdate


33. August 8, 2017 • Directors&SEVP’sSharingSession• QuickReportPerformanceJuly31,2017• ProposalRegardingCashManajement

System (CMS) Application Enhancement Follow-up

• EmploymentUpdate



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34. 15 Agustus 2017 • Directors&SEVP’sSharingSession• ProposalRegardingSAFE(Smart

Automated Funding Engine) Follow-Up Enhancement Module by PT Jakarta Teknologi Solusindo (JTEK)

• 2017MuhasabahCulture• BSMFixedAssetSPO• ProgressonBillingof50LargeThird

Party Funds with Debit / Overdraft Balance

• CooperationbetweenPTBankSyariahMandiri and BPKH

• BSM2018Calendar


35. August 22, 2017 • SharingDireksi&SEVP• UpdateKepegawaian• PersiapanWawancaraARA2016• UpdateprojectCorePlan#10e-Channel

& Digital Banking • ReviewRencanaPenyesuaianSales

Outlet Menjadi KFO dan KFNO Mikro Tahun 2017


36. August 29, 2017 • Directors&SEVP’sSharingSession• ProgressUpdateofOffice/Outletand

ATM Network July 2017• PublicationProgressofNewProduct&

Activity until July 2017• BSM’sBusinessDevelopment&ATM

Optimization• UpdateonProcurementofLawyer

Retainer Services• BPKHStrategicPartner


37. September 5, 2017 • Directors&SEVP’sSharingSession• VoiceofBSM’sCustomer• BSM’sBusinessDevelopment&

e-Channel Optimization• UpdateonDPKSettlementwithDebit

Balance as of August 30, 2017• Financialprojectionsfortheendof2017


38. September 9, 2017 • ChangesintheHeadOfficeOrganizational Structure

19/038/RADIR Dibuat oleh CBT

Toni E. B. Subari, Achmad Syafii, Putu Rahwidhiyasa, Edwin Dwidjajanto, Kusman Yandi, Choirul Anwar, Ade Cahyo Nugroho, Niken Andonowarih

39. September 12, 2017 • BSM’sFinancingRWA• UpdateonBPKHMaterial• BranchClassification• KPI,CoManage• LKMSupdate


40. September 14, 2017 • Updateon2018CorporateWork&Budget Plan



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41. September 19, 2017 • Directors&SEVP’sSharingSession• WholesaleBankingCustomerPipeline• EmploymentUpdate


42. September 26, 2017 • UpdateonBSMSantripreneurAward(BSA)

• Directors&SEVP’sSharingSession


FOURTH TRIMESTER OF 2017No. Date Agenda Number of Meeting Participating Director

43. October 3, 2017 • Directors&SEVP’sSharingSession• ResultReportofEmployerofChoice2017• ApplicationofChangeManagementinthe

Framework of Good Corporate Governance at PT Bank Syariah Mandiri

• ProposalforChangingtheAuthorityoftheBoard of Directors in Accordance with BSM Organizational Structure Changes

• UpdateReviewoftheCollectabilityof3Pillars of Wholesale Segment as of July 31, 2017

• Highlightsof2017OJKAuditResults• BSM2017MiladAgenda• UpdateonOJKCollaborationwithBSM

for Distribution of LKMS Formation and Operational Funds


44. October 10, 2017

• Directors&SEVP’sSharingSession• Resultsof2017OCHIMeasurementand

OCHI Implementation Plan• CGPIupdate• QuickReportPerformanceSeptember30,

2017• SpecialReviewofBank’sIDRDeposit&

Savings Ratio (KMR)• PlansfortherenovationofWismaMandiriI

Building • BankMandiriSharingSessiononBSM’sWork

and Budget Plan Update

19/044/RADIR Toni E. B. Subari, Achmad Syafii, Putu Rahwidhiyasa, Edwin Dwidjajanto, Kusman Yandi, Choirul Anwar, Ade Cahyo Nugroho.


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45. October 17, 2017

• Directors&SEVP’sSharingSession• Updateon2017MuhasabahCultureResults• Discussionofthe2017IntegrityPact• SecurityPowerProductivityImprovement

Progress (TAD)• ProgressProductivityEnrichmentProgram

(PEP) Report• 2017KickOffMeetingofthePWCPublic

Accounting Firm’s Audit• ProposalRegardingRevisionofHuman

Capital SPO

19/045/RADIR Toni E. B. Subari, Achmad Syafii, Edwin Dwidjajanto, Kusman Yandi, Ade Cahyo Nugroho, Niken Andonowarih.

46. October 24, 2017

• Directors&SEVP’sSharingSession• FutureBranchPresentationbyMcKinsey• People’sManagerProgram(PMP)

Presentation by Experd• BSMSavingStrategicMarketingSurvey

Presentation by Frontier Consulting• CorplanProjectProgress• CaseUpdate• DifferencesinPublicationFinancialRatio


47. October 25, 2017

• Follow-upontheReviewoftheCollectibilityof 3 Pillars of Wholesale Segment Financing as of July 31, 2017

19/047/RADIR Toni E. B. Subari, Achmad Syafii, Putu Rahwidhiyasa, Edwin Dwidjajanto, Kusman Yandi, Choirul Anwar, Ade Cahyo Nugroho.

48. October 31, 2017

• Directors&SEVP’sSharingSession• ManagementMeetingofBSM-Pefindoin

2017• UpdateonRepairofNPFandWORecovery

for Wholesale Segment• HCMSProjectUpdate• RevisionofHumanCapitalSPO• ProposalRegardingAccelerationofAccess

to Core Banking System from Branches to IT Network

• UpdateontheE-BankingSmartPracticeDevelopment Progress

• BSMQuadrantIVATMStrategy

19/048/RADIR Toni E. B. Subari, Achmad Syafii, Putu Rahwidhiyasa, Choirul Anwar, Ade Cahyo Nugroho, Niken Andonowarih.

49. November 7, 2017

• Directors&SEVP’sSharingSession• ExitMeetingofAuditofBankMandiriin2017• UpdateontheMuhasabahPlan• October2017PerformanceUpdate• SoftLaunchingofSingleMISCorplanProject

9• ActionPlan&ImplementationofETHIC-

New Behavior• ProposalRegardingAccelerationofBranch

Access to the IT Network• 2018CorporateWorkandBudgetPlanDraft• OfficerDevelopmentProgram(ODP)

Management Strategy• ProposalRegardingManagementofthe

Central BSM Club



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50. November 14, 2017

• Directors&SEVP’sSharingSession• Projectionof2017FinalPerformance• BPKHSelf-Assessment• ITSteeringCommittee• Reviewof2017BusinessBankingBusiness

Productivity and Quality

19/050/RADIR Toni E. B. Subari, Achmad Syafii, Putu Rahwidhiyasa, Kusman Yandi, Choirul Anwar, Ade Cahyo Nugroho.

51. November 21, 2017

• Directors&SEVP’sSharingSession• 2018CorporateWorkandBudgetPlan• ApplicationforOfficeNetworkClassification

Approval• EmployeeDisciplineMatrix• ProposalRegardingAdjustmentofExpense

Benefits• LegalUpdatesonFollow-upReport

19/051/RADIR Toni E. B. Subari, Achmad Syafii, Putu Rahwidhiyasa, Edwin Dwidjajanto, Kusman Yandi, Choirul Anwar, Niken Andonowarih.

52. November 30, 2017

• Timelinefor2017WholesaleBankingSegment RKP

• BranchClassification• IDI-BSMSurveyResultsNov29,2017• BSMUniformProcurementin2017• KMR

19/052/RADIR Toni E. B. Subari, Achmad Syafii, Putu Rahwidhiyasa, Edwin Dwidjajanto, Kusman Yandi, Choirul Anwar, Ade Cahyo Nugroho, Niken Andonowarih

53. December 5, 2017

• Follow-uponCorplan3Muhasabah• BranchKPI• QuickReportPerformanceNovember30,

2017• ReviewofCKPNPolicy


54.December 12, 2017

• Directors&SEVP’sSharingSession• UpdateonYear-EndProjections• ITSteeringCommittee• POJK45concerningtheManagementof

Remuneration for Commercial Bank• ProposalRegardingJobGrading&Career

Model Framework• 2018CSGStrategicFramework&Marketing

Communication Strategy

19/054/RADIR Toni E. B. Subari, Achmad Syafii, Putu Rahwidhiyasa, Edwin Dwidjajanto, Kusman Yandi, Choirul Anwar, Niken Andonowarih.

55. December 20, 2017

• Directors&SEVP’sSharingSession• PurchaseofOfficeBuildingPropertyin

Makassar• UpdateonYear-EndProjections• MuhasabahPreparationUpdate• Updateon2017AuditProgressofPWC

Public Accounting Firm• SharingfromAgusDwihandaya,SEVPBM


56. December 27, 2017

• Directors&SEVP’sSharingSession• UpdateonYear-EndProjections



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COMMITTEES UNDER BOARD OF DIRECTORSIn performing its functions, the Board of Directors is assisted by committees under the coordination of the Board of Directors as follows:

Organization Risk Management Committee

Asset and Liability Committee

Business Committee

Human Capital Committee

Policy and Procedure Committee

IT Steering Committee

Ketua Risk management and Compliance Director

Presiden Director President Director

Human Capital Director/SEVP

Risk management and Compliance Director

President Director

Secretary / inter-changeable

1. GH ERM2. GH Corporate Risk

1. GH Treasury2. GH ERM

1. GH Corporate Transformation2. GH Distributiion

1. GH HC Policy2. GH HC Services

1. GH PPG2. DH PPG

1. GH IT Arsitectur Strategy and Development2. GH IT Operation

Permanent Voting Member

1. Risk Management and compliance director

2. Wholesale banking Director

3. Retail banking director/SEVP

4. Financing risk and Recovery Director

5. Finance and Strategy Director

6. Distribution and Strategy Director

7. IT Director

1. President Director2. Wholesalebanking

Director3. Retail banking

director/SEVP4. Risk Management

and compliance director




1. President Director

2. Wholesale banking Director

3. Retail banking director/SEVP





1. Human Capital Director/SEVP





1. President Director

2. Technology Director



Non permanent voting member

Direktur/ SEVP terkait Materi

Permanent non voting member

The appointed compliance director/GH/compliance officer Riskmanagement and Compliance Director

Contributing non voting member

GH Pemateri

Invitee Dir/GH Internal Audit/ atau Dir/SEVP/Other GH Related to Materials

Working Group KMR WG Alco WG Business WG HC WG WPP IT WG


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SHARIA SUPERVISORY BOARD (DPS)Sharia Supervisory Board (DPS) as independent unit recommended by DSN-MUI in Sharia Financial Institution (LKS), in charge to supervise the implementation of National Sharia Board Fatwa in Sharia Financial Institution.

Composition and Curriculum Vitae of BSM Sharia Supervisory Board (DPS) Members

Name Position

Profil Prof. Dr (HC). K.H Ma’ruf Amin Chairman

Profil Dr. H. Muhammad Syafii Antonio, M.Ec Member

Profil Dr. H. Mohamad Hidayat, MBA, MH Member

Concurrent position of Sharia Supervisory Board’s members on other sharia financial institutions.

Name Position Concurrent Position

Prof. Dr (HC). K.H Ma’ruf Amin Chairman a. Chairman of BSM DPS (banking)b. Chairman of BMI DPS (banking)c. Chairman of BNI Syariah DPS (banking)d. Chairman of Mega Syariah DPS (banking)e. Chairman of BNI Life DPS (insurance)

Dr. H. Muhammad Syafii Antonio, M.Ec Member a. Head of STEI Tazkia (consultant & education)b. Member of BSM DPS (banking)c. Member of Schroders Investment Managemnet DPS

Dr. H. Mohamad Hidayat, MBA, MH Member a. Member of BSM DPS (banking)b. Member of PT Asuransi Manulife DPS (insurance)c. Member of PT Asuransi Allianz Syariah DPS (insurance)d. Member of UUS BTN Syariah DPS (banking)

Meeting of Sharia Supervisory BoardIn 2017, DPS conducted 9 (nine) times of meeting attended in person by DPS, as stated on table below:

Meeting

Member of Sharia Supervisory Board

Prof. Dr (HC). K.H Ma’ruf

Amin *)

Dr. H. Muhammad

Syafii Antonio,

M.Ec

Dr. H. Mohamad Hidayat, MBA, MH

Total Attendance in Meeting

9 8 9 9

*) Unable to attend 1 (one) time due to meeting in MUI

The agenda discussed on several times of meetings throughout 2017 is as follows:1. Progress of Sell Down Financing Settlement2. Submission of DPS activity plan (monthly, quarterly,

semesters and annually), including strategic activities of the Company such as Rakernas

3. Schedule and agenda of monthly DPS meeting discussion with main discussion on DMTL settlement of DPS Opinion

4. Schedule and agenda of DPS coordination meeting discussion with DymFK

5. Submission of DPS UP review, DPS Board Charter Updates, Meeting Time Line and DPS survey test, Pending Matters of DPS Opinion

6. Supplier Financing Opinion and Inti Plasma Partnership Financing Opinion Request

7. Recommendation and Presentation from DPS regarding Sharia Compliance Duties and DPS Opinion Request on DMTL OJK Year 2016 (Sharia Refinancing scheme)

8. DPS Opinion Request on Inti-Plasma Partnership Financing:• “margin during construction” scheme during

unproductive period (TBM)• Debt diversion of Farmers Cooperatives (plasma)

scheme to Core Company9. DPS Opinion Request on Sharia Refinancing Scheme

and DPS Opinion on PT. Mitra Bisnis Madani Financing Request

10. Opinion request on Non Performing Financing Settlement through Cessie and Discussion on OJK Audit Findings 2017


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11. Discussion meeting on:• DPSOpinionrequestonWadiahFundUsageforBSM

Employee financing• DPSOpinionrequestonMaturedGuaranteeBank

Obligation Settlement with Sharia Refinancing• DPSOpinionrequestonCostChargingforChecking

Activity (Quality Assurance) in Mudharabah Executing Financing

12. Discussion meeting on:• DPSOpinionRequestonSocialFundUsage• DPSOpinionRequestonWakalahAgreementofHajj

to Ministry of Religious Affairs of the Republic of Indonesia

• DPSOpinionRequestonAgreementUseinLakuPandai Makmur Basic Saving Account (BSA) program

13. Discussion meeting on:• ConsultancyonRestructuringCostApplication• DPSOpinionrequestonGeneralFacilityImport• DPSOpinionrequestonDistributorFinancing• DPSOpinionrequestonProjectFinancingforall

business sectors• DPSOpinionrequestonZakatInfaqandShadaqah

Saving Account 14. DPS utilized teleconference/video conference

technology as data collection process or information transformation acceleration with branches throughout Indonesia.

Duties and Responsibilities Execution of DPSBased on PBI No. 11/33/PBI/2009 and SE BI No. 12/13/BPbS. Sharia Supervisory Board conducts supervision towards Bank activities by:a. Analyzing report submitted by the Board of Directors,

internal audit function and/or compliance function to acknowledge the quality of Sharia Principle fulfillment on fund collection activities and fund distribution as well as Bank services.

On several time of sample test, DPS BSM conducts coordination with Internal Audit and Compliance work unit to collect data and information on particular branches, prior to the test. This aims so that DPS already had complete information on branch, to be more focus during the test.

b. Determining total sample test of transaction that will be investigated by taking into account the quality of Sharia Principle fulfillment from each activities. On early year, DPS BSM conducts DPS internal meeting to determine several branches that will be tested.

c. Investigating transaction document that is tested to know the Sharia Principle fulfillment as required in prevailing Bank internal provision. DPS BSM investigation focus is fulfillment of sharia aspects/sharia compliance. Among others are:1) In accordance of agreement used,2) Fulfillment of the agreement aspects on a financing

scheme,3) Investigation of SP3, Financing Analysis Note (SAP),

agreement and notary deed.d. Conducting inspection, investigation, request for

explanation and/or confirmation to Bank’s employees and/or customers to strengthen document investigation result;

e. Conducting review to prevailing internal provision related to sharia aspect if there is any unconformity indication on Sharia Principle fulfillment implementation;

f. Providing sharia opinion on fund collection and fund distribution activities as well as Bank services. DPS Sharia Opinion particularly for this matter becomes a requirement that must be fulfilled by BSM to fulfill audit process requirement fulfillment of BSM annual financial statements by KAP;

g. Reporting supervision result of Sharia Supervisory Board to the Board of Directors and Commissioners. This report contains documentation of DPS activities that is prepared in semester. Comprising, of:1) Supervision result to Bank new product development

process including objectives, characteristics, agreement in product, conformity to DSN-MUI Fatwa, system review and new product procedure.

2) Supervision result to bank activities including fund collection, fund distribution, and Bank services. Supervision in the form of; Internal Audit Result Report analysis, determination and investigation of total transaction sample test, review to SOP related to Sharia aspect.

3) DPS General Opinion on Bank operational per period. Period I started from January 1, 2016 to June 30, 2017 and period II started from July 1, 2017 to December 31, 2017.

4) DPS opinion to fund collection activities, fund distribution, and Bank services. By providing data of: Total SE (Circular Letter), financing data and DPS opinion on Bank new product. In 2017, DPS had issued 9 Sharia Opinions as follows:(1) BSM Product and Operational in 2016(2) Follow up of Sell Down Financing Transaction in

PT BSM


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(3) Plan of Insurance Acquisition Cost Recognition as Bank Revenues

(4) Development of BSM Debit Card Activities with International Visa Network

(5) Supplier Financing Product(6) Project Financing Product for Agriculture Sector(7) Social Fund Management(8) Wakalah Agreement Use in Management

Authority of Hajj Cost (BPIH)(9) Use of Agreement in Laku Pandai Makmur Saving

Account Program5) 5) Methodology and technique of investigation

sample testIn 2017, DPS had conducted sample test/direct

supervision to 8 (eight) Branch Offices and 4 (four) BSM area offices comprising of: (1) Batam Area,(2) Banda Aceh Area,(3) Makasar Area,(4) Bogor Area,(5) KC Cimahi,(6) KC Bogor,(7) KC Purwokerto,(8) KC Cilegon,(9) KC Mataram,(10) KC Kediri,(11) KC Purwakarta and(12) KJ JKT-Warung Buncit

With sample test concentration of funding, financing transaction document with agreement based: (1) Murabahah(2) Mudharabah(3) Musyarakah, including Musyarakah

Mutanaqisah(4) Ijarah(5) Take Over Case(6) Refinancing Case(7) Financing to Cooperatives

To complete investigation process, DPS also requests and learns Internal Audit & Anti Fraud Group (IAG) findings result from each Branch Office that is tested.

h. Improving Sharia Banking Practice Understanding Other material matter is during Sample Test, BSM DPS

conducts dialogue with branch office leaders and employees, to analyze deeper the business challenges and branch office operations related to sharia aspect to ensure the conformity of sharia principle.

In addition, DPS also provides guidance and strengthens “Sharia Banking Agreement and Product” material to branch offices staff, by organizing Sharia Clinic Forum to answer complaints and receives input that could improve sharia aspect fulfillment quality.

This aims so all of branch office officers will understand and recognize sharia banking products and services. Including standard agreements used in funding, financing products and services. And business aspect is expected to keep growing and sharia aspect can be fulfilled.

To support all of the above achievements, DPS morally and spiritually has obligation to deliver motivation and guidance to all officers and employees of branch offices to emphasize Islamic attitude/ethics in executing all duties and responsibilities as mandated by the Company. Because this will become added values and fundamental strengths for Bank Syariah Mandiri, moreover Bank Syariah Mandiri had Corplan 2018-2020, that is strengthened with PAS (Confident, Enthusiast, and Spiritful) culture internalization, insya Allah Bank Syariah Mandiri becomes a “Leading, Modern and Safety” bank.

COMMITTEESThe Board of Commissioners in executing its duties and responsibilities had formed committees to assist and improve supervision function taken by the Board of Commissioners. Committees formed comprising of:a. Audit Committeeb. Risk Monitoring Committeec. Remuneration & Nomination Committee

Committees formed comprises of the Board of Commissioners and independent parties and professionals in each field.

AUDIT COMMITTEETo implement Good Corporate Governance in Sharia Commercial Bank based on Bank Indonesia Regulation (PBI) No. 11/13/PBI/2009 dated December 9, 2009, the Board of Commissioners of PT Bank Syariah Mandiri (further called as Bank Syariah Mandiri) had formed Audit Committee (KA) to support the effectiveness of Board of Commissioners’ duties and responsibilities execution.


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Based on Bank Indonesia Regulation No. 11/33/PBI/2009 dated December 7, 2009 concerning Good Corporate Governance Implementation for Sharia Commercial Bank and Sharia Business Unit, as well as SEBI No. 12/13/DpbS dated April 30, 2010 concerning Good Corporate Governance Implementation for Sharia Commercial Bank and Sharia Business Unit, among others had stipulated Audit Committee Activities. Those provisions became the reference in implementing Audit Committee activities in PT Bank Syariah Mandiri.

Basis of Audit Committee EstablishmentEstablishment of Audit Committee in BSM is completed with the Audit Committee Charter ratification of PT Bank Syariah Mandiri on May 20, 2005 became the main reference of work execution for Audit Committee’s members, which had been renewed on February 2011, and last was updated on December 4, 2014 and stipulated in SKB of the Board of Commissioners and Directors No. 17/001-SKB/KOM.DIR dated March 9, 2015 and had been updated again as stipulated in SKB of the Board of Commissioners and Directors No. 18/002-SKB/KOM.DIR dated November 1, 2016 concerning Reference Revision and Audit Committee and Risk Controlling Charter Determination of PT Bank Syariah Mandiri.

Further based on Joint Decision Letter of the Board of Directors and Commissioners of PT Bank Syariah Mandiri o. 18/002-SKB/KOM.DIR dated November 1, 2016 had determined the Reference Revision and Audit Committee Charter as the reference of Audit Committee in executing its duties to assist the Board of Commissioners in supervising Bank, especially in implementing the supervision duties and functions on related matters of financial information, internal control system, investigation effectiveness by internal and external auditor, effectiveness of risk management implementation (together with Risk Controlling Committee), compliance to prevailing rules and regulations as well as other duties assigned by the Board of Commissioners.

As one of the responsibility on Audit Committee duties execution, herewith we submitted Audit Committee Report of PT Bank Syariah Mandiri during period of January 1, 2017 until December 31, 2017.

Independency of Audit Committee MemberAll of members of Audit Committee come from independent parties that do not have financial relations, management, share ownership and/or family relations with the Board of Commissioners, Directors and/or Controlling Shareholders or relations with Bank, that can influence its ability to act independently.

Duties and Responsibilities of Audit CommitteeIn implementing the Audit Committee duties and responsibilities as stipulated in Audit Committee Charter, throughout 2017 Audit Committee had proactively organizing Audit Committee meetings with various discussion theme related to business activities and/or operations of the Bank and attended Meeting of the Board of Commissioners & Directors & DPS (Rakomdir/Ragab), Risk Monitoring Committee Meeting and Remuneration & Nomination Committee Meeting.

Based on Audit Committee Charter prepared by referring to PBI No. 11/33/OBI/2009 dated December 9, 2009, Audit Committee has duties and responsibilities, as follows:1) Conducting monitoring and evaluation on internal and

external audit to assess internal control system adequacy in financial statements drafting process.

To implement that duty, Audit Committee conducts evaluation on:a) Duties execution conducted by internal audit

function/unit.b) Follow up by the Board of Directors on audit findings

and/or recommendation from supervision result of Bank Indonesia/Financial Services Authority, Sharia Supervisory Board, internal and/or external Auditor.

2) Conducting monitoring and evaluation on audit implementation effectiveness by internal audit function/unit towards internal control system implementation on each level, work unit, product, activity and/or transaction based on best practice and/or prevailing provisions.

3) Learning and ensuring that Public Accountant Firm selection process had been executed in accordance to prevailing procedure and/or provision.

4) Providing recommendation related to Public Accountant and Public Accountant Firm appointment to the board of Commissioners.

5) Conducting coordination with Bank internal and external parties, including Public Accountant Firm to evaluate the effectiveness of external audit implementation.


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Composition of Audit Committee MembertStructure and composition of Audit Committee members as stipulated in PBI is as follows:

1) Period of January 1, 2017 until April 10, 2017:

Name Concurrent Position

Mr. Zulkifli Djaelani Head/Independent Commissioner

Mr. Ventje Rahardjo Member/President Commissioner

Mr. Ramzi A. Zuhdi Member/Independent Commissioner

Mr. Bambang Widianto Member/Independent Commissioner

Mr. Ichwan Rochmanu Member from Independent Party

Mr. Djoko Seno Adji Member from Independent Party

2) Period of April 10, 2017 to present:

Name Double Position

Mr. Ramzi A. Zuhdi Head/Independent Commissioner

Mr. Mulya Effendi Siregar Member/President Commissioner/Independent

Mr. Bambang Widianto Member/Independent Commissioner

Mr. Dikdik Yustandi Member/Commissioner

Mr. Ichwan Rochmanu *) Member from Independent Party

Mr. Djoko Seno Adji Member from Independent Party

Mr. Kayim Hanuri **) Member from Independent Party

*) Term of Office until September 30, 2017**) Started joining as Audit Committee Member effectively on October 1, 2017

Curriculum Vitae of Audit Committee MemberComposition of Audit Committee Member of PT Bank Syariah Mandiri was 6 (six) people in total, comprising of 3 (three) Independent Commissioners (one of it served as Head), 1 member of Commissioner, and 3 (three) members from independent party outside the bank, with composition as stated on the table below:

Name Position

Mulya E SiregarHead, Independent Commissioner

Referring to Board of Commissioners’ Profile on page 74

Ramzi A ZuhdiMember, Independent Commissioner


Dikdik YustandiMember, Commissioner


Bambang widiantoMember, Independent Commissioner



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Name Position

Kayim HanuriMember *), Independent party

Was born in Cirebon, on December 7, 1958. Completed his Bach-elor Degree of Agriculture from Institut Pertanian Bogor (IPB) in 1982 and Master of Science in Agricultural Economics from Texas A&M University, USA in 1992. Joined with Bank Bumi Daya (BBD) since 1983 and assigned in BBD Bandarlampung branch with vari-ous positions until 1989, and then in 1990 to 1992 obtained schol-arship from BBD to continue his Master Degree and after complet-ed his Master Degree, he was assigned to on the job training in BBD New York Agency. From 1992 to 1996, he served in the Head Office of Corporate Affairs as a Senior Account Manager, then as the Syndicated Credit Section Leader in the same office from 1997 to 1998. In 1998 he was assigned as a member of the Merger Team of Corporate Banking of PT Bank Mandiri (Persero) to represent BBD. During his career at PT. Bank Mandiri (Persero) Tbk, he used to serve as Division Head of Corporate Banking-Structured Finance in 1999-2000, Division Head of Corporate Banking-Structured Finance, Trade Service & Cash Management in 2000-2001, Depart-ment Head of Syndication and Structured Finance in 2001-2005, Regional Risk Manager - Region I Medan (Aceh, North Sumatra, Batam) in 2006-2007, Department Head of Credit Policy and Pro-cedure in 2007-2013, and Department Head of Business Process & System Reengineering in 2013-2014. Courses and training that have been followed include: LPPI Branch Manager Course (1998), Bank Mandiri Advanced Leadership Course (2001), Transformation Leadership from Within, Bank Mandiri (2004), Syndicated Loans, International Faculty of Finance (London, 2004) , INSEAD Senior Leadership Training, INSEAD France (Jakarta, 2004) SESPIBANK-LP-PI (2005), Political Risk and Insurance (Shanghai, 2007), Early Warn-ing Signals: Liquidity and Refinancing Challenges, Fitch Training (Hongkong, 2008), Credit Risk Masterclasses (Singapore, 2009), Enterprise Risk Management Masterclass (Kuala Lumpur, 2011), Level III-LSPP Risk Management Certification (2010). Since October 1, 2017, he has served as a member of the Bank Syariah Mandiri’s Risk Monitoring Committee.


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Name Position

Djoko Seno Adji Member, Independent party

Born in Bogor, West Java, 27 May 1959. Education: Akademi Akuntansi Indonesia Jakarta (D3), Faculty of Management Economics University of Muhammadiyah Jakarta (S1), Faculty of Law University of Indonesia Jakarta (S1 - Extension). Certification: Qualified Internal Auditor (QIA), Level I Competency Certification in Banking Risk Management, Certification of Auditor Competency (Senior Level Auditor). Work experience: Bank Exim Officers Jakarta Gambir Branch (1981-1988), Internal Auditor Bank Exim (1989-1999), Internal Auditor of Bank Mandiri (2000-2015). Training / workshops that have been participated, namely: Technical Skill Computer Audit, Managing Credit Administration, Training KYC - AML & Auditing, Corporate Banking for Internal Audit, Education and Communication Training and Psychology Audit, National Symposium Accounting Year 2014, Fraud Investigation, etc. Serving as a Member of Bank Syariah Mandiri Audit Committee since 1 July 2016.

Ichwan RochmanuMember **), Independent party

Born in Trenggalek, East Java on April 25, 1959. Education: Faculty of Law (S-1, Department of Civil Law), Jayabaya University Jakarta (1980 to 1985), Master of Management (S- 2, Department of Financial Management) STIE IPWI Jakarta (1997 to 1998). Certification: Qualified Internal Auditor (QIA), Certified Fraud Examiner (CFE), Risk Management (BSMR Level 3), Auditor Competency Certification (Level Audit Manager) and Certification as a Professional Assessor of Banking Auditor. Work experience: Joined Bank Dagang Negara since 1980 with details as follow: from 1980 until 1990 served as Operational Employee in Jakarta, Thamrin branch office; from 1991 until 1997 served as Internal Auditor; from 1997 until 1999 served as Head of Internal Quality Audit. From 1999 until 2015, he worked in Bank Mandiri with details as follow: From 1999 until 2005 served as Invesrigator; from 2006 until 2007 served as Department Head of General Audit; and from 2008 until 2015 served as Department Head of Special Audit/Investigation. Training and workshops that have been participated, namely: Risk Based Auditing, Investigative & Forensic Audit, Problem Solving & Decision Making, Fraud Prevention& Investigation, Risk Assessment in Credit Transaction, Creative Problem Solving, Effective Communication With NLP, Internal Auditor Role for Basel II Compliance, Great Leader Program, Building High Engagement Workplace, Coaching for Excellence, Targeted Selection, Building Professionalism In You, Competency of Assessor for Banking Auditor Professional, etc.

*) Effectively active as member of Audit Committee since July 1, 2016 replacing Mr. Ichwan Rochmana.**) Term of Office until September 30, 2017.


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Independency Statement of Audit CommitteeIn performing its duties and responsibilities, each member of Audit Committee had acted independently, objectively and professionally both in appearance or in fact. Independency of Audit Committee’s member is reflected in aspect below:

Independency Aspect Mulya E. Siregar

Dikdik Yustandi

Bambang widianto

Kayim Hanuri

Djoko Seno Adji

Ichwan Rochmanu

Do not have financial relations with the Board of Commissioners and Directors.

ü ü ü ü ü ü

Do not have management relations in the Company, subsidiary, or affiliated companies.

ü ü ü ü ü ü

Do not have share ownership relations in the Company.

ü ü ü ü ü ü

Do not have family relations with the Board of Commissioners, Directors, and/or among Audit Committee members.

ü ü ü ü ü ü

All of Audit Committee members had fulfilled independency criteria as shown in independency aspect.

Concurrent Position of Committee Member1) There is no Audit Committee member who has

concurrent position as BSM Board of Directors.2) Head of Audit Committee concurrently serves as

member of Risk Monitoring Committee and member of Remuneration and Nomination Committee.

3) Member of Audit Committee from Independent Party on behalf of Mr. Kayim Hanuri concurrently serves as member of Risk Monitoring Committee.

Duties and Responsibilities of Audit CommitteeIn carrying out the duties and responsibilities of the Audit Committee as arranged in the Charter of Audit Committee, during the year of 2017, the Audit Committe has proactively conducted meetings with various discussion themes related to the Bank's business activities and / or operations as well as conducting on site / observation studies on the Field to directly observe business activities and / or operations at Branches, and attend Board of Commissioners & Directors & DPS (Rakomdir/Ragab) Meetings, Risk Monitoring Committee and Remuneration & Nomination Committee Meetings.

Based on Charter (KA) with reference to PBI No. 11/33/PBI/2009 dated 9 December 2009, KA has duties and responsibilities, as follows:1) Conducting monitoring and evaluation of the internal

and external audit in order to assess the adequacy of

internal control (internal control system) including sufficiency in the process of making financial statements. In order to carry out the task, the Committee evaluates:a) a. Implementation of tasks performed by internal

audit functions / units.b) Implementation of follow-up actions by the Board of

Directors on audit findings and / or recommendations from the supervision of Bank Indonesia / Financial Services Authority, Sharia Supervisory Board, Internal Auditor and / or External Auditor.

2) Monitoring and evaluating the effectiveness of audit implementation by internal audit unit / function on the implementation of internal control system at every level, work unit, product, activity and / or transaction according to best practices and / or provisions.

3) Analyzing and ensuring that the process of selecting a Public Accounting Firm has been implemented in accordance with applicable procedures and / or provisions.

4) Providing recommendations on the appointment of Public Accountant and Public Accounting Firm to the Board of Commissioners.

5) Coordinating with internal Bank and external parties, including Public Accounting Firm in order to evaluate the effectiveness of external audit.


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work Report of Audit CommitteeDuring 2017, the Audit Committee has performed its duties in accordance with applicable provisions, covering the following activities:a. Review of Audit Realization and Top Letters on November 2016b. Review of Report Progress of PT IT Project of PT BSM on December 2016c. Review of Audit Realization and Top Letters on December 2016d. Review of Reappointment Proposal of Public Accounting Firm Tanuredja, Wibisono, Rintis & Partners to

Audit PT BSM’s Annual Financial Reporte. Review of Confirmation to Internal Audit Group on OJK Letters Related to DNTL of OJK’s Audit Results

in 2014, 2015 and 2016f. Review of Publication of PT BSM’s Financial Report as of December 31, 2016g. Review of Audit Realization and Top Letters on January 2017h. Review of Audit Realization and Top Letters on February 2017i. Review of Publication of PT BSM’s Financial Report as of March 31, 2017j. Review of Audit Realization and Top Letters on March 2017k. Review of Audit Realization and Top Letters Period on April 2017l. Review of Report Progress of PT IT Project of PT BSM on May 2017m. Review of Audit Realization and Top Letters Period on May 2017n. Review of Report Progress of PT IT Project of PT BSM on June 2017o. Review of Publication of PT BSM’s Financial Report as of June 30, 2017p. Review of Report Progress of PT IT Project of PT BSM on July 2017q. Review of Audit Realization and Top Letters Period on June 2017r. Review of Report Progress of PT IT Project of PT BSM on August 2017s. Review of Audit Realization and Top Letters Period on July 2017t. Review of Audit Realization and Top Letters Period on August 2017u. Review of Publication of PT BSM’s Financial Report as of September 30, 2017v. Review of the Honorarium Negotiation of the Audit Services of PT BSM’s Financial Report with the

Fiscal Year of 2017w. Proposal on the Input Request of BOC Initiative in Establishing the Annual Audit Plan in 2018x. Review of Audit Realization and Top Letters Period on September 2017y. Review of Audit Realization and Top Letters Period on October 2017

Audit Committee MeetingAs set forth in the Audit Committee Charter, the meeting of Audit Committee has been conducted at least 12 (twelve) times a year. In 2017, the meeting of Audit Committee has been conducted 18 (eighteen) times. In addition, the Audit Committee also attended various meetings, namely Rakom for 6 (six) times, Rakomdir for 19 (nineteen) times, Ragab for 1 (one) time, meeting of Risk Monitoring Committee for 38 (thirty-eight) times, and meeting of Remuneration and Nomination Committee for 1 (one) time. Thus the total number of meetings attended by the Audit Committee is 83 (eighty-three) times. Details of the Audit Committee's attendance at meetings held in 2017 are as follows:


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a. Period of January 1, 2017 to April 10, 2017

No Name of Meeting Total Meeting

Ventje Raharjo

Ramzi A Zuhdi

Bambang widianto

Zulkifli Djaelani

Djoko Seno Adji

Ichwan Rochmanu

1 Rakom - - - - - - -

2 Rakomdir 6 6 6 3 6 6 6

3 RaGab 1 1 1 1 1 1 1

4 Meeting of Risk Monitoring Committee

14 14 14 5 14 14 14

5 Meeting of Audit Committee

6 6 6 2 6 6 6

6 Meeting of Remuneration Committee

- - - - - - -

Total 27 27 27 10 27 27 27

b. Period of April 10, 2017 to Present

No Name of Meeting

Total Meeting


Ramzi A Zuhdi

Bambang widianto

Dikdik Yustandi

Djoko Seno Adji

Ichwan Rochmanu *)

Kayim Hanuri **)

1 Rakom 6 6 6 5 5 6 5 6

2 Rakomdir 13 13 13 11 7 13 8 13

3 RaGab - - - - - - - -


24 24 22 8 17 24 16 23


12 12 12 4 8 11 6 12


1 1 1 1 - 1 1 1

Total 56 56 54 29 37 55 36 55

*) Served until September 30, 2017**) Joined as a Member of the Audit Committee since October 1, 2017 (but has been a member of the Risk

Monitoring Committee since July 1, 2016).

From January to December 2017, 18 (eighteen) Audit Committee Meetings were conducted with the minutes of each meeting with the following agenda:1) Audit Result of KAP PWC on BSM’s Financial Report in 20162) Report of the Internal Audit Result for the Period of December 20163) WISE & SAFE Project Development Progress4) 2017 Annual Audit Plan5) Mechanism of CKPN Calculation & Backup per Financing Account6) DMTL Follow-Up Progress and Overview of Internal Control Systems7) Internal Control Report of PT Bank Syariah Mandiri as of December 31, 20168) Internal Audit Result up to March 2017 and Completion Progress of Follow-up Monitoring Checklist (DMTL)9) Strategy and Progress of Completion and Development of Information Technology10) Review Result of Implementation Standards of Bank’s Internal Audit Function (SPFAIB) in Bank Syariah Mandiri

by Deloitte


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11) Internal Audit Review for the period of April to May 2017 and Progress of Completion of Follow-up Monitoring Checklist (DMTL)

12) Progress of Development and Completion of Information Technology

13) Realization of Audit Internal Audit Group (IAG) Results from June to July 2017

14) Realization of Audit Internal Audit Results (IAG) in August 2017

15) Implementation of Anti-Fraud Strategy of PT Bank Syariah Mandiri

16) Progress of Development and Completion of Information Technology until September 2017

17) Audit Plan of BSM’s Financial Report for the Financial Year of 2017 by PWC

18) Results of Internal Audit Group Examination (IAG) in September and October 2017

Meeting of the Board of Commissioners and Directors and DPS (Rakomdir and Ragab)From January to December 2017, together with the Risk Monitoring Committee, the Audit Committee participated in Rakomdir/Ragab for 20 (twenty) times with the agenda of reviewing the monthly performance of PT Bank Syariah Mandiri, Action Plan, and other strategic issues.

Meeting of the Risk Monitoring CommitteeFrom January to December 2017, the Audit Committee participated in the Risk Monitoring Committee Meeting for 38 (thirty-eight) times.

Meeting of Remuneration CommitteeFrom the total 4 meetings of the Remuneration and Nomination Committee held in 2017, the Audit Committe participated in one (1) Remuneration and Nomination Committee Meeting with the agenda of Human Resource Management.

RISK MONITORING COMMITTEEIn the interest of Good Corporate Governance implementationin Syariah commercial bank, according to Bank of Indonesia Regulation (PBI) No. 11/33/PBI/2009, dated 9 December 2009, PT Bank Syariah Mandiri Board of Commissioners have established the Risk Oversight Committee (KPR-Komite Pemantau Risiko) for supporting the effectiveness of Board of Commissioners tasks and responsibilities.

Afterwards, with the basis of Joint-Decision Letter of PT Bank Syariah Mandiri Directors and Board of Commissioners No.18/002-SKB/KOM.DIR, dated 1 November 2016, the revision on the KPR’s charter (guidelines and code of conduct), as the reference for the KPR in implementing their duties to support Board of Commissioners in actively monitor the risk management implementation in Bank Syariah Mandiri.

In implementing its tasks and responsibilities as regulated in KPR’s Charter, the KPR, within the period of 1 January 2017 until 31 December 2017, has proactively implement KPR meetings with various business-related agendas and/or Bank’s operational as well as conduct various reviews both on-desk and on-site to directly check the business activities and/or operation in branch offices, as well as attending meetings that of Board of Commissioners, Board of Directors and DPS (Board of Commissioners or Joint-Meeting), Audit Committee Meeting and Nomination and Remuneration Committee. In performing its duties, the Risk Monitoring Committee is responsible to the Board of Commissioners.

Duties and Responsibilities of the Risk Monitoring CommitteeAccording to the KPR Charter compiled with reference to PBI no. 11/33 / PBI / 2009, dated 9 December 2009, in the framework of performing its duties to assist the Board of Commissioners to actively supervise the implementation of risk management in Bank Syariah Mandiri, KPR has the duties and responsibilities, as follows:1) To proactively conduct discussions / conduct meetings

with the Board of Directors or related working units, to anticipate the risks of any matter related to business activities and / or operations of the Bank which according to the consideration of the Board of Commissioners need to be discussed / gathered in the Committee Meetings, especially if there are important events / Urgent or external regulations that may affect the business activities and / or operations of the Bank.

2) Evaluate the Bank’s Risk Management Policy.3) Evaluate the suitability between the Bank’s Risk

Management Policy and the implementation of the policy.

4) Evaluate the execution of the duties of the Risk Management Committee and the Risk Management Unit.

5) Evaluate the Bank’s internal reports on risk control.6) To evaluate the change of Bank organizational structure

up to one level below the Board of Directors.


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Structure and Brief Profile of Members of the Risk Monitoring CommitteeThe Risk Monitoring Committee has 6 (six) members consisting of 1 Chairman held by the President/Independent Commissioner, 2 independent Commissioners, 1 Commissioner, and 2 members from independent parties outside the bank’s organization.

Name Position

Mulya Effendi SiregarChairman/President Commissioner/Independent


Ramzi A ZuhdiMember/Independent Commissioner


Bambang widiantoMember/Independent Commissioner


Dikdik YustandiMember, Commissioner


Hari DewantoMember, Independent Party from Oustide of the Bank

Hari Dewanto was born in Jakarta, 10 October 1958. He was graduated with a Bachelor of animal husbandry degree from Bogor Agricultural Institute in 1981, and continued his post-graduate degree in Australia and received Post Graduate Diploma in agricultural economics in 1987 and Master of Economics degree in 1988 from University of New England, Australia. His professional career dated from 1981 at PT. Mercubuana as marketing staff, and started to have a career in Bank Pembangunan Indonesia (Bapindo) in 1989 as part of the Project II Financing Team, Corporate Division. He then received various appointments at Bank Mandiri, with final position as Vice President, Department Head, Corporate Risk Group. Courses and trainings that he has participated include Risk Management Certification, Portfolio & Operational Risk Management, Expertise in Fertilizer, Coal, Palm Oil and Down Stream Industries; Leadership Senior Management Training, INSEAD, Singapore; Project Finance for Developing Countries, the Development Bank of Japan, Tokyo; Corporate Credit Risk Analysis, Standards & Poor’s Singapore. Since October 1, 2017, he has been a member of the Risk Monitoring Committee in Bank Syariah Mandiri.

Kayim HanuriMember, Independent Party from Oustide of the Bank

Hayim Kanuri was born on 7 December 1958. He completed education and received a bachelor degree on agricultural sciences from Bogor Agricultural Institute (IPB) on 1982 and Master of Science in Agri-cultural Economics from Texas A&M University, USA, on 1992. Afterwards, he joined Bank Bumi Daya (BBD) from 1983 until being assigned to BBD’s Bandar Lampung branch office with various appoint-ments until 1989. From 1990 until 1992, he received scholarship from BBD to continue post-graduate education, received a master degree and subsequently assigned on the job training at BBD’s New York Agency. His final position was as Department Head of Business Process and System Reengineering of Bank Mandiri on 2013-2014 period. Various courses and trainings that he has participated include Branch Manager Course-LPPI (1998); Bank Mandiri Advanced Leadership Course (2001); Transforma-tion Leadership from Within, Bank Mandiri (2004); Syndicated Loans, International Faculty of Finance (London, 2004); INSEAD Leadership Senior Training, INSEAD France (Jakarta, 2004); SESPIBANK-LPPI (2005); Political Risk and Insurance (Shanghai, 2007); Early Warning Signals: Liquidity and Refinancing Challenges, Fitch Training (Hongkong, 2008); Credit Risk Masterclass (Singapore, 2009); Enterprise Risk Management Masterclass (Kuala Lumpur, 2011); Risk Management Certification Level III-LSPP (2010). Since July 1, 2016, he has been a member of the Risk Monitoring Committee in Bank Syariah Mandiri.

There was a change in the composition of the Risk Monitoring Committee on April 10, 2017, as a follow-up to the result of the decision of BSM’s Annual GMS for the fiscal year 2016 related to the approval of the structural change of the Board of Commissioners. In performing its duties, KPR is responsible to the Board of Commissioners.


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Report on the Activities of the Risk Monitoring Committee of 2017During 2017, the Risk Monitoring Committee has performed its duties and responsibilities in accordance with the applicable regulations, covering the following activities:

1) Review During 2017, the Risk Monitoring Committee has conducted 5 (five) reviews and made 2 (two) proposals with the

following agenda:

No. Dual Position

1. Review of Compliance Risk of PT Bank Syariah Mandiri in 2016

2. Review on the Results of BSM’s Health Level Rating (Risk Based Bank Rating) for the Last Three Years (2014 - 2016)

3. Review on the Results of BSM’s DPS Supervision Report in the Second Semester of 2017

4. Review of Risk Profile Rating of PT Bank Syariah Mandiri on Mandiri Group's Subsidiaries Risk Profile (integrated Risk Profile)

5. Watchlist Review of Wholesale Banking Segment Watchlist as of September 30, 2017

6. Proposal of Schedule and Agenda of KPR and KA Meeting in 2017

7. Proposal of Schedule and Agenda of KPR and KA Meeting in 2018

2) Meeting of the Risk Monitoring Committee As regulated in the Charter of Risk Monitoring Committee, the committee at minimum organize 12 (twelve) meetings

in a year. In 2017, the Risk Monitoring Committee organized 38 (thirty-eight) meetings. In addition, the Risk Monitoring Committee also participated in other meetings including Rakom for 6 (six) times, Rakomdir for 19 (nineteen) times, Ragab 1 for (one) time, Audit Committee Meeting for 18 (eighteen) times, and Remuneration and Nomination Committee Meeting for 1 (one) time. Thus the total number of meetings attended by the Risk Monitoring Committee is 83 (eighty-three) times.

Details and percentage of attendance of the Risk Monitoring Committee at meetings held in 2017 with the following agenda:1. Integrated Compliance Report of Mandiri Group in the Fourth Quarter of 2016 (18 January 2017);2. Self-Assessment of Mandiri Group's Independent Governance Implementation in the Second Semester of 2016

(January 18, 2017);3. Bank Syariah Mandiri’s Health Level for the Second Semester of 2016 (January 25, 2017);4. Compliance Implementation Report for the Second Semester of 2016 (January 25, 2017);5. BSM’s Procurement Management (February 1, 2017);6. Progress of BSM’s Corporate Plan Initiatives for 2016-2020 (February 17, 2017);7. Progress & Work Plan of BSM OTO in 2017, Synergy with MTF (February 23, 2017);8. End-to-End Progress of 3 (Three) Major Business Processes (March 2, 2017);9. Revision of BSM Head Office Organizational Structure (March 2, 2017);10. Implementation of Anti Money Laundering (APU) and Terrorism Financing Prevention (PPT) in BSM (March 9, 2017);11. Employee Recruitment for Retail Segment (March 30, 2017);12. Progress of Development of Compliance Information System (SIK) & Risk Management System (SIMRIS) to support

the process of identification, measurement, monitoring and risk control (March 30, 2017);13. Review / Risk Monitoring on Financing Growth and NPF, and Financing at Risk for Retail Banking Financing

Segment (April 6, 2017);14. Review / Risk Monitoring on Financing Growth and NPF, and Financing at Risk for Wholesale Banking Financing

segment (6 April 2017);


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15. Pipeline Management and Financing At Risk for Wholesale Banking segment (May 24, 2017);16. Fee-Based Income (FBI) Achievement Strategy (May 24, 2007);17. Compliance Implementation Report by the Director in charge of the Compliance Function for the First Quarter of 2017

(May 31, 2017);18. Progress of BSM’s Corporate Culture Implementation (June 8, 2017);19. Progress of APU and PPT Implementation (June 8, 2017);20. Pipeline Management and Financing ControlAt Risk for Retail Banking segment (June 15, 2017);21. End to End Process of Business Financing for Wholesale Banking Segment (13 July 2017);22. Progress of BSM Office Network Development (13 July 2017);23. Bank Syariah Mandiri’s Health Report per June 30, 2017 (July 26, 2017);24. Enhancement of Employee Productivity (July 26, 2017);25. Progress of New Publication & Activity (3 August 2017);26. Compliance Implementation Report for the Second Quarter of 2017 (August 10, 2017);27. Self-Assessment of the Integrated Governance Implementation in the First Semester of 2017 (August 10, 2017);28. Document Management System (August 31, 2017);29. Progress and Prospects of Growth of Financing and NPF, and Financing At Risk for Wholesale Banking segment (7

September 2017);30. Progress and Prospects of Growth of Financing and NPF, and Financing At Risk for Retail Banking segment (14

September 2017);31. Business Progress of Islamic Sector Solution - Umroh Ecosystem (October 12, 2017);32. Progress of BSM Corporate Plan Initiatives 2016-2020 (25 October 2017);33. Progress and Prospects of NPF Financing and Financing Growth, and Financing At Risk for Wholesale Banking Financing

segment until December 31, 2017 (November 23, 2017);34. Progress of BSM Electronic Banking Development Progress (November 30, 2017);35. Progress of Achievements and Prospects of NPF Financing Recovery and Write Off (7 December 2017);36. Transformation & Cost Efficiency (7 December 2017);37. Risk Management Committee Performance (December 14, 2017);38. Realization of BSM Marketing Communication & Branding Program 2017 and 2018 Plan (14 December 2017).

a. From January 1 – April 9, 2017

No Name of the Meeting Total Meeting

Ventje Raharjo

Ramzi A Zuhdi

Zulkifli Djaelani

Hari Dewanto

Kayim Hanuri

1 Rakom - - - - - -

2 Rakomdir 6 6 6 6 6

3 Ragab 1 1 1 1 1 1


14 14 14 14 14 14


6 6 6 6 6 6


- - - - -

Total 27 27 27 27 27 27

Percentage of Attendance 100% 100% 100% 100% 100%


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b. Period of April 10, 2017 until Present

No Name of the Meeting Total Meeting

Mulya Efendi Siregar

Ramzi A Zuhdi

Bambang widianto

Dikdik Yustandi

Hari Dewanto

Kayim Hanuri

1 Rakom 6 6 6 5 5 6 6

2 Rakomdir 13 13 13 11 7 13 13

3 Ragab - - - - - -


24 24 22 8 17 21 23


12 12 12 4 8 12 12


1 1 1 1 1 1 1

Total 56 56 54 29 37 53 55

Percentage of Attendance

100% 96.4% 51.8% 66% 94.6% 98.2%

c. Meetings held and/or attended by the Risk Monitoring Committee in 2017:1) Meeting of the Board of Commissioners (Rakom) From the total 8 (eight) meetings of the Board

of Commissioners (Rakom) held in 2017, the Risk Monitoring Committee participated in 6 (six) meetings of the Board of Commissioners (Rakom) with the agenda as follows:a) Concern of the Board of Commissioners regarding

the Realization of BSM Performance as of July 31, 2017 (24 August 2017);

b) Supporting Committee of the Board of Commissioners (14 September 2017);

c) Concern of the Board of Commissioners regarding the Realization of BSM Performance as of August 31, 2017 (September 28, 2017);

d) Concern of the Board of Commissioners regarding the Realization of BSM Performance as of September 30, 2017 (October 19, 2017);

e) Concern of the Board of Commissioners regarding the Realization of BSM Performance as of October 31, 2017 (November 16, 2017);

f) Concern of the Board of Commissioners regarding the Realization of BSM Performance as of November 30, 2017 (December 21, 2017).

2) Meeting of the Board of Commissioners with the Board of Directors and SEVP (Rakomdir and Ragab)

From January to December 2017, together with the Risk Monitoring Committee, the Audit Committee participated in Rakomdir/Ragab for 20 (twenty) times with the agenda of reviewing the monthly performance of PT Bank Syariah Mandiri, Action Plan, and other strategic issuesa) BSM’s Performance until December 31, 2016

(audited) (January 16, 2017);b) Implementation of AGMS of LB and Annual

General Meeting of Shareholders of BSM in 2016 (January 18, 2017);

c) BSM’s Performance as of January 31, 2017 (February 17, 2017);

d) Approval request of BSM Financing for Kopkar BSM (March 13, 2017);

e) BSM’s Performance as of February 28, 2017 (March 15, 2017);

f) BSM’s Performance Evaluation as of March 31, 2017 (April 6, 2017);

g) Board Preparation of Bank Mandiri’s Subsidiaries Forum on BSM Performance as of March 31, 2017 (May 2, 2017);

h) BSM’s Performance Evaluation as of April 30, 2017 (May 24, 2017);


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i) Stress Test on the Impact of Financing Quality Against CKPN and Capital Adequacy of BSM (June 2, 2017);

j) Evaluation of BSM’s Performance as of May 31, 2017 and Action Plan (June 15, 2017);

k) Evaluation of BSM’s Performance in June 30, 2017 and Action Plan (July 20, 2017);

l) Evaluation of BSM’s Performance in July 31, 2017 and Action Plan (August 24, 2017);

m) Organizational Structure Change (September 14, 2017);

n) Evaluation of BSM’s Performance in August 31, 2017 and Action Plan (September 28, 2017);

o) Evaluation of BSM’s Performance in September 30, 2017 and Action Plan (October 19, 2017);

p) Evaluation of BSM’s Performance and Action Plan as of October 31, 2017 & Bank Business Plan 2018 (November 16, 2017);

q) Discussion on Bank Business Plan (RBB) of Bank Syariah Mandiri for the period of 2018-2020 (November 24, 2017);

r) Evaluation of BSM’s Performance and Action Plan as of November 30, 2017 (December 21, 2017);

s) Addition of Write Off Budget 2017 and the Impact on BSM’s Performance as of December 31, 2017 (December 28, 2017);

t) Sell Down Financing.

3) Independency of the Members of the Risk Monitoring Committee

All members of the Risk Monitoring Committee, who originated from independent party and not having any relationships of financial, management, shareholding and/or familial one with Board of Commissioners, Directors and/or Controlling Shareholders and relationship with the Bank, that can compromise his/her abilities to act independently.

4) Multiple Positions of the Members of the Risk Monitoring Committeea) No member of the Risk Monitoring Committee

concurrently serves as the Board of Directors of Bank Syariah Mandiri

b) The Chairman of the Risk Monitoring Committee is also a Member of the Audit Committee and Member of the Remuneration and Nomination Committee

c) Member of the Risk Monitoring Committee from the Independent Party, Kayim Hanuri, concurrently serves as a member of the Audit Committee as of 1 October 2017

REMUNERATION AND NOMINATION COMMITTEEThe Board of Commissioners has established a Remuneration and Nomination Committee to support the effective implementation of the duties and responsibilities of the Board of Commissioners. This is in line with the implementation of good corporate governance (vide PBI No.11/33/PBI/2009) dated December 7, 2009 on Implementation of Good Corporate Governance for Sharia Commercial Banks and Sharia Business Units).

The BSM Remuneration and Nomination Committee already has guidelines and work procedures and has been updated as referred to the SKB of the Boards of Commissioners and Directors No.16 / 002-SKB / KOM-DIR dated 8 December 2014 on Stipulation of the Revision of the Remuneration and Nomination Committee PT Bank Syariah Mandiri.

As one of the responsibilities for performing the duties of the Remuneration and Nomination Committee, we hereby submit the Activity Report of the Remuneration and Nomination Committee of BSM during 2017.

Duties and Responsibilities of the Remuneration and Nomination CommitteeThe Remuneration and Nomination Committee has duties and responsibilities, among others, as follows:1) Evaluating the remuneration policy; 2) Evaluating the appropriateness of the remuneration

policy with the implementation of the policy;3) Providing recommendations to the Board of

Commissioners regarding remuneration policy for the Board of Commissioners, Directors, Sharia Supervisory Board, Executive Officers and Employees as a whole;

4) Preparing and providing recommendations to the Board of Commissioners on the system and procedures for the selection and / or replacement of members of the Board of Commissioners, Board of Directors and Sharia Supervisory Board;

5) Providing recommendations to the Board of Commissioners regarding candidates for members of the Board of Commissioners, Board of Directors, and / or Sharia Supervisory Board;


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6) Providing recommendations to the Board of Commissioners regarding independent candidates who will become members of the Audit Committee and Risk Monitoring Committee Members.

Membership and Composition of the Remuneration and Nomination CommitteePT Bank Syariah Mandiri Remuneration and Nomination Committee has fulfilled the requirement of such a committee regulated by Bank Indonesia Regulation No.11 / 33 / PBI / 2009, which stated that it is at least consists of 2 (two) Independent Commissioners and 1 (one) person Executive Officer of the Bank in charge of human resources.

The structure and members of the 2017 Remuneration and Nomination Committee is as follows:1) From January 1 – April 10, 2017

No Name Position

1. Bambang Widianto Chairman/Independent Commissioner

2. Ventje Raharjo Member/President Commissioner

3. Ramzi A Zuhdi Member/Independent Commissioner

4. Agus Fuad Member/Commissioner

5. Zulkifli Djaelani Member/Independent Commissioner

6. Andang Lukitomo Head of Human Capital Group (Ex: Officio)

2) From April 10, 2017 – Present

No Name Position

1 Bambang Widianto Chairman/Independent Commssioner

2 Mulya Efendi Siregar Member/President/Independent Commissioner

3 Ramzi A Zuhdi Member/Independent Commissioner

4 Dikdik Yustandi Member/Commissioner

5 Andang Lukitomo Member/Head of Human Capital Group (Ex: Officio)

Meeting of the Remuneration and Nomination CommitteeDuring 2017, the Remuneration and Nomination Committee has conducted 4 (four) meetings with the agenda for discussion and attendance of each member of the Remuneration and Nomination Committee as follows:

Agenda for Remuneration and Nomination Committee Meetings, as follows:1) Material Preparation for BSM’s AGM for the Fiscal Year 20162) Material Preparation for BSM’s GMS for the Fiscal Year 20163) Remuneration4) Human Resource Management

The attendance rate of Remuneration and Nomination Committee members is as follows:1) From January 1 – April 10, 2017

Description Total Meeting

Ventje Raharjo

Ramzi A Zuhdi

Agus Fuad

Bambang widianto

Zulkifli Djaelani

Andang Lukitomo

Meeting of the Remuneration and Nomination Committee

2 2 2 2 2 2 2


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2) Period of April 10, 2017 until Present

Description TotalMeeting

Bambang widianto

Mulya E Siregar

Ramzi A. Zuhdi

Dikdik Yustandi

Andang Lukitomo

Remuneration and Nomination Committee Meeting

2 2 2 2 1 2

SHARE OwNERSHIP IN BANKIn 2017 there was a change of share ownership structure from the previous year due to the addition of capital from the Main Entity. The composition of ownership of PT Bank Syariah Mandiri in 2017 is as follows:

No. Owner Amount(in Thousand Rupiahs)

Number of Shares Percentage

1. PT Bank Mandiri (Persero) Tbk 2,989,021,930 597,804,386 99.99999983%

2. PT Mandiri Sekuritas 5 1 0.00000017%

REMUNERATION AND OTHER FACILITIESPolicy Regarding Remuneration and Other FacilitiesPolicy regarding remuneration and other facilities (remuneration package) established by Annual General Meeting of Shareholders (AGM) for the Board of Commissioners, the Board of Directors, and Sharia Supervisory Board. The policy set by the AGM includes the following: a. Remuneration, i.e., income in the form finances (non-

natura) including salaries, benefi ts, compensation in the form of shares, bonus and other forms of remuneration; and

b. Other facilities, including facilities received not in the form of finances (natura) i.e., housing, transport facilities, insurance facility health, telecommunications facilities, and other facilities can be owned and cannot be owned.

Remuneration package for the Board of Commissioners, Board of Directors and Sharia Supervisory Board refers to Regulation Bank Indonesia No.11 / 33 / PBI / 2009 on the Implementation Good Corporate Governance for Islamic Banks and Sharia. Under the regulation, Remuneration and Nomination Committee in setting remuneration package implement the following:a. to evaluate the remuneration policy;b. to evaluate the concordance between remuneration

policy and implementation of the policy; andc. to provide recommendations to the Board of

Commissioners regarding the remuneration policy for the Board Commissioners, Directors, Sharia Supervisory Board, executive officials, and all employees in general.

In determining the remuneration package, Remuneration and Nomination Committee has considered:a. The financial performance; b. Compliance allowance for deletion of assets; c. Fairness with the peer group; and d. Consideration of long-term goals and BUS strategies.

Remuneration And Nomination

Committee

• Remuneration Package Assessment


• Deliberation of Remuneration

General Meetingof Shareholders

• Determination of Remuneration

Employee reward management consists of transactional and non-transactional reward component. Transactional reward is a visible reward that appears from transactions between the Bank and employees with respect to income, whether fixed or fixed, and facilities. Meanwhile non-transactional rewards are invisible rewards which deals with learning and development as well as the development of a working environment climate.

BSM constantly strives to improve employee welfare with a guaranteed cash pattern that continues to be competitive in the industry and variable income based on individual performance, work unit and the Company, as well as other various personnel facilities. Policy regarding remuneration and other facilities determined by the Annual General Meeting of Shareholders (AGMS) for the Board of Commissioners, Board of Directors, and Sharia Supervisory Board (DPS).


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A reward program that is transactional is developed to make the position of Total Guaranteed Cash remain competitive in similar industries. Giving variable income form contest not only aims to improve performance, however can shape employee behavior in running the task.

Non-transactional reward programs have a great role to improve employee engagement. A well-scaled and well-scaled performance management system educational and training activities that are in line with employee career development. Quality of work interaction as well exemplars of leadership have shaped the environmental climate work that is conducive.

A. Transactional

Individual Communal

1. Income a. Permanent income

1. Basic Salary2. Religious Holiday Allowance3. Annual Leave Allowance4. Long Service Leave Allowance

b. Non-permanent Income1. Non-fixed Allowance2. Bonus3. Incentive4. Reward

2. Facilitiesa. BPJS (Ketenagakerjaan, Kesehatan, and Pensiun)b. Pension Fundc. Overtime Payd. Leave and Absence Permite. Health Facilities for Employeesf. Official Travel Allowanceg. Relocation Allowanceh. Relocation Allowance for Employees’ Children’s Educationi. Official Residencej. Employee Loansk. Uniformsl. Bereavement Paym. Transportation Allowance for Returning to Homebasen. Take-home Vehicleso. Communication Devicesp. Scholarships for Employees’ Children

B. Non-Transactional

Individual Communal

1. Training and Developmenta. Education and development in the

workplaceb. Trainingc. Work Managementd. Career Developmente. Postgraduate Scholarships for Employees

2. Work Climatea. Implementation of ETHIC shared valueb. Coaching Programc. Leadershipd. Employees’ Aspirationse. Recognition (Contest and Recognition Program)f. Talent Managementg. Achievementsh. Job Design and Role Development (Duties,

Responsibilities, Authorities, Meaningfulness of Work, Scope of Use and Development of Expertise)

i. Quality of Work Interaction


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Remuenaration and Other Facilities for the Board of Commissioners, Board of Directors, and Sharia Supervisory BoardRemuneration granted to the Board of Commissioners, Directors and Sharia Supervisory Board is as follows:

a. Period of January 1, 2017 to April 9, 2017

Amount of Remuneration and Other Facilities

Amount Received in 1 (One) Year

Board of Commissioners Board of DirectorsSharia Supervisory

Board

Number of Personnel

Million IDRNumber of Personnel


Million IDR

Remuneration 5 4.052 7 13.996 3 320

Other facilities*):1. Can be owned2. Cannot be owned

1.203 2.760 302

Total 5 5.255 7 16.755 3 622*) in Indonesian Rupiah equivalent.

Remarks:a) Remuneration is income in the form financial (non natura) include salaries, benefits, compensation in the form of

shares, bonus and other forms of remuneration; b) Other facilities are any in-kind that being received, i.e., housing, transportation, health insurance,

telecommunications, and other facilities, both that can be owned and cannot be owned.

b. From April 10, 2017 – Present



Board of Commissioners Board of DirectorsSharia Supervisory

Board

Number of Personnel



Million IDR

Remuneration 4 2,317 7 9,493 3 997


619 2,384 11

Total 4 **) 2,936 7 11,877 3 1,008*) in Indonesian Rupiah equivalent.**) According to the 2016 GMS, there was a change of members of the Board of Commissioners to 4 personnel.

Remarks:a) Remuneration is income in the form financial (non natura) include salaries, benefits, compensation in the form of

shares, bonus and other forms of remuneration; b) Other facilities are any in-kind that being received, i.e., housing, transportation, health insurance,


The policy regarding remuneration and other facilities determined by the General Meeting of Shareholders (GMS) for the Board of Commissioners, Board of Directors and Sharia Supervisory Board (DPS) and employees who receive remuneration is variable and total nominal remuneration is the variable received.


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c. From January 1 – April 9, 2017




Board of DirectorsSharia Supervisory

BoardEmployees

Number of

Personnel

Million IDR

Number of

Personnel

Million IDR

Number of

Personnel

Million IDR

Number of

Personnel

Million IDR

Remuneration 5 4,052 7 13,996 3 320 8,858 120,247


1,203 2,760 302

Total 5 5,255 7 16,755 3 622 8,858 120,247*) in Indonesian Rupiah equivalent.

Remarks:a) Remuneration is income in the form financial (non natura) include salaries, benefits, compensation in the form

of shares, bonus and other forms of remuneration; b) Other facilities are any in-kind that being received, i.e., housing, transportation, health insurance,


d. From April 10, 2017 – Present




Board of DirectorsSharia Supervisory

BoardEmployees

Number of

Personnel

Million IDR

Number of

Personnel

Million IDR

Number of

Personnel

Million IDR

Number of

Personnel

Million IDR

Remuneration 4 2,317 7 9,493 3 997 8,858 120,247


619 2,384 11

Total 4**) 2,936 7 11,877 3 1,008 8,858 120,247*) in Indonesian Rupiah equivalent.**) According to the 2016 GMS, there was a change of members of the Board of Commissioners to 4 people.

Remarks:a) Remuneration is income in the form financial (non natura) include salaries, benefits, compensation in the form

of shares, bonus and other forms of remuneration; b) Other facilities are any in-kind that being received, i.e., housing, transportation, health insurance,



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Remuneration that has been paid to members of the Remuneration Committee for 1 yeara. From January 1 – April 9, 2017


Amount Received in 1 (One) Month

Remuneration Committee

Number of Personnel Million IDR

Remuneration 6 4,620


1,253

Total 6 5,874*) in Indonesian Rupiah equivalent.

b. From April 10, 2017 – Present


Amount Received in 1 (One) Month

Remuneration Committee

Number of Personnel Million IDR

Remuneration 5 3,103


720

Total 5 **) 3,823*) in Indonesian Rupiah equivalent.**) in 2017, there was a change of composition to 5 personnel.

Number of employees affected by termination of employment and total severance paid

Nominal amount of severance paid for each person in 1 year Number of Employees

More than 1 billion -

From more than 500 million to 1 billion -

Up to 500 million -

Details of remuneration amount paid in 1 (one) year (in million rupiahs)a. From January 1 – April 9, 2017

Fixed Remuneration*)

1. Cash Rp18,694

2. Shares or stock-based instruments issued by the bank Rp.-

Variable Remuneration**)

Not suspended Suspended

1. Cash Rp4,169 Rp.-

2. Shares or stock-based instruments issued by the bank Rp.- Rp.- Note: *) Only for risk taker material and stated in million rupiahs.


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b. Period of January 1, 2017 to April 9, 2017

Fixed Remuneration*)

1. Cash Rp.15.121

2. Shares or stock-based instruments issued by the bank Rp.-

Variable Remuneration**)

Not suspended Suspended

1. Cash Rp.3.293 Rp.-

2. Shares or stock-based instruments issued by the bank Rp.- Rp.- Note: *) only for risk taker material and stated in million rupiahs.

Number of members of the Board of Commissioners, Board of Directors, and Sharia Supervisory Board who received remuneration in one yeara. Period of January 1, 2017 to April 9, 2017

Amount of remuneration*) for every personnel in 1 year

Number of personnel of the Board of

Commissioners

Number of personnel of the

Board of Directors


Sharia Supervisory Board

More than 2 billion - 5 -

From 1 billion to 2 billion - 1 -

From 500 billion to 1 billion 5 - -

Up to 500 billion - 1 3

Note: *) received in the form of finances (non-natura).

b. Period of January 1, 2017 to April 9, 2017

Amount of remuneration*) for every personnel in 1 year

Number of personnel of the Board of

Commissioners


Board of Directors


Sharia Supervisory Board

More than 2 billion - - -

From 1 billion to 2 billion - 7 -

From 500 billion to 1 billion 4 - -

Up to 500 billion - - 3

Note: *) received in the form of finances (non-natura).

Highest and lowest wage ratioThis table below discloses the highest and lowest wage ratio received by the Board of Commissioners, the Board of Directors, and employees per month.

Description Ratio

Highest to lowest Employee wage ratio 24,2:1

Highest to lowest Board of Directors wage ratio 1,1:1

Highest to lowest Board of Commissioners wage ratio 1,1:1

Highest director wage and highest employee wage 2,2:1


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The salary compared to the above salary ratio is the salary received by members of the Board of Commissioners, Board of Directors, and employees per month.Information:a) Salary is the right of an employee, who is received and expressed in the form of money in return for the employer or

employer to an employee, who is designated and paid in accordance with an employment agreement, agreement or statute, including allowances for the employee and his family for a job and / or services that have been done.

b) Employees shall be permanent employees of BUS to the extent of the executive.

Quantiitative Information

Variable remuneration*) Suspended Remains

Amount of Reduction during the Reporting Period

Caused by Explicit

Adjustment (A)

Caused by Implicit

Adjustment (B)

Total (A) + (B)

1. Cash (in million rupiahs) - - -

2. Shares or stock-based instruments issued by the bank (in shares and million rupiahs converted from such shares)

- - - -

Total amount (in million rupiahs) - - - -

Note: only for risk taker material

INTERNAL CONTROL SYSTEMThe Internal Control System is an important component of corporate governance and serves as a basis for healthy, prudent and safe Bank operations.

The Internal Control System is a supervisory mechanism established by the Bank’s management with the approval of the commissioner on an on-going basis with the aim of safeguarding and securing the Bank’s assets, ensuring more accurate reporting, enhancing compliance with the prevailing regulations, reducing the impact of losses/finance, irregularities including fraud, and prudential violations, and improving organizational effectiveness and cost efficiency.

The purposes of the Internal Control System are:1) Compliance with Terms and Regulations or Objectives of

Compliance2) Availability of Complete, Accurate, Appropriate, and

Timely Financial Information and Management, or Information Objectives

3) Effectiveness and Efficiency in Bank Operations or Operational Objectives

4) Improvement in the Effectiveness of Risk Culture in Whole Bank Organization or Risk Culture Objectives.

Implementation of a reliable and effective Internal Control System is the responsibility of all parties within Organization of the Bank, through:1) Accountability of the Bank officer / management and the

development of a culture of internal control throughout the organization.

2) Implementation of risk identification and risk assessment of operational activities of the Bank.

3) Separation of functions between operations, storage and accounting.

4) Periodic evaluation of the Bank’s performance. 5) Implementation of communication and fulfillment

of information within the organization of the Bank in particular the level of risk exposure decision making.

6) Supervision and internal audit activities are effective. 7) The fulfillment of the commitment of the Bank

Management implies strict sanctions against violations of applicable regulations.

As part of the implementation of the principles of Good Corporate Governance (GCG), BSM integrates and continuously develops and implements effective Internal Control Systems in managing corporate risks.


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Internal Control System of BSM has refers to the internal control concept that generally applies in accordance to the COSO (The Committee of Sponsoring Organizations of the Treadway Commission), which includes:1) Internal Environment 2) Objective Setting 3) Event Identification 4) Risk Assessment 5) Risk Response 6) Control Activities 7) Information and Communication 8) Monitoring.

The approach of analysis and evaluation that being applied in each internal control component of the COSO, are as follow: 1) Process Based It is used to test the control of activities, information

& communication and monitoring. Internal Auditor will test the appropriateness of design control and its implementation in accordance to the audit program prescribed beforehand.

2) Characteristic Based It is used to test controls on components of Internal

Environment, Objective Setting, Event Identification, Risk Assessment, Risk Response, Information & Communication, and Monitoring. The effectiveness of controls in characteristic based is assessed based on predetermined criteria for each control. Testing of characteristic based control is done by using Control Diagnostic Tools / CDT.

The Bank has established internal control provisions, which are regulated in the form of:1) BSM Audit Internal Control Policy, No. KBP / 02-2016,

dated March 31, 2016.2) BSM Internal Control System Policy, No. KBP / 04-2016,

dated October 6, 2016. 3) Anti-Fraud Policy of Bank Syariah Mandiri BSM, No. 14 /

002 / UMM, dated May 22, 2012.4) Standard of Internal Audit Control Procedures, No. SPP /

07-2016, dated November 30, 2017.

The policy aims to:1) be a guideline in the effective implementation of

the Internal Control System on the Bank’s business operations and operations, by all levels of the Bank;

2) provide an understanding of the Internal Control System (SPI) in the Bank environment;

3) build the same perception in applying SPI; 4) provide guidance to work units that carry out supervisory

functions as well as other interested parties regarding the Internal Control System.

In accordance with BSM’s Internal Control System (KSPI) Policy, the establishment of a reliable and effective Internal Control System is the responsibility of all parties involved in the Bank’s organization:1. Board of Commissioners2. Board of Directors3. Sharia Supervisory Board4. Internal Audit Work Unit (SKAI)5. Officials and Employees of Banks6. External Parties

A description of the responsibilities of the parties mentioned above, is as follows: 1. Board of Commissioners The Board of Commissioners of the Bank has the

responsibility to supervise the implementation of internal control in general, including the policies of the Board of Directors, which establishes such internal controls.

2. Board of Directors The Board of Directors of the Bank is responsible for

creating and maintaining an effective Internal Control System and ensuring that the system is operating safely and in accordance with the Bank’s internal control objectives and in accordance with sharia principles.

3. Sharia Supervisory Board (DPS) The DPS has the responsibility to provide advice and

suggestion to the Board of Directors and oversee the Bank’s activities to conform to Sharia Principles and ensure compliance with Sharia Principles on operational guidelines and products issued by the Bank.

4. Related Work Unitsa. Internal Audit Work Unit Internal Audit Group should be able to evaluate and

take an active role in improving the effectiveness of Internal Control System continuously related to the operational implementation of Bank, which has the potential to cause loss in achieving the target set by the Bank management.


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b. Compliance Unit Compliance Unit should conduct compliance

monitoring process of each work unit toward the applicable laws and regulations, including Bank's internal policies.

c. Enterprise Risk Management Unit Enterprise Risk Management Unit should perform

monitoring, measurement, control and reporting of risk in the framework of improvement of Internal Control System.

d. Other Work Units Responsible to maintain and implement effective

control system in each work unit and ensure that the system runs safely and healthily according to the purpose of internal control system established by the Bank.

5. Officials and Employees of the Bank Every Bank officer and employee must understand and

implement the Internal Control System established by the Bank’s management. Effective internal controls will increase the responsibilities of Bank officials and employees, promote adequate risk culture, and accelerate the process of identifying unhealthy banking practices and organizations through efficient early detection systems.

6. External Parties The Bank’s external parties include the Bank’s supervisory

authority, external auditors, and Bank customers with an interest in implementing a reliable and effective Internal Control System.

IMPLEMENTATION OF INTERNAL AUDITInternal Audit Work Unit is one of the parties responsible for internal supervisory function and directly responsible to the President Director and can communicate directly with the Board of Commissioners / Audit Committee, and is responsible for:1. Evaluating the effectiveness of SPI on an ongoing

basis in relation to the operational implementation of the Bank;

2. Taking an active role in increasing the effectiveness of SPI implementation in accordance with the objectives set by the Bank;

3. conducting risk-based audit independently and objectively.

The scope of audit implementation covers all areas of Bank’s operations to determine the adequacy of internal control quality, the application of risk management, and governance process.

Internal Audit has the role and function to guard the business to stay within the corridor of effective and efficient internal control, sound risk management, and good corporate governance. In doing so, the Internal Audit makes an analysis and provides recommendations through the provision of assurance and consulting services. As a strategic partner, the Internal Audit Group (IAG) seeks to provide "added value and improve organization's operations," which not only helps management to assess the efficiency and effectiveness of the company's internal control but also contribute to the achievement of the Bank's targets set forth in a strategic initiatives for the next five years. The Internal Audit Group is also responsible for maintaining and implementing effective control system in its respective work units, as well as ensuring that the system is operating safely and in accordance with the objectives of the Bank's internal control system.

Organization of Internal AuditInternal Audit is headed by a Group Head, who is appointed and dismissed by the President Director with the approval of the Board of Commissioners. In accordance with PBI No.1 / 6 / PBI / 1999 dated 20 September 1999. The Internal Audit organization is directly under the coordination of the President Director.


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Brief Profile of Head of Internal Audit Unit

SuhartoHead of Internal Audit Group (IAG) He was born in Indramayu, March 20, 1966 and he graduated from the Accounting Department at the Faculty of Economics, STIE Jagakarsa in 1996. He graduated from Accounting Department, Padjajaran University (1988), and graduated with a bachelor’s degree in Accounting from STIE Jagakarsa in 1996 and a master’s degree in Management from Bogor Agricultural University. He joined BSM since January 11, 2017 (based on Decree No. 19/007-KEP / DIR dated January 9, 2017).

The Party who Appoints and Dismisses the Head of Internal AuditThe Internal Audit is headed by the Head of Internal Audit appointed and dismissed by the President Director of BSM with approval from the Board of Commissioners and reported to the regulator.

Internal Audit Charter BSM has an internal audit policy of PT Bank Syariah Mandiri, which includes Internal Audit Charter as the foundation and working guideline of Internal Audit in performing Internal Audit function, which contains vision & mission, position, authority and scope of internal audit activity to implement effective internal control system in BSM.

In 2016, BSM enacted the Internal Audit Policy of PT Bank Syariah Mandiri and Standard of Control Procedures,

which refers to the professional and best practice standard of national and international audit standards.

Internal Audit has purposes to:a) Assist all levels of management in securing bank operations,

particularly those involving public funds (intermediary); b) Maintain and ensure the development of the bank towards

a reasonable and healthy development.

Internal Audit functions independently and objectively to the operational work unit so as to express its views and thoughts without the influence or pressure from management or other parties. Internal Audit is directly responsible to the President Director, has a functional relationship with the Board of Commissioners through the Audit Committee, and has a coordination relationship with the Bank Mandiri’s Integrated Internal Audit Work Unit (SKAIT).

In carrying out the control function, it includes planning, implementation and monitoring of bank operations through the provision of assurance and consulting services.ta) Assurance Conducting objective testing of evidence in order to

provide independent assessments of governance, risk management, and control processes within the organization.

b) Consulting Consulting is a service provided by the Internal Auditor

based on the needs and approvals of the client / auditee in order to provide constructive and applicable value added on all aspects affecting the performance and internal control system to improve internal control, risk management, and governance process.

In accordance with Bank Indonesia Regulation on SPFAIB, every 3 years Internal Audit must be reviewed by an independent external party. The review aims to assess the quality of operations and the suitability of the internal audit process to the Standards for Implementation of Commercial Bank Internal Audit Functions (SPFAIB) and the standards of The Institute of Internal Auditors (IIA).

External ReviewIn 2017, BSM’s Internal Audit has been reviewed by Deloitte with an inspection period from 2014 to 2017. Based on Deloitte's review, the implementation of the Internal Audit function is stated to be in general compliance with SPFAIB (generally conforms) and partially in accordance with IIA standards (partially conforms). The next review will be conducted in 2020.


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Vision and Mission of Internal Audit work UnitVision:Becoming a Strategic Partner with international standard, based on sharia principles.

Mission:a) Assisting the organization to achieve its objectives

by providing reasonable assurance and consulting independently and objectively.

b) Evaluating the effectiveness of internal control, risk management and governance process through the implementation of Risk Based Audit.

c) Improving the synergy of Internal Audit function with stakeholders.

d) Ensuring the implementation of sharia aspects through ongoing audit activities.

e) Managing internal audit activities effectively and efficiently.

f) Developing the competence of the Auditor, which refers to the best practice of the audit profession.

Duties and Responsibilities of Internal Audit work Unit 1. Assisting the duties of President Director and Board of

Commissioners in conducting supervision by:a. Describing operationally both planning,

implementation and monitoring of audit results. b. Communicating directly with the Board of Directors,

Board of Commissioners, and / or Audit Committee. c. Submitting an audit report to the President Director

and the Board of Commissioners with a copy to the Compliance Director.

2. Identifying all possibilities to improve and enhance the efficient use of resources and funds.

3. Providing analysis and assessment in finance, accounting, operations and other activities.

4. Conducting examination and evaluation on the adequacy and effectiveness of internal control system including on effectiveness of Anti Money Laundering and Terrorism Financing Prevention program.

5. Providing suggestions for improvements and objective information about the activities examined at all levels of management.

6. Planning and executing Internal Audit Activities with emphasis on areas / activities that have high risk and evaluating the existing procedures / control system to gain confidence that the goals and objectives of the Bank can be achieved optimally and sustainably.

7. Performing the steps in order to extract information (investigation), report, and propose sanctions on fraud to the Management.

8. Reporting the implementation of Sharia principles to the Sharia Supervisory Board.

9. Conducting follow-up monitoring of audit results, both internal and external.

10. Providing responses / opinions on proposed policies or systems and procedures to ensure that internal control aspects are covered in the new policies or systems and procedures. Internal Audit’s involvement in providing responses / opinions on policy proposals or systems and procedures does not mean that they will be excluded as audit objects.

11. Improving the system of audit development in accordance with the policy direction of the Bank.

12. Developing written policies and procedures as guidelines for the Internal Auditor in performing their duties.

13. Providing consultations to internal Banks to provide added value and improvements to the quality of control, risk management, and corporate governance.

14. Implementing continuous education in order to improve auditor competence.

15. Conducting ongoing evaluations to improve internal audit quality.

16. Coordinating its activities with external audit activities and other assurance provider units / functions. Coordination can be performed through periodic meetings to discuss matters that are considered important to both parties.

Organization of Internal Supervisory Unit Internal Audit is headed by a Group Head, who is appointed and dismissed by the President Director with the approval of the Board of Commissioners. In accordance with PBI No. 1/6/PBI/1999 dated September 20, 1999. The Internal Audit organization is directly under the coordination of the President Director.

In performing its duties, the Group Head is assisted by seven personnel of Head Department as depicted in the following organizational structure:


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ClerkSecretariat

President Director

Internal Audit

wholesale Audit

Retail & Distribution

Audit

Consumer & Distribution

Audit

Information Technology

Audit

Head Office Audit

SpecialAudit

General Affair

Audit Development & Counterpart

Relation

Quality Assurance

Audit Development

Detection Analyst Auditor AuditorAuditor Auditor Auditor

External Audit Liasion Investigator

Evaluation Analyst

In performing its duties and functions, the Internal Audit Group is led by a Group Head, who oversees 7 (seven) departments with specialization of duties on Retail & Distribution Audit, Consumer & Distribution Audit, Wholesale Audit, Head Office Audit, Information Technology Audit, Special Audit and Development & Counterpart Relation Audit.

Position Total

Group Head 1

Department Head 7

Team Leader 18

Auditor 33

Secretary 1

Total 60

Development of Auditor Resources The Bank has sincerely organize professional resource management to obtain qualified resources to accomplish the duties effectively.

In order to ensure the continuous development and enhancement of human resource competencies, both competency and soft skills, IAG has been developing its human resources through:1. In ClassTraining Internal Audit has routinely included employees in trainings / workshops conducted by internal and external parties,

followed by Group Head level up to the Auditor. The trainings IAG participated in during 2017 include:


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No. Type of Training/workshop Date Place Total Participant

1 Preparation of Banking Operation Academy module January 10 – 13, 2017 Graha Mandiri 1

2 Mastering Impactfull Communication Skill, MandiriUniversity Tanah Abang Dalam

February 27 – 28, 2017 Mandiri University Tanah Abang Dalam

1

3 Industry Focus Mastery – Hospital Industry February 9 – 10, 2017 LCG BSM 1

4 Analytic data processing - IDEA training in Bank Mandiri April 5 – 7, 2017 Mandiri University Tanah Abang Dalam

3

5 IT Governance, IT Security, Emerging Technologies and IT April 5 – 7, 2017 Hotel Sari Pan Pacific 1

6 Executive Training on Islamic Banking Aoril 20, 2017 Graha Mandiri 1

7 Public Training - Digital Transformation in Finance Sector May 18, 2017 JW Marriott Hotel Jakarta

1

8 Workshop Root Cause Analysis Methodology May 24, 2017 Jakarta 63

9 Training Forensic Audit July 10 – 12, 2017 Graha Mandiri 1

10 Audit Leaders Seminar - Providing Assurance Through Continuous Auditing

July 11, 2017 Grand Hyatt Jakarta 1

11 Certified Bank Training for Internal Auditor (CBIA) July 27 – 28, 2017 Jakarta 18

12 Certified Bank for Internal Auditor (CBIA) July 29, 2017 Jakarta 18

13 Credit Acquisition Developer and Property Agent Partnership

May 2 – 4, 2017 Grand Mercury 1

14 Certification of CISA on behalf of Christian Adi Sucipto July 8 – September 9, 2017

Pusilkom UI, Salemba 1

15 Certification of CIA on behalf of Widya Setyadi August 26, 2017 – January 18, 2018

PPA FEB UI 1

16 Training and Certification of CBIA on behalf of Asep Nana Heryana

August 24 – 26, 2017 Plaza Bapindo 1

17 Secretary Training Program August 24 – 25, 2017 Graha Mandiri 1

18 Workshop Quality Assurance Improvement Program September 28 – 29, 2017

Hotel Ambhara, Blok M, Jakarta Selatan

1

19 External Training: Codebali Conference, organized by idNSA

September 26 – 29, 2017

Padma Hotel, Legian Bali

1

20 Refreshment Program “Risk Management and Internal Audit”

October 19, 2017 Financial Club Graha Niaga, Lt.27, Jl. Jend.Sudirman, Jakarta

1

21 Workshop Cyber Crime & e-Banking Fraud November 2 – 3, 2017 Hotel Santika, Bogor 1

22 National Anti Fraud Conference November 6 – 7, 2017 Sheraton Hotel, Yogyakarta

2

23 National Conference IX IAIB 2017 November 8 – 10, 2017 Bumi Surabaya City Resort

2

24 Treasury of Islamic Bank, ICDIF LPPI November 8 – 10, 2017 LPPI, Kemang 2

25 Mobile Forensic Investigation Course Batch 2, ACFE December 14 – 15, 2017

Padjajaran Suite Resort & Convention Hotel -Bogor

2


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2. Refreshment Program Refreshment Program through e-learning was

carried out routinely in order to improve employee understanding of both the internal and external provisions. The program attended by all auditors and other employees of the Head Office was conducted on April 25, 2017 until May 26, 2017.

3. Professional Certification The development of auditor competence was also

carried out through the National and International Audit Certification Program. Details of the number of employees who obtained National and International certification until 2017 are as follows:

No. Certification Total

1. Sertifikasi Risk Management (BSMR) Level I s.d. IV

43

2. Certified Fraud Examiner (CFE) 3

3. Certified Bank Internal Auditor (LSPP)

52

Internal Audit Function in 2017The functions of Internal Audit during 2017 included 197 assignments (117.26% of the target of 168 audit assignments), follow-up of 100% external audit findings on DMTL maturity, and realization of Service Level Agreement (SLA) upon Top Letter Report of the audit results amounted to 99.67% or reached 102.23%, from the target of 97.50%. Service Level Agreement (SLA) of opinion submission on the internal control adequacy covering opinion on Policy, Standard of Procedure, Product Manual, Technical Instruction, and or Memorandum of Operational Directive amounted to 97.98% or 103.14% from the target of 95%. The development of strategic initiatives includes the preparation of Internal Audit Plan Methodology, Internal Audit Competency Framework, Root Cause Analysis, Audit Advisory & Co-Sourcing, PTO Audit Management System (AMS), PTO DMTL Online (D-ONE), and Anti-Fraud Policy Revision.

Monitoring Activities and Corrective Action Measures Monitoring activities shall be monitoring of irregularities/disparities between processes and provisions. The Bank has undertaken continuous monitoring of the adequacy and effectiveness of the implementation of internal control by: a) Ensuring that monitoring functions are clearly defined

and well structured.

b) Establishing assigned officers to monitor the effectiveness of internal controls.

c) Setting the appropriate frequency for monitoring activities.

d) Integrating control systems into operational activities and providing routine reports as necessary.

e) Reviewing the results of the evaluation of the work unit/officer assigned to perform the monitoring.

f) Providing appropriate information/feedback to the interested parties.

The action of correction of irregularities shall be the recovery of irregularities between the process and the determination of its recovery efforts. Bank performs Corrective Action Measures by the following:a) Any report on weaknesses in internal control or

ineffective risk control of the Bank shall be promptly followed up by the Board of Commissioners, the Board of Directors and the relevant executive officers.

b) The Internal Audit Work Unit shall conduct a review or other appropriate monitoring measure of the weaknesses that occurs and promptly reports to the Board of Commissioners, and the President Director in the event of any unresolved weakness or corrective action not being acted upon.

c) Ensuring that all weaknesses are promptly acted upon, the Board of Directors must create a system that can trace weaknesses to internal control and take corrective action.

d) The Board of Commissioners and the Board of Directors shall receive periodic reports in the form of a summary of the results of the identification of all internal control issues.

Development of Implementation of Anti Fraud Strategy BSM continually strives to strengthen the implementation of anti fraud strategy by performing the following: A. Prevention Pillars BSM has realized fraud prevention programs, among

others:1. Anti Fraud Awareness Anti-fraud awareness is an effort to raise awareness

about the importance of fraud prevention by all related parties. Through good leadership and supported by high anti-fraud awareness, it is expected to grow the awareness of all elements in BSM against fraud control, including through:


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a. Socializing the anti-fraud statements through the "Anti-Fraud Doctrine" and anti-fraud posters.

b. Internalization of "I Know" culture program to all employees in Head Office, Regional Office, Area, and Branch Office. This program aims to ensure that every employee understands his duties and responsibilities in working.

c. Anti-fraud materials are integrated into training academy modules starting from employee level to executive level and socialization by IAG Team during on-site audit of Work Unit in branch office.

d. Reduction of KPI Value of Work Unit, i.e. making fraud incident as a deduction of KPI value to Work Unit where fraud happens to encourage awareness to always together prevent fraudulent acts.

2. Risk Identification Risk identification is a risk management process for

identifying, analyzing, and assessing the potential risks of fraud. In general, risk identification is aimed to identify the risks of fraud attached to any activity potentially harmful to the Bank including through the implementation of Risk & Control Self-Assessment (RCSA) in all work units starting in 2014 and the implementation of the Early Warning System (EWS).

3. Know Your Employee As an effort to prevent fraud from human resource

aspect, BSM has encouraged Know Your Employee program to each leadership in stages in each Work Unit in order to know the employees well under the appropriate supervision by identifying them since the recruitment process, updating of data and employee information, surveying employee satisfaction organized through independent parties, and taking preventive actions led by the head of the work unit (coaching & counseling and signing of Annual Disclosure by employees), and by organizing events involving the family so as to encourage reminding behavior among the employees and employees’ family.

B. Pillars of Detection The pillars of detection are tools intended to identify and

find frauds, which at least include:1. Whistleblowing System Mechanism, aimed to

increase the effectiveness of the application of fraud control system by focusing on the disclosure of the complaint. BSM opens a complaint facility for employees and other parties who are aware of any

alleged fraud within BSM, either through telephone lines, mail, or email.

2. Surprise Audit, conducted primarily on high-risk business units or prone to fraud. The surprise audit has been run on the audited Branch work unit, based on risk mapping, including high risk category work units.

3. Empowerment of Business Control Area (RBC), BSM has established RBC throughout the Regional Office so it is expected to detect any irregularities early for quick follow up and recovery to minimize the number of losses.

C. Pilar Investigasi, Pelaporan dan Sanksi During 2017, an investigative audit of the fraud case was

conducted quickly with a standardized audit method. BSM is committed to dealing with frauds seriously and fairly and fair actions to provide a deterrent effect to the perpetrators of fraud by imposing sanctions and reporting to the Police. During 2017, BSM reported 7 cases of fraud to the Police to be processed by law.

D. Pillars of Monitoring, Evaluation and Follow-up BSM has conducted monitoring and evaluation of

frauds through fraud profiling which is supported by Integrated Fraud Information System (IFIS). Follow-up improvements on the results of the investigation are reported to the Board of Directors and monitored through D-ONE application.

In general, compliance implementation in 2016 is implemented in every BSM business activity, as follows: 1. Implementation of Duties of Compliance Director In accordance with applicable regulations, the

performance of the duties and responsibilities of the Director in charge of the Bank’s Compliance Function shall include:a. Formulating strategies to encourage the creation of a

Compliance Culture; b. Proposing compliance policies or compliance

principles to be determined by the Board of Directors; c. Establishing compliance systems and procedures

that will be used to develop provisions and internal guidelines;

d. Ensuring that all policies, provisions, systems, procedures and business activities carried out by the Bank are in compliance with prevailing regulatory and regulatory provisions;

e. Minimizing Compliance Risk;


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f. Taking precautions so that policies and / or decisions taken by the Board of Directors do not deviate from the applicable regulatory and regulatory provisions, including Sharia Principles for Sharia Commercial Bank;

g. Performing other tasks related to the Compliance Function include:1) Ensuring the Bank’s compliance with commitments made by the bank to Bank Indonesia and/or other

authorized auditing entities;2) Disseminating to all employees of the Bank regarding various affairs related to Compliance function,

particularly related to valid regulation; 3) Acting as contact person for various Bank’s compliance issues towards internal and external parties.

2. Compliance Risk Profile The Compliance Unit is responsible for managing the Compliance Risk to prevent risks arising from the Bank’s

failure to comply with and/or not enforce applicable laws and regulations, including the Sharia Principles. BSM conducts business activities required to always comply with banking regulations issued by the Government, Bank Indonesia (BI), the Financial Services Authority (OJK) and the National Sharia Board-MUI (DSN-MUI).

Compliance Risk Management is closely related to the Compliance Risk profile where BSM has an inherent risk for BSM Compliance Risk during 2017 is Low to Moderate (2nd rank) with Risk Management Implementation Quality (KPMR) Satisfactory (adequate).

COMPLIANCE wORK UNITProfile of the Head of Compliance GroupKhoirul Huda S Riyadi

Age 43 years

Place, Date of Birth Jakarta, October 6, 1975

Citizen Indonesian

Domicile Jakarta

Educational Background

S1 Institut Pertanian Bogor 1999S2 Magister Management Universitas Budi Luhur 2004

Position History • GroupHeadofCompliance• GroupHeadofInformationandTechnology

Training • PeopleManagerProgramExperd,2017• RefreshmentBankingRiskManagementLevel4• AMLandCounterTerorismFinancing2017• AustralianTransactionReport&AnalysisCenter

(AUSTRAC) & Bank Negara Malaysia • 3rd Counter Terrorism Financing (CTF) Summit from

PPATK


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Organizational Structure of the Compliance Unit

Compliance

Secretary

Compliance Management

Business Compliance

Syariah Compliance

Corporate Governance

& Compliance Support

APU-PPTwork Unit

Customer Profile

Monitoring

Online Advice

FinancialCrime

Analysis

Good Corporate Governance (GCG)

Compliance

Regulatory Management

Operational Compliance

SyariahCompliance

Officer

Compliance Reporting & Monitoring

Policy & System Management

Strategic Compliance

ComplianceSystem Information

& Support

ComplianceRisk

Management

Anti Money Laundering

(AML) Advisory & Support

Staff Staff

a. Anti-Money Laundering and Counterterrorism Prevention Unit 1) Effectiveness of Customer Due Diligence (CDD)

Implementation and Enhance Due Diligence (EDD) The effectiveness of CDD implementation to

customers in the form of:a) Monitoring customer profiles through the

completeness of CIF data. b) Monitoring of customer finance profile through

fulfillment of Checklist of APU and PPT of Financing Sector.

c) Updating of customer funding data.

The effectiveness of EDD implementation in the form of monitoring and examination of high risk customers for the criteria:a) High risk job (high risk job) b) High-risk business (high risk business) c) High risk country (high risk country) d) High risk product (high risk product)

2) Effectiveness of APU PPT application and risk profile a) The effectiveness of APU PPT BSM application is

supported by the active oversight role of the Board of Commissioners and the Board of Directors, which periodically conducts monitoring through special Risk Monitoring Committee Meetings and discussion on the implementation of APU PPT and progress of APU & PPT program running in BSM. The highly motivated roles of the BoC and BoD provide the motivation and passion for realizing a culture of compliance in the application of PPU APUs throughout the organization.

b) The risk profile of APU and PPT program implementation is periodically monthly reported by SKAP to the Director in charge of the Compliance Function. Risk profile of APU & PPT implementation December 2016 period is “very low” with a total value of 99.36. Overall Predicate the implementation of APU and PPT Bank programs “Very good” with the index of achievement “one”


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3) Effectiveness of KYE implementation The application of KYE is done by Bank in various

forms of activities: a) Implementation of the screening of prospective

employee acceptance against profiles and possible track records Involved money laundering and criminal acts and terrorism financing.

b) Implementation of the screening of existing employees in the promotion process positions, which includes several things, including:• Neverhaslegalissues.• Neverbecomeasuspect/defendant.• Has no relationship/connection with the

suspect/defendant • NeverreceivedacoachingletterfromBSM.

4) Socialization of APU PPT implementation Implementation of socialization of APU and PPT

conducted by the Bank continuously runs in various forms of activities as follows: a) Socialization of APU and PPT through 4DX

program and mailing list to PIC SKAP b) Training to PIC SKAP in this case Area Operation

Service Manager (AOSM), Branch Operation Service Manager (BOSM), Cash Outlet Manager (COM).

c) APU and PPT Training to Banking Staff, Priority Banking Officer, Staff Development Program, Officer Development Program.

d) Refreshment test APU and PPT for PIC SKAP and Front-liner

5) APU & PPT Work Program Some of the APU & PPT work programs launched

in 2016 can be well implemented in the following activities:a) Strengthening the analytical skills of the Head

Office’s SKAP officers by attending Analysis of Suspicious Financial Transactions conducted by external parties.

b) Enhancing and strengthening the role, function and knowledge of PIC of SKAP through training in Regional V, VI and VII in May - June 2017.

c) Developing a System Information Management (MIS) application for customer data updating and Risk Based Approach (RBA).

6) Various steps to strengthen APU & PPT implementation a) Preparation for Mutual Evaluation Review (MER)

of Financial Action Task Force (FATF) conducted by Asia Pacific Group.1. Following MER preparation workshop

organized by OJK and PPATK in Jakarta and Bandung.

2. Following the review process conducted by APG in PPATK on November 13, 2017.

b) Head Office’s SKAP in carrying out its duties have done synergy in the form of:1. Coordinating and monitoring the

implementation of APU & PPT work units in Head Office through Decentralize Compliance and Operation Risk (DCOR) and throughout the Regional Office through Regional Business Control (RBC).

2. Updating the PIC of SKAP in the Head Office, Regional Office, Area, Branch and Cash Outlet.

3. Conducting socialization, training and external training for SKAP officers and PIC of SKAP in the Regional Office.

7) Other information matters related to the strengthening of compliance function

Strengthening the compliance function in relation to the implementation of APU & PPT is done through communication channels SKAP Head Office with all outlets through media owned by banks in the form of email, lych, telephone. The communication is part of the monitoring and guidance to the staffs in relation to APU & PPT implementation in order to carry out the duties in accordance with the applicable guidelines and regulations.

b. Corporate Governance and Compliance Support Ensure reporting to related parties is met in a timely

manner, including: 1) Quarterly Compliance Function Report to the

President Director 2) Implementation Report of the Compliance Function

of the Director in charge of the Compliance Function to OJK

3) Integrated Compliance Report to Bank Mandiri 4) A self-assessment report on GCG implementation

per semester as an evaluation form reported to the Financial Services Authority (OJK).


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5) A self-assessment report on the implementation of Integrated Governance in each semester as an evaluation form reported to the Main Entity (Bank Mandiri).

6) Annual GCG Implementation Report to stakeholders. 7) Report on the Implementation of Annual Integrated

Governance to Main Entity.

Ensure the optimization of GCG implementation through:1) Disseminating the implementation of GCG

continuously to the Bank's line through:a) Email blast to the Bank's ranks regarding GCG

implementationb) Provision of basic materials of GCG

implementation in training class.2) Updating of internal regulations related to GCG and

CoC implementation3) Consolidating with the parent company in

implementing GCG4) Following the Corporate Governance Perception

Index program as a form of evaluation of GCG implementation conducted by independent parties in order to provide positive feedback to improve the implementation of GCG.

5) Conducting measurement of Compliance Culture through survey methodology to all staffs.

6) Maintaining the implementation of Bank Compliance Business Plan 2017 and the Monitoring List of Compliance Follow-Up.

7) Guarding the fit and proper test process of the Board of Directors, Board of Commissioners & Sharia Supervisory Board; GSM and the preparation of Annual Report.

8) Monitoring and mitigating the BSM fines so that the amount of fines can be minimized annually.

c. Compliance Risk Management Ensure that policies, regulations, systems and procedures,

and business activities are in conformity with applicable regulatory and sharia principles. The efforts have been undertaken through:1) 1) Analyzing and compiling the exsum on new

regulations issued by the Regulator (BI, OJK, other External Regulations related to Banking) submitted to the Commissioners, Directors, SEVP and Group Head;

2) Analyzing and creating a review of the new regulations that directly impact BSM, submitted to the Board of Directors and SEVP, which is then

submitted to the relevant Group / stakeholders; 3) Submitting compliance notes to each compliance

and advice on compliance with Working Group Policy & Procedure (WPP);

4) Analyzing and evaluating the effectiveness, adequacy and suitability of the Bank’s internal policies, regulations, systems and procedures in accordance with applicable laws and regulations and provide input, responses to internal requirements within the Working Group Policy & Procedure (WPP).

5) Implementing the reminder system of reporting obligations to third parties and PIC reports to third parties on Compliance Information System (SIK);

6) Implementing Integrated Compliance Working Unit (SKK) with Bank Mandiri related to regulations affecting the bank;

7) Providing input on the development of Compliance Information System (SIK).

8) Compiling monthly, quarterly, semi-annual report of Compliance Risk to the regulator, integration with the parent company (Bank Mandiri), and to the Bank management and other support reports to the relevant Working Units.

9) Ensuring the management processes are implemented (identification, measurement, monitoring and control) Compliance Risk with reference to the regulations of Bank Indonesia and the Financial Services Authority on the Implementation of Risk Management.

10) Conducting coordination meetings with work units that get penalties from regulators to find solutions and monitoring;

11) Delivering and monitoring action plans on sanctions from regulators subject to fines to identify and mitigate against recurrence.

12) Compiling and monitoring the action plan on external provisions to be submitted to the relevant work units and implement Integrated Compliance Work Unit (SKK) with Bank Mandiri related to regulations that may affect the bank.

13) Assessing and evaluating the effectiveness, adequacy, and conformity of policies, conditions, systems and the Bank’s internal procedures are in compliance with the current regulation;

14) Conducting socialization of external provisions to related work units and top dotted line Regional Business Control (RBC) and Decentralized Compliance & Operation Risk (DCOR);

15) Ensuring that the policy, guidelines and other


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requirements dissemination and publication have been provided to related working units and represent the Bank on socialization events and act as liaison officers to Bank of Indonesia and Financial Service Authority;

16) Implementing Competency & Coordination Strengthening Forum among Directorates of Decentralize Compliance & Operational Risk (DCOR);

17) Conducting advisory on the submission of license and reporting on the realization of Bank Products and Activities (PAB) with the relevant Work Units in accordance with the deadline set by the Regulator;

18) Guarding the implementation of Financial Information Preservation for the benefit of Taxation;19) Guarding the implementation and licensing the use of NSICSS and VISA Chips in BSM Card.

d. Syariah ComplianceEnsure and supervise the implementation of Sharia principles in Bank operations, through: 1) Ensuring the availability of sharia study at the request of the work unit 2) Ensuring the availability of DPS opinion on request of work unit 3) Ensuring follow-up of sharia audit results, both internal and external4) Ensuring the compilation of DPS surveillance reports and their delivery to OJK periodically (semester) 5) Ensuring the implementation of sharia aspects of supervision at Board of Directors level financing committee6) Ensuring sharia aspect of People Development, through:

a) Ensuring the implementation of DPS Deed Test runs well CPG provides assistance to DPS in the implementation of the Deed Test, which has been implemented to

the Area / Branch as follows:

No. Date work Unit1 January 23-25, 2017 Cimahi Branch Office2 February 13-14, 2017 Purwakarta Branch Office3 February 13-14, 2017 Warung Buncit Branch Office4 April 3-4, 2017 Bogor Area5 June 14-16, 2017 Batam Area6 July 17-19, 2017 Purwokerto Branch Office7 August 24-28, 2017 Cilegon Branch Office8 September 25-26, 2017 Mataram Area9 September 27-28, 2017 Kediri Branch Office10 November 7-8, 2017 Bogpr Area11 November 14-16, 2017 Aceh Area12 November 27-28, 2017 Makassar Area

b) Ensuring the implementation of sharia clinic for KP business unitc) Sharing session of sharia aspects with RO/Area/Branch throughout Indonesia

7) Coordination with Sharia Supervisory Boarda) Coordination with the Sharia Supervisory Board during 2017 between CPG and the Sharia Supervisory

Board has been conducted 12 (twelve) times.b) Scope of supervision of sharia aspects: The scope of supervision on sharia aspects is:

• AssistingDPSontheDeedTest,namelybycheckingthefinancingdocumentstotheworkunitthatbecame the object of DPS Test, such as financing on the basis of the following contract: a) Murabaha b) Mudharabah c) Musyarakah, including Musyarakah Mutanaqisah d) Ijarah, including Ijarah Muntahiya Bit Tamlik e) Take Over Financing, either from Conventional Financial Institutions or Sharia Financial Institutions f) Financing for Refinancing purposes


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g) Financing to Cooperativesh) Account Opening Form for Savings, Giro,

and Deposits• Inspection method shall be conducted on

desk and on site by examination of documents and interviews to relevant Working Units (Area / Branch).

• EnsuringthefulfillmentoftheShariaaspectsin the finance committee forum at the level of the Board of Directors by attending Technical Meetings and Board of Directors Level Financing Committee Meetings.

c) Efforts to strengthen the fulfillment of Sharia aspects

To strengthen the fulfillment of Sharia aspects, CPG has done the following: • Serving as a teaching facilitator in some

academy programs implemented by LCG, including:a) Financing Retail Risk Academyb) Business Banking Academyc) Pawning Academyd) Retail Collection & Recovery Academye) Business Control Academyf) Banking Staff Programg) BSM Micro Program

• Ensuring the fulfillment of Sharia aspectsin the Board of Directors level financing committee by attending the Technical Meetings and Committee Meetings of Financing Level Directors;

• EnsuringtheavailabilityofShariacompliancestudy at the request of the relevant work unit;

• EnsuringtheavailabilityofShariaSupervisoryBoard Opinions at the request of the relevant work units;

• Ensuringthefollow-upofshariaauditresults,both internal and external;

• EnsuringthefulfillmentofShariaaspectsbothin the proposed manual of new products and the changes;

• Providingconsultationfortherelevantworkunits regarding sharia aspects through meetings, e-mail, telephone and other infrastructure;

• Assisting the relevant work units regardingthe sharia aspects (if needed).

e. Business Compliance 1) Implementation of Compliance Review on

strategic activities of the Bank is as follows: a) Performing Compliance review to the

proposed financing distribution plan that will be decided by the Board of Directors Financing Committee. Testing through the participation of the Compliance Unit in the Technical Meeting (Ratek) process and Financing Committee Meeting (RKP) with Compliance note Independent (CNI) tools conducted by the Compliance Work Unit to ensure the financing process is in line with external and internal requirements.

b) Ensuring the operational readiness of the plan to open / change the address / change status of the bank office network through the fulfillment of the list of requirements contained in the compliance check-list set by the regulator.

c) Reviewing the procurement process of committee-level goods and services committees to ensure that the procurement process of goods and services to be decided by the Board of Directors level committees has been conducted in an orderly, efficient, transparent manner and in accordance with the applicable GCG principles.

d) Providing input / opinion on the material of the plan for the issuance of the Bank’s internal provisions in the form of a draft of the Policy, SE, SOP in accordance with the prevailing laws and regulations of Bank Indonesia/Financial Services Authority.

2) Strategic measures undertaken for upgrading/managing work unit compliance/management development:a) Conducting Evaluation of Financing

Review involving business unit, risk assessment unit and support unit in coordinating among work units to minimize or prevent non-compliance procedure in financing processes. Evaluation forums are conducted on a quarterly basis.

b) Reviewing the financing after the disbursement of the decisions of the BoD


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committee for the Corporate and Commercial segment with the pillars of financing prudentiality process from the initial application process to the monitoring of the financing.

c) Reviewing the use of social funds for BSM’s Corporate Social Responsibility (CSR) activities.d) Conducting compliance on visit for the fulfillment of office network infrastructure for the relocation of

Yogyakarta Branch Office.e) Assisting the implementation of Bank Syariah Services (LSB) at Bank Mandiri outlets.f) Coordinating with DCOR in implementing compliance control effectiveness in accordance with their

respective roles and duties.

MANAGEMENT OF CONCFLICT OF INTERESTS BSM management is very concerned about the issue of conflict of interest. In 2017 BSM has updated the Code of Conduct (CoC) as set forth in the Corporate Governance Policy of PT Bank Syariah Mandiri with No. Registration KBP/01-2016.

Code of Conduct is the internal guidance of the company that contains systems, values, business ethics, commitments, and enforcement of company regulations for individuals in conducting business and other activities and interacting with stakeholders. Throughout 2017 there were no conflicts of interest involving the company management that caused losses to the company.

As an illustration in preventing the emergence of conflicts of interest, several efforts are carried out on an ongoing basis, including through:a. La risywah poster, No Kick Back and No Special Payment It is a form of leadership commitment that must be followed by all the Bank’s personnel to work according to regulations.

b. Email blast A form of socialization and reminder to the Bank’s personnel to avoid various possible emergence of conflicts of interest

in carrying out their duties and responsibilities.


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c. Annual Disclosure of Conflict of Interest BSM’s personnel are required to complete annual disclosure related to conflict of interest arising in carrying out their

duties and responsibilities.

CORPORATE SECRETARYThe Corporate Secretary has an important role in bridging the interests of the Company with shareholders, regulators and other stakeholders, especially in creating good communication, maintaining perceptions of the Company's image and ensuring the Company's compliance with banking laws.

There are four pillars of governance that became the foundation of Corporate Secretary in carrying out its communications activities, namely:1. Compliance Governance Compliance governance is related to the regulation,

organization and documentation of the GMS, publication of bank financial statements as a form of transparency, and preparation of internal (Board of Directors and Board of Commissioners meetings) and external materials.

2. Communication Governance Corporate Secretary acts as an information gateway

for all internal stakeholders, customers, shareholders, regulators, and media. This Communication Governance is conducted to maintain and enhance the stakeholders' positive knowledge, understanding and perception of the Company's positive image and reputation and to run

the function of education and socialization of Islamic banks to the public.

3. Secretarial Governance Secretarial Governance begins with the creation,

recording, storage, destruction and reporting of documentation. In addition, Secretariat Governance also includes household and protocol functions.

4. Management Governance In terms of Management Governance, Corporate

Secretary monitors and regulates the strategic project of the management and the Sharia Supervisory Board (DPS) to run in accordance with the stakeholders' expectations. The Management Governance function focuses on supporting the implementation of GCG and assistance to all activities of the boards and Sharia Supervisory Board.

Organizational Structure of Corporate SecretaryBased on the Decree of the Board of Directors No. 18/730-KEP/DIR dated April 6, 2016 regarding Employee Placement and Assignment of PT Bank Syariah Mandiri, Corporate Secretary is under the coordination of Risk Management Directorate with the following structure:


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Staff Staff

Corporate Secretary

Corporate Internal Affairs

Document Secretariat & Management

Marketing Communication

Corporate Communications

Corporate Branding

Corporate Management

BrandDevelopment & Implementation

Media Relation & Stakeholders Management

Board & Support Brand Marketing & Analytics

DigitalMarketing

Corporate Social Responsibility

External Communication

Internal Communication

Creative Development &

Publishing

Staff

Staff

Corporate Secretary Profile As of April 7, 2016 Dharmawan P. Hadad served as the Corporate Secretary based on Decree No.18/730-KEP/DIR dated April 6, 2016, concerning the Placement and Appointment of PT Bank Syariah Mandiri’s Employees. The profile of the Corporate Secretary is explained as follows:

Dharmawan P. Hadad

Age 51 years

Place, Date of Birth Bekasi, March 17,1966

Citizen Indonesian

Domicile Taman Permata Cikunier Blok A13 No. 6 Kel. Jakamulya, South Bekasi, Bekasi


• FacultyofCurriculumandTechnology,IKIPJakarta(1991)

• MasterofManagement,STIEIPWI(2000)• DoctoralProgramofIslamicEconomicandFinance,

Trisakti University, Jakarta (currently completing dissertation)

Position History Group Head Learning Center (March 1, 2015 – April 6, 2016)Group Head Corporate Secretary (April 7, 2016 – present)

Training • TechnicalFunctionofCorporateSecretaryFromA-Zorganized by Infobank Magazine (December 15 – 16, 2016)

• Education&LiteracyforFinanceInstitutionSeminar/Workshop organized by OJK (2017)

• GRIStandardsCertifiedTrainingonSustainabilityReporting organized by National Center for Sustainability Reporting (February 5 – 7, 2018)


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Duties and Responsibilities of Corporate SecretaryThe duties, responsibilities and roles of Corporate Secretary’s in BSM as well as all supporting units are set out in the Corporate Secretary Operating Procedure Standard of 2016 effective from July 2016 and SK No.14 / 747-KEP / DIR dated December 13, 2012, concerning Placement and Employee Assignment of PT Bank Syariah Mandiri. Its main duties and responsibilities as follows:

A. Regarding the Compliance Governance Function1. To direct and prepare the General Meeting of

Shareholders.2. To ensure the functioning of the Board of

Commissioners, Directors, Committees and DPS. 3. To coordinate Self-assessment and Reporting of GCG

Implementation of Bank in accordance PBI, GCG Rules, and OJK regulations.

4. To remind the Board of Directors of the Bank of its responsibilities to implement the optimal GCG according to the company’s objectives in order to create a better corporate image and improve the company’s profits on an ongoing basis.

5. To prepare List of Shareholders, Special Lists of members of the Board of Directors, Board of Commissioners, and their families in share ownership, business relationships, and other roles that may create a conflict of interest.

6. To attend and make minutes of meetings of the Board of Directors and Board of Commissioners.

7. To provide input to the Board of Directors of the Bank to comply with prevailing regulations/laws, among others concerning the Company, Bonds, Sharia Banking Shares, Capital Market and its implementing regulations.

8. To direct the publication of transparency in accordance with the provisions of banking regulations.

9. To guard the Bank’s correspondence.

B. Regarding the Communication and Marketing Communication Governance Function1. To establish communication strategy in order to

maintain positive corporate reputation. 2. To direct the dissemination of information to internal

and external stakeholders.3. To become a liaison between the Bank and external

parties representing the community.4. To follow market developments and external

conditions of the Bank, particularly regulations

applicable in the field of Islamic banking.5. To direct above the line and below the line activities

to support the company’s business. 6. To direct the preparation of effective and targeted

media marketing tools and communications.7. To conduct education, socialization and literacy of

Islamic banking to the public.

C. Regarding Corporate Branding & Corporate Social Responsibility (CSR) Governance Function1. To develop a strategic Corporate Branding and

Corporate Social Responsibility (CSR) program that aims to build, maintain and develop the corporate image.

2. To maintain and enhance the corporate image through consistency and standardization in the implementation of the Corporate Identity Bank.

3. To implement CSR program as a form of concern for the community and the environment.

4. To manage the process and performance of Corporate Branding & CSR effectively in providing optimal contribution to positive perceptions of stakeholders and shareholders to increase the brand equity, and to contribute to the increased awareness and business of the Bank.

Corporate Secretary PerformanceThe realization of Corporate Secretary duties and responsibilities during 2017, in relation to relationships with stakeholders includes:

a. Organizing corporate events and/or participating in third party events in the form of sponsorship include:1. Annual General Meeting of Shareholders2. GIIAS Automotive Exhibition, August 10-20, 20173. BSM Festival for Ramadhan, May 20174. Mandiri Jogja Marathon, April 23, 20175. Mandiri Pekan Raya Indonesia at ICE BSD, October 21

- November 5, 20176. Launch of National Committee of Sharia Economic

and Finance in Jakarta July 27, 20177. Micro entrepreneur training with Tokopedia in

several cities in Indonesia8. Socialization of sharia products and services through

iB Vaganza event, Grebeg Pasar, BSM Siaran, Gold Based Seminar, Micro People Market, Car Free Day Outlet, BSM Spekta, opening outlets in malls in several cities

9. Halal bi Halal with Hajj and Umrah Travel Organizer


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b. Organizing events with media including: 1. December 7-8, 2017, Media Training for Sharia Banking (National)2. April 26, 2017, Media Training for Sharia Banking at RO VI, Media Makassar3. June 8, 2017, silaturahim and iftar party with the Directors4. June 2017, silaturahim and iftar party at 7 (seven) Regional Offices5. Media monthly briefing

c. Press conference All published press releases have been approved and are known by BSM. Of all reports, BSM did not experience

financial and non-financial impacts that could affect the stability of business performance. Therefore, BSM assesses that published press releases are positive and constructive and have a positive influence on the company's reputation.

During 2017, there were 78 publications of press releases and news photos with contents covering Bank’s performance, operations, products and services, awards, cooperation with third parties, and corporate social responsibility (CSR) program.

d. Memorandum of Understanding (MoU) Signing with Bank partners, including:

January 12, 2017 Memorandum of Understanding with North Sumatra Provincial Government

28 February 2017 Financing Agreement with PT Inka Group

April 20, 2017 MoU on Sharia Economic Development with Padjajaran University

April 23, 2017 Motor Vehicle Financing Synergy with Mandiri Tunas Finance

May 26, 2017 Synergy of Mortgages with Large Developers

June 12, 2017 Rp 1 Trillion Financing to Jasa Marga

June 16, 2017 Agreement on Infrastructure Financing of Rp1.25 Trillion with Waskita Karya

July 10, 2017 Financing Agreement to FIFGROUP amounted to 500 billion

August 14, 2017 MoU Signing with UGM in Launching Co-Branding Card Kagama

October 6, 2017 Collaboration for Tuition Payment of IPB’s Students

November 8, 2017 Collaboration with Bukalapak in Providing Sharia Payment Method for Bukalapak Users

November 28, 2017 Agreement on Financing amounted to Rp1.5 trillion Ceiling for Pertamedika and IHC

December 14, 2017 Payment Point Launching in Unibraw and Unisma to Simplify Tuition Payment

e. Organizing various events related to Corporate Social Responsibility (CSR) program including:1. BSM’s Program Distributing Blessings in the form of assistance in renovating or improving the cleanliness of

mosques/mushalla around BSM’s outlets throughout Indonesia;2. Assistance in the construction of Islamic boarding school building in Cirebon;3. Construction of Al Amien Syariah Mandiri Mosque in Kinahrejo Merapi, Yogyakarta;4. Donation for orphans at the Head Office and Regional Office;5. Assistance in the construction of Islamic boarding school building in Cirebon;6. Educational facility support;7. Scholarships for underprivileged students;8. Economic empowerment assistance.

f. Organizing financial education and literacy events including:1. Socialization of Sharia Product and Finance in SMAN 80, SMAN 68 (October, 2017)2. Socialization of Sharia Economy and Finance for Vocational Teachers (October 25, 2017)

g. Preparing the infrastructure (system) for the management of the archives of the Company.h. Completing customer complaints through mass media and social media by coordinating with Customer Care


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i. Redesigning and updating the content of corporate websites. Currently corporate website has been designed in a user friendly manner to be accessed through personal computer and mobile devices, the look of the website becomes responsive (adaptive to the media used to access) and the information about the product will be simpler with a clean design.

j. Managing corporate social media accounts on Facebook, Instagram, and Twitter.

Career Development Program Human resource competencies are crucial in the Company's performance. Therefore, Corporate Secretary has sent the employees to several trainings, such as:

No Name of Training Participant from BSM’s Corporate Secretary

1 Middle Management Development Program 1 Participant

2 Senior Development Program 1 Participant

3. Character 2 Participants

4 Workshop Digital Branding 1 Participant

5 Sharing Session Sosial Media 3 Participants

6 Character Building

7 Worskhop Branding dan Marketing Communications 5 Participants

8 Workshop PR and Media Relations 2 Participants

2017 Correspondence DataDuring 2017, there were 25,280 incoming mails and 33,151 outgoing mails. The expenses incurred for the correspondence amounted to Rp111,571,242,.

Information AccessAccess of information to Stakeholders is carried out in two

ways:a. Direct, including Shareholders General Meeting (GMS),

Public Expose, Press Conference, Media Briefing, Media Visit, Forum Group Discussion, Branch Visit, Sharia Banking Literacy and Inclusion Events, Morning Prayer Forum, Islamic Study Forum, socialization to Regional Offices and Branches, etc.

b. Indirect, including Annual Report, Publication of Financial Report, Press Release, website www. syariahmandiri.co.id, social media (Facebook, Twitter and Instagram), newsletter, internal media Bank: intranet, Bank SE portal, BSM KNOWN, ETHIC (internal BSM’s magazine).

Command CenterCommand Center serves as a liaison of coordination between work units in order to anticipate things that affect the company's reputation. The Command Center is headed by the Director in charge of Corporate Secretary.

The Command Center Secretariat is located at the Head Office with members:• HeadofAuditWorkUnit• HeadofHumanCapitalWorkUnit• HeadoftheNetworksunit• HeadofLegalWorkUnit• HeadofCorporateSecretaryUnit• HeadofOperationalUnit

Corporate Secretary’s Target in 2018Projects to be implemented in 2018 include:1. Archiving Governance The Company will build an archive building to store and

document important company records. The budget for building construction is around 13 billion rupiahs. In addition to physical building, the Company is preparing an archival policy.

2. Preparation of Sustainability Program Plan.


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PUBLIC ACCOUNTANTThe appointment of a Public Accountant and Public Accounting Firm (KAP) has been approved by the GMS. For the 2017 financial year, the appointed Public Accounting Firm is Tanudiredja, Wibisana, Rintis & Partners.

Audit FeesAudit fees incurred for 2017 accounting year amounted to Rp450,000,000.

During the last 5 (five) years, the Public Accounting Firms auditing BSM’s Financial Statements are as follows:

Year Public Accounting Firm Opinion

2017 Tanudiredja, Wibisana, Rintis & Partners, KAP License Number KEP-241/KM.1/2015 Fair in all material things



2014 Purwantono, Suherman & Surja, KAP License Number 381/KM.1/2010 Fair in all material things




Fees and Scope of Services The fees and scope of services of the Public Accounting Firm are as follows:

Year Public Accounting Firm Audit Fees (in Rupiah)

Scope of work

2017 Tanudiredja, Wibisana, Rintis & Partners, KAP License Number KEP-241/KM.1/2015

2,450,000,000 Financial Statement Audit

2016 Tanudiredja, Wibisana, Pioneers & Partners, KAP License Number KEP-241/KM.1/2015

2,100,000,000 Compliance Audit Toward Internal Control and Law

2015 Tanudiredja, Wibisana, Rintis & Partners, KAP License Number KEP-241/KM.1/2015

750,000,000 • AuditofFinancialStatements• ComplianceAuditAgainstInternalControl

and Law• PerformanceAudit

2014 Purwantono, Suherman & Surja, KAP License Number 381/KM.1/2010







1,895,000,000 • AuditofFinancialStatements• ComplianceAuditAgainstInternalControl



2,100,000,000 • AuditofFinancialStatements• ComplianceAuditAgainstInternalControl



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Koordinasi Antara Auditor Eksternal dan Komite AuditBSM constantly strives to improve communication between the Public Accounting Firm, Audit Committee, and Internal Audit Committee to minimize the constraints that occur during the audit process. In order for the audit process to be in accordance with the Accounting Professional Standards, work agreement, and scope of the audit that has been established and to be completed in the target time set, several meetings that address several significant important issues were routinely conducted.

RISK MANAGEMENTThe Risk Management Work Unit (SKMR) is led by the Enterprise Risk Management Group Head.

Profil Group Head Enterprise Risk ManagementM Fanny Fansyuri

Age 51 years

Place, Date of Birth Bandung, April 14, 1967

Citizen Indonesian

Domicile Bogor, West Java


S1 Fakultas Ekonomi Universitas Padjajaran 1991

Position History • GHERM• GHSPM

Training • AuditInternal&FraudPerbankan,LSPP-IBI,2017• PeopleManagerProgram,Experd2017• TrainingforTrainerManajemenRisikoPerbankan

Syariah, Asbisindo, 2017• BestPracticeofCreditRiskManagement,BARa• PropheticLeadership&ManagementWisdom,

ProLM Leadership Center

IMPLEMENTATION OF RISK MANAGEMENTIn line with business growth, increasingly complex business activities, and increased operational activities, the Bank needs to improve effective risk management through integrated risk management. The implementation of risk management is one of the foundations to support a healthy and sustainable business growth with optimal return.

In the risk management process, the Bank implements 4 (four) interrelated aspects, namely: risk management governance, risk management framework, risk management process, and adequacy of the risk control system.

A. Risk Management Governance The Bank's risk management organization consists of a Board of Commissioners that carries out the risk monitoring

function assisted by the Risk Monitoring Committee (KPR), the Board of Directors that performs risk policy assisted by the Risk Management Committee.


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Risk Management Governance Structure

Oversight Risk Committee (Board of Commissioners)

Risk Management Committee (Board of Directors)

Risk Monitoring Committee

ALMA & Financing

Business Unit Risk Management Internal Audit

Operation / Support Unit Compliance

1st Line of Defence 2nd Line of Defence 3rd Line of Defence

Remuneration and Nomination Committee

Operational

Audit Committee

The Risk Management Committee has authority in preparing and updating policies/guidelines and strategis of risk management.

The organizational structure of the Risk Management Committee consists of:Chairman : President DirectorSecretary : Head of Enterprise Risk Management UnitPermanent Members : Directors and SEVPNon-Permanent Member : Head of the Relevant Work Units

In 2017, the Risk Management Committee has performed the following functions and evaluation activities:

No Agenda Time

1 Core Depositor’s Fund Limit January 2017

2 Special Price Program for Wholesale Financing March 2017

3 Yield of Asset and Cost of Fund July 2017

4 Special Price Program for Wholesale Financing July 2017

5 Price Islamic Banking Supplier Financing (iB-SF) September 2017

6 Special Ratio of Rupiah Deposits and Mudharabah Savings Ratio October 2017

7 Holders of authority to impose operational risk losses October 2017

8 Counter Ratio of Rupiah Deposits November 2017

At the operational level, the Business Unit (1st line of defense) performs risk identification, risk measurement, risk mitigation and risk control function with the Risk Management Unit and Compliance Unit (as the 2nd line of defense).


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The Internal Audit Work Unit (as the 3rd Line of Defense) periodically supervises/reviews the Bank's business activities/operations.

The Bank recognizes that the implementation of risk management can be more effective if all Human Resources/employees have a good risk awareness. In order to increase employee’s risk awareness, the Bank has undertaken:1. Internalizing the implementation of risk management in

employee training program To improve knowledge, understanding and competence,

every employee must follow the training program in accordance with their respective field of duty. As a reinforcement, the Bank establishes a risk management module as a compulsory curriculum in every training program for each level. The risk management module is updated regularly based on the developments and changes in the Bank's internal and external conditions.

2. Risk Management Certification The Bank sent a few officials to participate in the risk

management competency test. As of December 2017, the number of employees who have obtained risk management certification are:

Certification s.d. 2016 2017 s.d. 2017

Level 1 499 92 591

Level 2 402 336 738

Level 3 64 18 82

Level 4 29 1 30

Level 5 5 3 8

Total 999 450 1.449

3. Risk Awareness Survey (RAWS) The Bank implements RAWS with Bank Mandiri as a

holding company that aims to:a. Identify levels of risk management awareness of

employees at various levels of work units.b. Obtain an overview of how far employees understand

the application of risk management.c. Provide direction in raising risk awareness in the next

period.

The result of RAWS assessment in 2017 shows that the level of risk awareness is at a very good level. In comparison, the predicate of RAWS assessment result in 2016 is categorized as Very Good.

B. Risk Management Framework 1. Organization To support an adequate risk management process,

the Bank establishes clear human resource qualifications for each level of positions related to the implementation of risk management. In addition, banks consistently make efforts to increase employee competence through training, certification, internalization of socialization, discussion forums, internships, or other programs related to the implementation of risk management.

The Bank established a Risk Management Work Unit which is an independent unit of business unit and internal audit unit. However, these units are synergized in the implementation of risk management as first line, second line, and third line of defense.

2. Policies, Procedures, and Determination of the Limit a. The Bank has Risk management policies and

procedures as a reference for risk management at the Bank and serves as a foundation for business and operational policies and procedures. In 2017, the Bank published and updated:1) Operational Risk Management Control

Procedures & Standards2) Standard Operating Procedures for Risk

Based Bank Rating (RBBR)3) Standard Operating Procedures for Business

Continuity Management (BCM)4) Standard Operating Procedures for Office

Security Standardization5) Standard Operating Procedures for Asset

Management6) Standard Operating Procedures for BSM

Capital Management7) Standard Operating Procedures for Know

Your Customer (KYC), Anti-Laundering (APU) and Terrorism Financing Prevention (PPT)

8) Standard Operating Procedures for Document Management

9) Standard Operating Procedures for Customer Protection and Complaints

10) Standard Operating Procedures for Corporate Plans, Corporate Work Plans and Budgets (RKAP) and Bank Business Plans (RBB)


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11) Standards Operating Procedures for Internal Audit Control12) Operational Guidelines for Industry Acceptance Criteria (IAC)

b. The Bank sets a risk limit on each activity, both at portfolio and transactional levels.

Risk Limit

Credit and Investment Risk1. Limit on the termination of financing2. Limit on the financing portfolio of the

industrial sector3. Limit of the credit line4. Limit on the exposure of 25 large debtors5. Limit of the in-house BMPK6. Limit on foreign currency financing portfolio

Market and Return Risk1. Limit of Net Open Position (NOP)2. Limit on individual gold mortgage financing3. Limit of bank notes4. Limit of special ratio deposit5. VaR Limit

Liquidity Risk1. Cash Balance Limit2. Limit of Minimum Statutory Reserve3. Limit of Core Depositors4. Limit of liquidity Reserves

Operational Risk1. Limit of Operational Transactions2. Limit of Treasury Transactions3. Limit of E-channel Transactions4. Limit on Procurement of Goods and Services

The Bank conducts regular review of operational risk management policies to adjust with changes in internal and external conditions of the bank.

3. Risk Management Process The Bank processes the identification, measurement,

monitoring, risk control, and risk management information systems with a risk management approach through operational and capital activities.a. Risk Management Through Operational Activities Risk management in operational activities aims

to manage risk in daily business activities well in accordance with the established risk appetite and risk tolerance. The Bank manages 10 risks including credit risk, market risk, liquidity risk, operational risk, legal risk, reputation risk, strategic risk, compliance risk, investment risk, and return risk.

b. Risk Management Through Capital Risk management through capital aims to

ensure the adequacy of bank capital to cover various risks, particularly credit risk, market risk and operational risk. The Bank calculates the adequacy of capital for credit, market and operational risks by approaching:1) Credit risk using standardized approach. 2) Market risk using standard models. The Bank calculates Risk-Weighted Assets

for exchange rate risk and yield benchmark risk. In assessing the adequacy of capital internally, banks use Value at Risk (VaR).

3) Operational risk uses a basic indicator approach.


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C. Risk Management Process 1. Credit Risk and Investment Risk The management of credit and investment risk aims to guide business expansion based on the Bank's

guideline and risk appetite portfolio.a. Organization The Bank established an organizational tool that supports the implementation of risk management

in the field of financing through the implementation of 3 pillars in the process of providing financing that is the business unit that initiates, the risk unit that has the function of risk assessment (Retail Risk Assessment Work Unit and Wholesale Risk Assessment Work Unit), and financing unit operation as an independent unit to business unit, risk unit, and recovery unit for performing the process of restructuring and completion of troubled financing.

b. Policies and Procedures The Bank establishes Credit Risk Management Policy, Standard Operating Procedures for Business

Financing, and Product Manuals and Technical Operations Guidelines for each financing segment. c. Proses, Tools dan Limit

The Bank manages credit risk through:1) Determination of Guideline Portfolio consisting of:

a) Industry Class The Bank sets the industry classes into three (3) classification (industry classification) that is attractive,

neutral, and selective. The distribution of financing is preferred to the business sector with attractive and neutral classification.

b) Industry Limit The Bank sets the industry limit to maintain the concentration of the Bank's portfolio. The Bank implements

industry limits for industrial sector portfolios including securities investment limit as well as individual customer limit. At the transactional level, the bank sets a limit on the authority to cut financing for bank officialsw.

c) Industry Acceptance Criteria The Bank determines the industry acceptance criteria limit to represent the bank's risk appetite in certain

industrial sectors and as a tool to select the debtor candidate in a particular industry sector before the proposal of the debtor candidate is further analyzed.

d) Implementation of scoring system of micro, small, and consumer financing.e) Implementation of watch list tools to monitor the performance of debtors, and to establish strategy

accounts.f) Regular financing portfolio street test to determine the impact of changing economic conditions that may

occur on the quality of the Bank's portfolio.


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Based on the Standard Approach, the Bank has the following credit Risk Weighted Assets:

Asset Exposure in the Balance Sheet (Rp Billion)


December 31, 2016 December 31, 2017

Net Receivables

RwA before

CRM

RwA after CRM

Net Receivables

RwA before

CRM

RwA after CRM

A. Asset Exposures in the Balance Sheet financed by Non-profit Sharing Fund Sources, except for Profit Sharing Financing

78,015 42,492 41,439 88,151 43,038 41,774

1. Receivables from the Government 17,028 - - 22,656 - -

2. Receivables from Public Sector Entities 3,283 1,252 1,235 5,023 1,708 1,697

3. Receivables from Multilateral Development Banks and Institutions

- - - - - -

4. Receivables from Banks 2,398 548 537 1,415 368 353

5. Loans Secured by Residential Property 8,325 2,745 2,736 8,618 2,875 2,861

6. Loans Secured by Commercial Property - - - - - -

7. Employee/Retirement Loans 4,409 2,205 2,204 7,533 3,767 3,766

8. Receivables from SME & Retail Portfolio 9,980 7,485 5,761 9,853 7,389 5,716

9. Receivables from Corporates 27,837 27,043 25,208 28,663 26,159 24,125

10. Past Due Receivables 1,215 1,215 1,214 771 771 770

11. Other Assets 3,630 - 2,544 3,620 - 2,485

B. Profit Sharing Financing Funded by Non-profit Sharing Funds

- - -

C. Asset Exposure in the Balance Sheet Financed by Source of Profit Sharing Funds

- - -

TOTAL 78,015 42,492 41,439 88,151 43,038 41,774

Note: MRK (Credit Risk Mitigation) is a technique of risk mitigation that can be used as the ATMR subtraction; i.e. collateral, guarantee and/or underwriting or MSMEs financing insurance in accordance with the regulation concerning the calculation of ATMR Credit Risk for sharia banks

Exposure on Commitment / Contingent Charge on Administrative Account Transactions (Rp Billion)



Net Receivables

RwA before

CRM

RwA after CRM

Net Receivables

RwA before

CRM

RwA after CRM

A. Asset Exposures in the Balance Sheet financed by Non-profit Sharing Fund Sources, except for Profit Sharing Financing

533 780 775 621 468 468

1. Receivables from the Government - - - - - -

2. Receivables from Public Sector Entities - - - - - -


- - - - - -

4. Receivables from Banks 331 394 394 283 142 142

5. Loans Secured by Residential Property 164 324 322 230 230 230

6. Loans Secured by Commercial Property 38 62 59 43 33 33

7. Employee/Retirement Loans - - - - - -

8. Receivables from SME & Retail Portfolio - - - - - -

9. Receivables from Corporates - - - - - -

10. Past Due Receivables 0.30 0.30 0 65 65 65

B. Profit Sharing Financing Funded by Non-profit Sharing Funds

C. Asset Exposure in the Balance Sheet Financed by Source of Profit Sharing Funds

TOTAL 533 780 775 621 468 468


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Exposure to Credit Risk due to Counterparty Credit Risk (Rp Billion)



Net Receivables

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CRM

RwA after CRM

Net Receivables

RwA before

CRM

RwA after CRM

1. Receivables from the Government 1,009 - - - - -


- - - - - -

3. Receivables from Banks - - - - - -

4. Receivables from Public Sector Entities - - - - - -

5. Receivables from Corporates - - - - - -

6. Receivables from SME & Retail Portfolio - - - - - -

TOTAL 1,009 - - - - -

Exposure that Raises Credit Risk due to Settlement Risk (Rp Billion)

No. Transaction Type


ExposureCapital

Deduction Factor

RwA ExposureCapital

Deduction Factor

RwA

1. Delivery versus payment - - - - - -

2. Non-delivery versus payment - - - - - -

TOTAL - - - - - -

Asset Securitization Exposure (Rp Billion)

No. Transaction Type


Capital Deduction

FactorRwA

Capital Deduction

FactorRwA

1. Eligible supporting credit facility - - - -

2. Non-eligible supporting credit facility - - - -

3 Eligible liquidity facility - - - -

4 Non-eligible liquidity facility - - - -

5 Eligible purchase of asset-backed securities - - - -

6 Non-eligible purchase of asset-backed securities - - - -

7 Securitization exposure not included in Bank Indonesia’s provisions - - - -

TOTAL - - - -

Total of RwA of Credit Risk (Rp Billion)

31 Desember 2016 31 Desember 2017TOTAL OF CREDIT RISK RwA (A) 42,213 42,043

TOTAL OF CAPITAL DEDUCTION FACTOR (B) 0 0

In the calculation of Risk-Weighted Assets for Credit Risk, the Bank uses rating issued by rating agencies acknowledged by regulators pursuant to OJK’s Circular Letter No.37/SEOJK.03/2016 on Rating and Ranking Agencies recognized by OJK. The rating is used for Public Sector Entities and Corporations portfolio categories.

2. Market Risk Market risk management aims to maintain / minimize the negative impact of movement of market variables on the

position of the bank portfolio.


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a. Organization The Bank separates functions between front office,

middle office, and back office on treasury transactions. The business unit as a front office serves to carry out treasury transactions. The front office serves as a first line of defense that limits and anticipates market risk exposure according to predetermined limits.

The risk management unit serves as the middle office and second line of defense that reviews the risk limits and monitors market risk and compliance with risk limits. The operational work unit as a back office is responsible for bookkeeping and transaction settlement.

b. Policy, Procedures and Limit Adequacy The Bank sets out the Market Risk Management Policy

and Standard of Treasury Business Procedures as well as other market risk management provisions. The determination of market risk limits includes Net Open Position (NOP), Value at Risk (VaR), open positions, stop loss, treasury transactions, cut loss and bank notes.

c. Management and Measurement of Trading Book Market Risk

The Bank conducts daily valuation of trading securities by using market prices from independent sources. Sources of market prices used by the Bank as reference include:1) The price listed on Bloomberg, Reuters, etc.2) The price listed on exchange prices or secondary

market,3) The most conservative quotations provided by at

least 2 (two) reputable brokers and/or market makers and one of which is independent,

4) For mutual funds, the source of market price data uses the net asset value (NAV) obtained from the Investment Manager.

For instruments that do not have a market value, the Bank uses mark-to-model based on a methodology whose suitability and accuracy are evaluated periodically. The Bank calculates the Minimum Capital Adequacy Ratio (KPMM) using the Standard Method. In addition, the Bank has performed capital adequacy calculations internally, using Value at Risk (VaR). VaR represents the maximum potential for losses suffered by the Bank as a result of market movements that affect the Bank's risk exposure under normal market conditions.

In 2017, the bank developed the VaR method. The method measures the risk exposure of trading book securities and exchange rate risk more accurately and comprehensively. In the VaR calculation, the Bank uses the variance covariance method with 99% confidence level and holding period for 1 day. To maintain the accuracy of the VaR method, the Bank periodically conducts backtesting.

The Bank also conducts stress testing to test the resilience of capital against significant market factor movement and prepares the necessary strategies if the crisis conditions occur.

Based on the implementation of stress test in 2017, the potential losses incurred by market risk exposure (exchange rate and trading securities) are relatively small.

Monitoring of trading book market risk is conducted periodically on portfolio, market price movement of securities, realization of limit and potential profit/loss from trading book securities.

d. Management and Measurement of Exchange Rate Risk The Bank does forex transaction squaring to keep

the NOP low. The risk of changes in exchange rates is caused by exchange rate volatility. The Bank measures the exchange rate risk by using the Gap Analysis or Net Open Position (NOP) method, which is the net difference between an asset or a foreign currency bill with liabilities or foreign currency liabilities, plus the net difference between the bill and liabilities either as commitment or contingency in the administrative account for any foreign currency all denominated in Rupiah.

Exchange rate risk monitoring is conducted periodically to the NOP, realization of limit and exchange rate movements.

e. Trading Book and Banking Book Portfolio which is Calculated in KPMM

In the calculation of Risk-Weighted Assets for Market Risk, the Bank refers to SEOJK No. 35/SEOJK.03/2015 regarding Calculation of Weighted Risk-Based Assets for Market Risk by Using Standard Methods for Sharia Commercial Banks. Calculation of Market Risk in KPMM Bank includes interest rate benchmark and exchange rate risk.


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The calculation of interest rate benchmark risk is performed on trading securities instruments.

The calculation of capital expense for interest rate benchmark risk includes specific risk and general risk.

The calculation of exchange rate risk is applied to the foreign currency position of both the trading book and the banking book exposed to exchange rate risk. The calculation of capital expense on exchange rate risk is 8% of the overall Net Open Position.

Based on the Standard Approach, the Bank has a market risk RWA as follows:

Market Risk Exposure as of December 31, 2017 (Rp Billion)

No. Market Risk Capital Charge

RwA

1. Interest Rate Benchmark Riska. Specific Risk - -

b. General Risk 0.02 0.23

2. Exchange Rate Risk 19.79 247.34

3. Equity Risk - -

4. Commodity Risk

Total 19.81 247.56

Market Risk Exposure as of December 31, 2016 (Rp Billion)

No. Risiko Pasar Beban Modal ATMR

1. Interest Rate Benchmark Riska. Specific Risk - -

b. General Risk 0.06 0.74

2. Exchange Rate Risk 48.06 600.73

3. Equity Risk - -

4. Commodity Risk

Total 48.12 601.47

3. Liquidity Risk Liquidity risk management aims to maintain the

adequacy/availability of cash flow funding sources to meet bank liabilities. a. Organization Liquidity management is conducted by the treasury

unit, while the risk management unit serves as the middle office and unit operation as back office.

b. Policies and Procedures The Bank establishes Liquidity Risk Management

Policy and other liquidity risk management provisions, including Standard of Treasury and International Banking Business Procedures.

c. Liquidity Risk Management In managing liquidity, the bank maintains the

adequacy of primary reserves (cash and GWM) and liquidity reserves according to the safety level to ensure liquidity of the bank is at a safe level.

In addition, the bank performs:1) Maintenance of high quality liquid assets as

liquidity reserves.2) Maintenance of access to sharia interbank money

market through the acquisition and distribution of credit line from and to other banks.

3) Measurement of liquidity through cash flow projection, liquidity gap, Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR)

4) Monitoring of liquidity risk exposure and liquidity protocol.

5) Stress testing of liquidity risk.

d. Risk Liquidity Protocol The Bank monitors liquidity conditions through a

liquidity protocol consisting of internal indicators including: GWM fulfillment and availability of secondary reserve and withdrawal of funds. External indicators include the following: changes in the USD exchange rate against IDR and Rupiah and USD interbank interest rates.

e. Liquidity Risk Anticipation The Bank has a Liquidity Contingency Plan (LCP)

which includes funding strategies such as money market loans, repo, bilateral loans, securities sales, and pricing strategies. In the LCP, liquidity conditions and funding strategies are established on the basis of internal and external conditions.

Based on the implementation of stress test in 2017, the liquidity is always in surplus condition.

4. Operational Risk Operational risk management aims to minimize risk

exposure caused by human factors, internal procedures, system failures and external factors.


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a. Organization1) The Bank implements a clear segregation

of duties through the separation of maker, checker, approver/authorisator and dual custody mechanisms in each transaction.

2) The Bank establishes a working unit that ensures the running of control in each work unit, namely:a) Regional Business Control (RBC) in the region

office to monitor and ensure compliance, operational risk and internal control management in regional offices, areas and branches.

b) Decentralized Compliance & Operational Risk (DCOR) at each Directorate of Head Office to monitor and ensure compliance, operational risk and internal control management in the head office work unit.

b. Policies and Procedures The Bank sets out Operational Risk Management

Policy and Standard Operating Procedures for Risk Management as a reference for operational risk management and serves as a basis for each of the Bank's operational provisions.

c. Process, Tools, and Limit Adequacy The Bank manages operational risks through:1) Implementation of Risk & Control Self-Assessment

(RCSA) to identify, measure, monitor and mitigate operational risk exposures conducted independently by all work units (branch and head office). RCSA is predictable (forward looking) so that it can be used to anticipate or minimize the potential losses caused by operational risks. RCSA updates are made periodically (quarterly).

2) Determination of operational transaction limit of Head Office, Regional Office, Area and Branch Office, Electronic Channel Transaction Limit (Internet Banking, ATM, Mobile Banking), Limit of procurement of goods and services. These limits are evaluated periodically to support the implementation of bank operations prudentially.

3) The use of Operational Risk Management Information System (ORMIS) application serves as an early warning signal of potential risk events as well as Loss Event Database (LED).

d. Implementation of risk management through information technology is done through:1) Standardization of network data communication

device and software, management of system access authority, development of electronic banking services in terms of accessibility and security and Disaster Recovery Plan;

2) Implementation of User Acceptance Test (UAT) for every creation and development of new application system to minimize the potential of system application failure.

Based on the Basic Indicator Approach, the Bank has operational RWA as follows:

Operational RWA in 2017 (in billion rupiahs)

Year Average Gross Income (in the Past

3 Years)

Capital Charge

RwA

2016 3,771 565 7,071

2017 4,590 688 8,607

5. Other Risk In addition to key risks, the Bank manages other risks

that include legal risk, reputation risk, strategic risk, compliance risk, and return risk.a. Organization

1) The Bank has work units that are independent of the operational work unit that play a role in managing other risks including legal risk, reputation risk, compliance risk, and strategic risk.

2) The Bank places legal officers in all regional offices. The Bank has established a Decentralized Compliance & Operational Risk (DCOR) at the Directorate to monitor and ensure risk management in the head office work unit.

b. Policies and Procedures The Bank has established Risk Management Policy

and Standards and Procedures for Risk Management to manage other risks, including Standards and Procedures for Legal Control, Standards and Procedures for Compliance Control, Standards and Procedures for ‘Know Your Customer’ Control, Anti-Money Laundering, and Prevention of Terrorism Financing, Standard Operating Procedures for Consumer Protection and Complaint, Standard Operating Procedures for Corporate Plan, Corporate


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Work Plan and Budget (RKAP) and Bank Business Plan (RBB).

c. Risk Monitoring The Bank identifies, measures, monitors and controls

the risks, including through:1) Monitoring the handling of criminal and non-

criminal cases as well as legal risk control through backups to anticipate potential losses caused by lawsuits. When necessary, the bank uses the services of an external lawyer to assist in the handling of legal cases containing compensation claims.

2) Testing and monitoring compliance toward operational activities through compliance information system (SIK) and implementation of internal sharia advisory function to review and analyze the suitability of a product/activity of bank with sharia principles.

3) Monitoring and controlling the settlement of customer complaints through the complaint management system (CMS) and the implementation of reputation risk measurement through the Publicity Effectiveness Level (PEL) methodology and the implementation of the command center for the management of publications related to case reporting.

4) Implementation of periodic performance review in stages to evaluate the performance and effectiveness of the strategy undertaken.

5) Implementation of return protocol and return review of third party fund and financing results.

D. Adequacy of Risk Control System The Bank recognizes that the process of applying

effective risk management must be complemented by a reliable risk control system. To ensure the adequacy of the risk control system, the Bank conducts periodic reviews, namely:1. The Risk Management Unit conducts reviews

including methods, assumptions, and variables used to measure and establish risk limits;

2. Internal Audit Work Unit reviews include the reliability of the risk management framework and the implementation of risk management by business units and/or support units.

E. Consolidation and Integration of Risk Management with the Parent Company

The Bank consolidates and integrates the implementation of risk management with its parent company (Bank Mandiri) as a synergy for the implementation of risk management between subsidiary and parent company. In addition to meeting regulatory requirements, consolidation and integration are also intended to meet internal needs. This is because the continuity of the business of the bank and the holding company is inseparable from the effect of risk exposure either directly or indirectly from the respective business activities.

The consolidation and integration of risk management includes accounting system and risk management information system, policy architectures and operational procedures, as well as tools and methodologies.

In addition to the above, the form of consolidation and integration of risk management is also realized through the implementation of Risk Awareness Survey, Integrated Risk Management Forum and Annual Risk Consolidation Forum, and other consultation/sharing forums as needed.

F. Risk Profile Assessment Risk profile assessment aims to provide information to all

stakeholders regarding the business risk conditions faced by the bank. Risk profile includes assessment of inherent risk and quality of risk management implementation.

The composite rating of bank risk profile as of December 31, 2017 is 2 or low to moderate with the predicate that the inherent risk of the bank as a whole is Low to Moderate. The quality of risk management implementation is satisfactory.


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Assessment results through self-assessment:

No Type of Risk Inherent Risk Quality of Risk Management

Implementation

Composite Risk Rating

Trend

1 Credit Risk Moderate Satisfactory 2 Stable

2 Market Risk Low Satisfactory 1 Stable

3 Liquidity Risk Low Satisfactory 1 Stable

4 Operational Risk Moderate Satisfactory 2 Stable

5 Legal Risk Low Satisfactory 1 Stable

6 Reputation Risk Low Satisfactory 1 Stable

7 Strategic Risk Moderate Satisfactory 2 Stable

8 Compliance Risk Low to Moderate Satisfactory 2 Stable

9 Investment Risk Moderate Satisfactory 2 Stable

10 Return Risk Low to Moderate Satisfactory 2 Stable

Bank Composite Risk Predicate in General

Low to Moderate Satisfactory 2 Stable

Based on the evaluation of the risk profile, the Bank has made efforts to strengthen risk management by:1. Credit Risk and Investment Risk

a. Reducing the risk of concentration of financing, especially on core debtors by enlarging the retail segment portfolio

b. Improving financing quality and increasing CKPNc. Conducting ongoing training for the front end, middle end and back end

2. Market Risk Developing a market risk monitoring application system3. Liquidity Risk

a. Performing regular testing of credit line from counterpartyb. Developing the application of liquidity risk management information system

4. Operational Riska. Improving business process of operational transactions through EDC utilizationb. Strengthening controls in operational activities through the recruitment of personnel and HR competencies

for key positions in branches, and the recruitment of employees, competencies and infrastructure of regional business control

c. Strengthening IT infrastructure through application development, IT security, and Disaster Recovery Center (DRC)

5. Legal Risk Increasing the Bank’s personnel’s legal awareness on an ongoing basis6. Reputation Risk Improving customer complaint settlement according to service level agreement (SLA)7. Strategic Risk

a. Increasing fee based incomeb. Improving financing efficiency and growthc. Developing strategic risk management information system applications

8. Compliance Riska. Empowering the internal function of sharia advisory to assess the suitability of bank products/activities

with sharia principlesb. Improving reporting accuracy and order to external parties


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c. Increasing awareness to compliance risk including compliance with Sharia principles

9. Return Risk Strengthening monitoring of cost of fund and gross

revenue and decreasing of special ratio.

G. Bank’s Regulation and Anticipation 1. In 2017, the Financial Services Authority issues

POJK No.50 / POJK.03 / 2017 on the Obligation of Compliance of the Net Stable Funding Ratio. The Bank has reviewed the NSFR ratio. Based on these studies, the bank has over 100% NSFR.

2. In order to implement International Financing Reporting Standard (IFRS) 9, the Bank has prepared the necessary supporting equipment.

H. Development Plan of Risk Management The Bank aligns the development of risk management

with business development, internal conditions, and external conditions including new regulations. The risk management development plan that will be conducted in 2018 includes:

No Aspect Development

1. Tools & Methodologies

1. Industrial classification methodology

2. Rating system methodology for commercial financing

3. Control Testing and Key Risk Indicator

4. Pricing for financing model5. New Scoring Model for Business

Banking segment6. Financing Origination System

(FOS)7. Watchlist tools

2 Culture Risk awareness development program

IMPORTANT LAwSUITS IN 2017Important Lawsuits Faced by BSMImportant lawsuits are civil and criminal lawsuits faced by BSM during the reporting year period and have been filed through a legal process.

The lawsuits faced by BSM 2017 during 2017 are as follows:

Legal Issues Number of Issues

Civil Criminal

Have been completed (already have permanent legal force)

22 9

In the process of completion 190 26

Total 212 35

BSM's efforts in mitigating legal risks related to the intensity of the number of lawsuits faced by BSM are:1. The use of external lawyer services in assisting the

handling of legal cases containing compensation claims.2. Socialization of legal awareness in financing and funding

through training at head office/branches.3. Provision of potential losses.

The Case Faced by the Board of Commissioners and the Board of Directors As of 31 December 2017, no case was faced by BSM’s Board of Commissioners and Board of Directors.

The Case Faced by the SubsidiariesAs of 31 December 2017, no case was faced by the subsidiaries.

Administrative SanctionIn 2017 there was an administrative sanction from the regulator in the form of penalties imposed on BSM amounting to Rp2.69 billion.


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ACCESS OF INFORMATION AND COMPANY DATABSM provides the widest possible access to the public on the acquisition of information regarding identity and track record, business development, products and services offered, as well as the latest news related to the business of BSM through various media as follows:a. Direct, covering General Meeting of Shareholders (GMS), Public Expose, Press Conference, Media Briefing, Media Visit,

Forum Group Discussion, Branch Visit, Socialization of Literacy and Inclusion of Sharia Banking, Morning Prayer Forum, Islamic Study Forum, socialization to Regional Offices and Branch Offices, etc.

b. Nondirect, covering Annual Report, Financial Statement Publication, Press Release, Website www.syariahmandiri. co.id, social media (Facebook, Twitter and Instagram), newsletters, Bank’s internal media: intranet, Bank SE portal, BSM KNOWN, ETHIC (internal magazine BSM).

Command CenterCommand Center serves as a coordinating link between work units in order to anticipate important events that impact on negative publications and reputation risk.

The Command Center Secretariat is located at the Head Office with members as follows:• Head of Audit Work Unit• Head of Human Capital Work Unit• Head of Networks Unit• Head of Legal Work Unit• Head of Corporate Secretary


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PRESS RELEASEImpact of Press ReleaseAll published press releases have been approved and are known by BSM. From all reports, BSM has no financial and non-financial impacts that can affect the stability of business performance. Therefore, BSM assesses that published press releases are positive and constructive and have a positive influence on the company's reputation

CODE OF CONDUCTCode of Conduct (CoC) is a part of good corporate governance. CoC regulates Sharia, professional, responsible, reasonable, proper and trustworthy conduct for the Bank's Role, in conducting business relationships with customers/potential customers, partners/potential partners, co-workers and other stakeholders.

BSM’s personnel have a responsibility in bringing CoC into every behavior, so that it will not harm either the individual or the Company because the behavior of the person reflects the business ethics of the Company. BSM’s CoC consists of:

1. Conflict of Interest Conflict of interest is a condition in which members

of the Board of the Bank in carrying out its duties and responsibilities have interests beyond the interests of the service, both related to personal, family, or the interests of other parties, which allows the member of Board of the Bank to loss the objectivity in making decisions appropriately based on the authority given by the Bank.

The scope consists of: a. The Bank’s employees shall refrain from activities

that could give rise to a conflict of interest. b. The Bank’s employees must act in a responsible and

respectable and free from the influence that allows the loss of objectivity in the discharge or cause the Bank lost business and/or reputation.

c. The Bank’s employees are prohibited from misusing Bank corporate identity. Corporate identity can only be used for the benefit of the Bank and with the consent of the Bank.

2. Prohibition of Risywah Each staff of bank should be able to take firm steps to

not give/receive risywah to/from customers/prospective customers, partners/potential partners and civil servants


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or state officials related to his position as Bank’s staff. 3. Confidentiality

a. Each staff of bank must maintain the confidentiality of any data or information related to the Bank or its customers relating to the Bank and only use it for the benefit of the Bank.

b. The spread of data or information regarding the Bank and its customers relating to the Bank can only be done by regulation.

4. Abuse of Office Each staff of the bank is prohibited from abusing their

authority for personal benefit or the other, either by themselves or influence / other Bank staff forced to do something that is not in accordance with the applicable rules, which can result in losses for the Bank

5. Insider’s Behavior Each staff who has information about the Bank is

prohibited from making use of such information for personal gain or other parties that may result in losses for the Bank.

6. The Integrity and Accuracy of the Bank’s Dataa. Each staff both individually and together must

be able to be involved in things that can weaken or degrade the integrity of the banking system in Indonesia.

b. Each staff must take decisive steps to ensure that they are not being used for criminal activities and/or other illegal activities.

c. Each staff should be introspective and avoid the involvement of the Bank in money laundering activities, including for individuals not involved in the use and/or drug trafficking, or terrorism.

7. Employee Account Management The Bank’s employees must manage its personnel

account wisely and not utilize such accounts for illicit activities.

8. Annual Disclosure The Bank is required to complete annual statements

with honesty and accountability. 9. Sanctions of Abuse/Non-compliance The Bank’s employees shall comply with the Code of

Conduct guidelines as the Code of Conduct, both inside and outside the Bank who brought the image of the Bank with full responsibility. Imposition of sanctions for violation/non-compliance with the Code of Conduct refers to the applicable employment regulations.

Socialization of Code of ConductSocialization of the Code of Conduct to all levels of management and employees is done by distributing Code of Conduct guidebook. In addition, socialization is also conducted by the Board of Directors and structural officials in their respective work units. BSM has a CoC Introduction Program by internalizing CoC to new employees through training to provide an understanding of the meaning of conflict of interests and obligations to avoid conflict of interest conditions in the performance of duties and responsibilities.

Sanctions for Each Type of ViolationThe employee who commits an offense shall be liable to sanctions in accordance with the materiality, nature and frequency of the violation. Sanctions procedure refers to the Articles of Association, Company Regulations and applicable regulations.

Implementation and Violation of Code of Conduct 2017Optimal implementation of CoC is a benchmark for successful implementation of Good Corporate Governance. The commitment and integrity of each of the Bank's personnel of implementing Good Governance is a reflection of high effort and enthusiasm for the realization of a sustainable Bank.

Type of Violation 2016 2017Risywah Practice 1 1Abuse of Authority 0 0

BSM management consistently encourages the Bank to avoid conflict of interest. Any conflict of interest that may cause harm to the Bank has been acted upon as a form of accountability to stakeholders. As an example of movement to minimize the condition of conflict of interest driven by management is La Risywah movement, No Kick Back and No Special Payment which is a step to increase awareness of all BSM personnel to always work properly and responsibly and objectively professionally.

In addition to the rules regarding CoC, BSM also has rules relating to the prohibition of giving gifts or souvenirs to the Board of Directors, Board of Commissioners and other Bank’s personnel who are on business duties or visits to the work units as arranged in circular letter No.11/033/UMM dated January 15, 2009 concerning the Prohibition


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to Branch Office for Giving Souvenirs or Gifts to Members of the Board of Directors and/or Commissioners of Bank Conducting Business Trips and/or Visits.

wHISTLEBLOwING SYSTEMwhistleblowing System Policy The Bank already has a policy regulating whistleblowing system as an effort to encourage early detection of any deviation action. Some of the provisions underlying the application of whistle blowing in BSM are as follows:a. RI Law No. 21 of 2008 dated July 16, 2008 concerning

Sharia Banking; b. Bank Indonesia Regulation No. 1/61PBI/1999 dated

September 20, 1999 on Assignment of Compliance Director and Standard of Implementation of Bank Internal Audit Function (SPFAIB);

c. Bank Indonesia Regulation No.11/33/PBI/2009 dated December 7, 2009 concerning Implementation of Good Corporate Governance for Sharia Commercial Banks;

d. Bank Indonesia Regulation No. 13/2/PBI/2011 dated January 12, 2011 concerning Implementation of Commercial Bank Compliance Function;

e. Bank Indonesia Circular Letter No. 5/22/DPNP dated September 29, 2003, concerning Guidelines on Standards for Internal Control Systems for Commercial Banks;

f. Bank Indonesia Circular Letter No. 13/28/DPNP dated December 9, 2011 regarding the Implementation of Anti- Fraud Strategy for Commercial banks;

g. Circular Letter No. 14/002/UMM dated May 22, 2012 concerning Anti-Fraud Policy of Bank Syariah Mandiri;

h. Control Standards and Procedures No. SPP/07-2016, dated December 30, 2016 regarding Standards of Internal Audit Control Procedures.

Implementation MechanismThe Bank, through the Internal Audit Unit, has obligation to accept and response all reports regarding violations or irregularities with the following mechanism:a. Submission of reports of alleged irregular acts shall

be conducted by the Reporting Entity containing initial information on the form of deviation, the parties involved, location/work unit of deviation, estimated loss value (if any), and chronological deviations.

b. IAG opens a grievance channel from several sources (SMS, Whatsapp, BBM, Mail, phone, Email complaint @ bsm. co.id) or comes directly to IAG to report any indications of irregularities or fraud.

c. The Internal Audit Work Unit receives information and conducts preliminary analyzes of information on fraudulent allegations and collects additional information in the form of written evidence, written statements of witnesses and perpetrators, and other evidence.

d. Especially for initial information sourced from parties other than DCOR/RBC, the Internal Audit Work Unit informs DCOR/RBC according to the location of the alleged case. The goal is that DCOR/RBC is updated on issues in its work area and determines the handling of cases directly by DCOR/RBC or collaboration with the Internal Audit Work Unit.

e. The Internal Audit Work Unit concludes the results of an analysis of the initial information on the alleged fraud. Conclusions can be:• Eligible for implementationof investigationsbythe

Department Special Audit; and • Notworththeinvestigation.

f. If it is not yet feasible for investigation, the Internal Audit Work Unit informs the Non-Audit Service Provider or Non- Audit Special Unit for follow-up through a non-investigation mechanism. The informant may submit back to the Internal Audit Work Unit if there is any additional incremental evidence at any time.

g. If appropriate investigation, the Department Head Special Audit appoints the Audit Team to prepare pre-audit and letter of assignment which is then approved by the Head of Internal Audit Work Unit or 2 (two) Alternate Internal Audit Working Officials.

h. The Audit team initiated the investigation and compiled the hypothesis.

i. The Audit Team collects information and evidence to prove the hypothesis.

j. The Audit team tests the hypothesis by evaluating the accumulated evidence.

k. If the hypothesis is proven, the Investigation Audit Team shall prepare the Report on the Result of the Investigation Audit and the Executive Summary.

Number of Complaints and Follow-UpsDuring 2017, IAG received 77 complaints with follow-up measures as follows:

Number of Complaints

STATUS

DoneOn Desk/

On SiteInvalid for Follow Up

Not Followed

Up Yet

77 28 16 9 24


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whistleblower ProtectionBSM is committed to protecting the identity of the whistleblower in relation to the reported violation. This protection is provided to encourage whistleblower’s courage in reporting violation and protecting him/her from acts that may threaten or harm him/her. Protection of the whistleblower includes:a. Confidentiality guarantee of the whistleblower’s identity

and content of the report.b. Security guarantee for the whistleblower and his/her

family.c. Protection guarantees against harmful treatments.d. BSM guarantees the confidentiality of the reported

identity until the status is changed into ‘investigated’.

BAD CORPORATE GOVERNANCE PRACTICEThroughout 2017, BSM did not practice bad corporate governance. BSM always strives to implement good corporate governance by complying with all regulations related to BSM's business activities and other regulations, including performing its obligations well.

Until 2017, in carrying out its activities, BSM and the Board of Commissioners and Board of Directors, have never conducted bad corporate governance practices, including those related to:1. Environmental pollution;2. Violations of law;3. Non-compliance with tax obligations;4. Violations of the rights of employees;5. Non-compliance of financial reporting with applicable

regulations.

BUY BACK SHARES AND BUY BACK BONDSReferring to SEBI No.12/13/DPbS, regarding the Implementation of GCG for Sharia Commercial Banks and Sharia Business Units, dated April 30, 2010, the meaning of Buy Back Shares and Buy Back Bonds is an effort to reduce the number of shares or bonds that have been issued by buying back such shares or bonds, whose payment procedures are carried out in accordance with applicable regulations. In 2017, BSM did not buy back shares or buy back bonds..

INFORMATION TECHNOLOGY REPORTIn addition to focusing on completing the core banking system (CBS), BSM also develops information technology (IT) such as WISE project (workflow integrated system engine) to support financing distribution, SAFE (Smart Automated Funding Engine) project particularly related to cash management product development and strengthening against the Bank's management information system (MIS).

The work program implemented in 2017 is directed to support the company's work plan to succeed "Corplan" and to improve the use of Information Technology (IT), which includes routine and strategy work programs.

The routine activities include:a. Support the branch offices;b. Maintaining data capacity by archiving, backing up,

and cutting the database periodically;c. Maintaining hardware performance to support branch

operations;d. Conducting orderly administration in settling the

probleme. Maintaining operational helpdesk SLA with focus

on handling operational with Core and Non-Core applications;

f. Supervising and controling the implementation of maintenance work of the device by third parties.

The strategic activities include:a. Providing FOS application for all segments in 1 WISE

platform (Working flow Integrated System Engine);b. Integrating switching applications in 1 platform,

namely SmartVista, Setup of Visa Debit Card (Chip Card) and NSICCS National Standard (National Standard Indonesia Chip Card Specification) through NICE (New Intelligence Card Engine) corplan project;

c. Developing Cash Management System module, Lakupandai, Internet Banking and Mobile Banking in 1 platform of SAFE (Smart Automotion Funding Engine);

d. Developing a Management Information System (MIS) and Performance Management System (PMS) in 1 IDEA (Integrated Data Exploring Automotion) platform;

e. Synergizing with Mandiri’s subsidiary, Mandiri Tunas Finance (MTF), through the development of Motor Vehicle Financing Service (BSM Oto);

f. Enhancing iBSM Core Banking System for regulatory and audit requirement;


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g. Synergizing with Bank Mandiri through Sharia Banking Services (LSB), ATM Card Printing, Product Referral and Data Center Infrastructure.

1. Strategy In Facing Information Technology Risks The IT Group continue to implement strategies to deal

with the risks of information technology by:a. Reporting periodically to Director of Field related

to implementation of Information Technology (IT) project;

b. Implementing a Disaster Recovery Plan (DRP) trial in accordance with regulatory requirements that require banks to conduct DRP trials at least once a year. BSM has conducted 5 (five) times of DRP trials during 2017 to ensure IT services are always ready when disaster strikes;

No. Date Testing Conducted

1. April 13, 2017 Core Banking System, Switching and e-channel (mobile banking, internet banking)

2. June 10, 2017 Core Banking System, Switching and e-channel (mobile banking, internet banking)

3. August 11 & 18, 2017 SKN-BI Gen 2

4. August 18 & 25, 2017 BI-RTGS, BI-SSSS dan

5. BI-ETP Swift

September 8 & 15, 2017

Swift

2. Development of BSM’s Information and Technology To improve service quality and support the company's

strategy through BSM 2016-2020 initiative core plan, then in 2018 BSM will conduct three initiatives:a. Truly 24 Hours Service

1) Develop monitoring tools used as a reporting tool related to critical server performance through WhatsApp;

2) Conduct health checks or routine checks on conditions of utilization and technical compliance and security of IT device application systems;

3) Perform a Command Center setup used for the IT operational control room that works for 24 hours;

4) Perform Data Centralization

a) Relocation/replacement of IT equipment in Plaza Mandiri Data Center to Rempoa Data Center

b) Replacement of IT devices in Sigma Surabaya Data Center

5) Perform capacity Upgrade, such as T24 engine and Non-Core machine;

6) Develop performance management application that aims to monitor end-to-end performance;

7) Conduct bandwidth management across all outlets as a priority of data communications throughout the outlets used for transaction services.

b. IT Enabler1) Project Management by doing project

prioritization include:a) APIb) Islamic Sector Solutionc) Hospital Sector Solutiond) QR Paye) Multi Payment

2) Development Method by applying some application development methods include:a) Waterfall, Agile, Scrumb) Lean IT Processc) Testing Management Tools

3) Governance ITa) Updating System Development Life Cycle

(SDLC)b) Updating IT Strategic Plan (ITSP)

c. Digital Banking1) e-Channel Modernization

a) Completeness of bill payment on e-channel, top 20 billers

b) Availability of the channel 24/7c) Basic function of the channels, transfers,

bill paymentd) Implementation of new mobile and

internet bankinge) On Us transaction on Mandiri ATMf) Capability of Omni Channel across channelg) Focus on mobile and web application

with covered full customer journey, on boarding, transaction, services

h) QR Code Payment for Physical and Non Physical merchant


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i) Integration with internal channels such as social media, retailer, aggregator agent2) E-commerce Business

a) Implementation of connection with one ecommerce payment gatewayb) Implementation of connection with one of Multi Payment Gatewayc) Real-time reconciliation for market place and sellerd) Connected with loan product and simulatore) QR code payment and authorization via mobilef) Acquiring platform for other sharia banks

The duties and responsibilities of the parties in the IT Strategic Initiative organizations are described among others as follows: a. Project Sponsor

1) Commitment to strategic initiatives2) Ensuring the implementation of strategic initiatives in line with strategic aspirations in the Directorate.3) Reviewing, receiving reports and giving directions to GH In-Charge/Project Owner for implementing

strategic initiatives.

b. Project Owner (GH In-Charge) 1) Responsible for the implementation of strategic initiatives2) Reporting progress directly to PMO every week regarding the development of the status of strategic

initiatives.3) Attending meetings with PMO and Steering Committee.4) Appointing PIC of Initiatives to manage the implementation of day-to-day strategic initiatives

c. Working Team Assisting Project Owner and PIC of Initiatives to implement technical strategic initiatives.

d. Program Manager (PM) 1) Reporting performance initiatives directly to the Steering Committee.2) Guarding and monitoring the running of strategic initiatives.3) Cooperating with the owner of strategic initiatives to ensure consistency of implementation of

strategic initiatives.4) Responsible for tracking the initiative as a whole.5) Identifying the problem/risk and solving/escalating the problem if needed.6) Supporting team when initiative underperforms and supporting the resolution of cross-function

issues.

e. Program Management Office (PMO) Assisting Program Manager in coordinating the implementation of IT Strategic Initiatives and ensuring

the targets are achieved according to plan.

f. Co Project Owner (GH Support) Ensuring support from led groups, on implementation of strategic initiatives.


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FUNDS DONATION FOR SOCIAL AND / OR POLITICAL ACTIVITIESDuring 2017, information on the provision of funds in social activities can be seen in Corporate Social Responsibility (CSR) chapter and there was no political funding done by BSM.

NON-HALAL INCOME AND ITS USAGEV Non-halal income and its use in sharia banks must be disclosed in annual report of implementation of Good Corporate Governance. It is regulated in SEBI No.12/13/ DPbS dated 30 April 2010 regarding Implementation of Good Corporate Governance for Sharia Commercial Banks and Sharia Business Units. As a form of GCG implementation in relation to non-halal income and its use, BSM has internalized such regulation in Standard Operating Procedures (SPO) of BSM’s Corporate Secretary with registration number SPO/06-2016 valid since July 27, 2016. The SPO regulates the following provisions:1. Partner Institution is a zakat institution that has a track record in distributing zakat/infaq/ social funds that

is legally incorporated and appointed a partner of Bank in the distribution of zakat/infaq/social funds. As a form of GCG implementation and to avoid conflict of interests, the disbursement or channeling of Social Fund shall not be done to:a. Institutions where the Managers of the Bank (the Board of Commissioners and the Board of Directors),

Sharia Supervisory Board, or Executive Officers of the Bank serve in the management of such institutions.

b. Individuals or institutions whose management has a family relationship with the Management of the Bank, Sharia Board as well as the Executive Officer of the Bank.

2. Non-Halal Income Non-halal income is the source of fund of social fund of the Bank that consists of the following:

a. Social Funds from Penalties, i.e. funds derived from penalties for late installment payments.b. Social Funds from Demand Deposit Accounts, i.e. social funds derived from demand deposits received

by the Bank from placement in a conventional bank.c. Fines, i.e. funds derived from penalties imposed on customers who can afford to pay but delay the

payment in purpose in the form of a sum of money with unspecified amount on the basis of the agreement and not made when the contract is signed.

d. Other Social Funds, i.e., Benefit Funds derived from commissions, fees or other incomes from the bank’s partners other than eligible earnings in accordance with management provisions.


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\The following is the report on the use of income and use of BSM’s social funds in 2017:

Source of Funds 2017 2016

Source of Social Funds

Penalties 49,531,929,337 40,167,582,154

Donations - -

Non-halal Income 76,256,984 428,227,952

Other Social Funds 4,617,189 80,763,148

Total Amount of Social Funds 49,612,805,511 40,676,573,254

The social funds are distributed through:

LAZNAS BSM 21,349,000,000 36,990,032,769

Total use of the social funds 21,349,000,000 36,990,032,769

Foreign exchange gains (30,795,673) 121,101,197

Increase/decrease of the social funds 28,294,601,183 3,565,439,288

Beginning Balance of Social Funds 136,051,352,920 132,485,913,632

Ending Balance of Social Funds 164,345,954,103 136,051,352,920


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CoRPoRATe SoCiAL

ReSPoNSiBiLiTy

07

BSM believes that a company could grow and develop by performing ethical and responsible business practices. Therefore, BSM positions Corporate Social Responsibility (CSR) activity within the Company’s framework to achieve sustainability in the long term. Definition of sustainable business is the Company not only trying to maximize the economic performance for shareholders, but thoroughly trying to provide maximum contribution in the aspect of social and environmental.

Corporate Social Responsibility (CSR) is BSM commitment with aim to provide added values to all stakeholders to support the Company’s growth. To achieve that aim as well as ensure the quality of the Company’s growth, BSM designed and implemented various initiative programs including all operational aspects and dedicated to fulfill the expectation of all stakeholders.

In line with the Company’s mission related to social responsibility with objectives of:• Assist the growth and development of small

businesses and cooperatives which is independent, tough and competitive, and able to promote employment through professional management.

• Develop development patterns of small businessesand cooperatives, which has the potential to provide long-term mutual relationship with the Company’s business through the distribution of funds partnerships and sustainable development, with advanced aspects of equality, independence, professionalism and ethics.

• Participate in environmental conservation programand help improve the quality of life of the society

Corporate Social Responsibility (CSR) activity is a material part of BSM framework to maintain sustainability in the long term.

including the education, health, and welfare. • Also supporting the improvement of thequality of

education, health, religious life, and other general advice.

CSR policy in BSM is taken through triple bottom lines approach that includes economic indicators, environmental indicators, and social indicators. Through that policy, BSM hopes not only it is beneficial to shareholders, but also wider stakeholders including society and environment. In other words, BSM is trying to optimize Company’s profit in line with aim to provide the highest benefit for people and planet.

BSM believes that this thorough approach will support to achieve sustainable development goal, which is development activities taken to fulfill current generation needs without sacrificing future generation interest.

BASIS OF CSR IMPLEMENTATION implementation of BSM refers to the following basis:• Law No. 40 of 2007 regarding Limited Liability

Companies Corporate Social and Environmental Responsibilities is a commitment of the Company to active and to participate in the sustainable economic development to improve life quality of and environment that benefits, not only for the Company, but also for the relevant community and people in general.

• Law No. 25 of 2007 regarding Capital InvestmentEvery investor is required to: - Implement corporate social responsibility.


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- Respect cultural tradition of surrounding community wherein the business activities of the investor is located.

- Elucidation of article 15 point b: “corporate social responsibility” refers to the responsibility attached to every invested company to create a relationship that is in harmony, balance and in line with the values, rules and culture of neighborhood communities.

- Law No. 21 of 2008 article 4 clause (2) regarding Sharia Banking.

CONCEPT OF BSM CSRCSR of BSM is based on the following 3 (three) pillars: 1. Spirituality (Character Building) is a Foundation that spirited BSM in its activities, namely on behalf and for

Allah SWT (vertically) and jointly with people (ummah) to develop a noble civilization (horizontally). 2. Nationalism (National Contribution) is Creating for the State, which is a commitment of BSM in living the

independence as well as participated in development, This spirit is a basis for BSM as a joint entity with the community.

3. Prosperity (Economic Empowerment) is Supervision and development of economy of the community through capital assistance, improvement of competence, and provocation of entrepreneur souls.

Bank believes that the company, the community, and environment can work together and walk hand in hand to achieve the same goal. Therefore, BSM put CSR activities as the core strategy and make it as a source of innovation and efficiency to improve companies competitive advantage.


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BSM - CSR Concept Scheme Graph

STRUCTURE OF CSR MANAGEMENT To achieve well management of CSR activities and provide maximum results, BSM established an organization to handle CSR activities, which is attached to the Corporate Secretary.

CSR TOGETHER wITH LAZNAS BSM In the implementation of CSR, BSM cooperating with LAZNAS BSM / partner institutions in the disbursement of zakat funds and implementation of humanity programs.

Working reference implementation of CSR programs is the Agreement of Cooperation (MCC) BSM and Amil Zakat Nasional (LAZNAS) BSM: No. 18/586-PKS/DIR and No. 15/007PKS/LAZNAS dated August 30, 2016 on the distribution of Zakat Fund, Infaq Fund and Social Fund. LAZNAS BSM is the main partner of PT Bank Syariah Mandiri in CSR activities. BSM LAZNAS establishment was inaugurated by the Minister of Religious Affairs No: 406 of 2002 on Conservation of Yayasan Mitra Bangun Sejahtera Umat as Amil Zakat.

The cooperation is an effort to fulfill law mandate, which isLaw No. 21 of 2008 Article 4 clause (2) that requires the social fund to be distributed through zakat management organizations, then Bank cooperates with Lembaga Amil Zakat Nasional Bangun Sejahtera MItra (Laznas BSM) to distribute company’s zakat fund and social fund.

As a strategy in order to prepare effective and efficient plans, the implementation of CSR programs based on the

results of the survey and mapping of the environment and surrounding communities. Furthermore, a program that had been developed was carried out with actively involve the communities with a bottom-up mechanisms and partnership with other stakeholders. So that the program can be realized well and provide optimum benefits, then program implementation method is adjusted with each region condition, and coordinated with related parties, mainly local government, and other parties that directly involved.

CSR Fund (LAZNAS)The implementation of CSR program in BSM has 2 (two) fund sources, which are Zakat Infak Shadaqah (ZIS) and Qarhdul Hasan Fund, with details as follows: 1. Zakat Infak Shadaqah (ZIS) Fund Legal Basis for the Management of Zakat Funds LAZNAS BSM as an amil zakat institution designated and

mandated to manage zakat funds from BSM complies with prevailing rules and regulations. The legal basis for the management of zakat funds is as follows:a. Law No. 38 of 1999 which was converted into Law No.

23 of 2011 on Management of Zakat. b. Religion Ministerial Decree No. 373 of 2003 on the

implementation of Law No. 38 in 1999 on Zakat Management.

c. Decision of the Director General of the Islamic Community Guidance and Hajj Affairs No. D/291 in 2000 concerning Technical Guidelines for Management of Zakat.

d. Decree of the Foundation Board of Trustees People Mitra Bangun Sejahtera No. 001 / DP / YBSMU / VI / 2009 dated 8 June 2009 concerning Outline Management Policy Institute of the National Zakat Yayasan Bangun Sejahtera Mitra Umat (LAZNAS BSM).

e. Standard Operation Procedure (SOP) in accordance with the decree Yayasan Bangun Sejahtera Mitra Umat No. 09/001 /LAZNAS BSM.

Concept of Zakat Fund Management Collection and distribution of zakat by LAZNAS BSM in

relation to BSM is based on the Cooperation Agreement (PKS) dated August 30, 2016: No BSM: 18/586-PKS/DIR and No.LAZNAS BSM: 15/007-PKS/LAZNAS. Furthermore, the concept of zakat distribution refers to the MUI Fatwa No. 15/2011 dated March 17, 2011 about the withdrawal, Maintenance and Distribution of Zakat Fund) expressed as Zakat muqayyadah (designation has been determined


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by Muzakki) while still referring to ashnaf zakat.

In terms of fund raising, BSM periodically distributes Zakat funds (from the company’s profits, customers, employees), Infaq funds (voluntary contributions from customers, employees and communities) and Program funds (of income Non-Halal BSM) through LAZNAS BSM. The scope of the distribution of zakat implemented through the program: a. Mitra Umat (Ummah Partner) program, Didik Umat (Ummah Education) program and Simpati Umat (Ummah

Sympathy) which still referring to 8 ashnaf zakat (mustahik), namely: Fakir, Poor, Amil, Muallaf, Riqob, gharimin, Fisabilillah, Ibnu Sabil.

b. BSM Fellowship Program I for orphans/children of employees or retired employees who passed away.

Table of Zakat Distribution Concept

No. Ashnaf Assessment Methods/Criteria Beneficiaries

1. Fakir Certificate of Disadvantaged (SKTM) from the village, to a review of the location, income below the minimum wage.

Individuals, orphanages, boarding school (which accommodate indigent), the Foundation fosters fakir and poor people.

2. Poor

3. Amil SK Hiring, Contracts Work. Employees of LAZNAS BSM.

4 Mualaf Letter converted to Islam from the mosque. Orang yang baru masuk islam.

5. Riqob -

6. Gharimin Certificate of Debt Orang yang terlibat hutang untuk kebutuhan pokok.

7. Fisabilillah • LetteractiveinIslamicactivities.• ThemanagementofDKM/TakmirMasjid

(for the construction of a mosque).

Individual (And, Religious Teacher), Mosque located in Lower middle class environment.

8. Ibnu Sabil The certificate of loss from the police Certificate of domicile.

People who in the course of the run or taxable supplies and disaster.

Distribution of Zakat Fund Zakat Fund comes from company zakat (BSM), public and customers’ zakat, as well as Bank employees zakat. In 2017,

BSM has distributed Rp26.03 billion zakat, while the distribution of zakat in 2016 amounted Rp24.32 billion.

Table of Zakat Fund Source (in Million Rupiah)

Zakat Fund Resources 2016 2017

Zakat from Bank 11,146 12,489

Zakat from customers and general

2,697 2,658

Zakat from Bank’s employees 10,478 10,882

Total souce of zakat 24,321 26,092

Table of Zakat Fund Distribution (in Million Rupiah)

Zakat Fund Distribution 2016 2017

Initial balance of zakat 11,740 13,295

Zakat fund from Bank 24,321 26,029

Zakat fund total 36,061 39,324

Zakat fund distribution 22,766 24,636

End balance of zakat fund 13,295 14,688


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The usage of zakat fund from BSM through LAZNAS BBSM is distributed in the form of 3 (three) main programs as follows: 1. Mitra Umat Program 2. Didik Umat Program 3. Simpati Umat Program

In 2017, zakat fund distributed through LAZNAS BSM amounted to Rp24.64 billion, meanwhile in 2016, zakat fund distributed through LAZNAS BSM amounted to Rp22.77 billion. The detail is as follows:

Table of Corporate Zakat Fund Distributed Through LAZNAS BSM in 2017 (in Rp Million)

Program Zakat

2016 2017

Mitra Umat - 1,183.08

Didik Umat 2,359.84 21,819.72

Simpati Umat 3,198.00 17,195.30

Buy Assets Under Management (Land)

- -

Amil Portion 403.45 3,325.95

Total 5,961.29 43,524.05

Table of Corporate Zakat Fund Distributed in 2017 by Asnaf (in Rp Million)

No. Asnaf Amount (Rp)

2016 2017

1 Fakir 74.27 205.73

2 Miskin 5,280.48 32,293.92

3 Gharimin 6.50 17.44

4 Muallaf 0.00 605.00

5 Ibnu sabil 0.00 0.00

6 Riqob 0.00 0.00

7 Fii sabilillah 196.60 7,076.00

8 Amil 403.45 3,325.95

9 Beli aset kelolaan (tanah

0.00 0.00

Total 5,961.30 43,524.05

While based on the zakat recipients, through the Mitra Umat (Ummah Partner), Didik Umat (Ummah Education) and Simpati Umat (Ummah Sympathy), BSM and LAZNAS BSM been channeling zakat funds in accordance with the 8 (eight) aznaf categories of zakat recipients. By 2017, the

number of zakat recipients reached 68,677 people and institutionally reached 6,029 institutions.

Table of Zakat Fund Beneficiaries in 2016

Program Zakat Beneficiaries in

2016

Zakat Beneficiaries in

2017

Indi-viduals

Insti-tutions

Indi-viduals

Insti-tutions

Mitra Umat - - 8 17

Didik Umat 313 13 9,136 7

Simpati Umat 9,347 30 59,533 6,008

Total 9,660 43 68,677 6,029

2. Qarhdhul Hasan Fund Qarhdhul Hasan Fund comes from Penalty, Non-Halal

Income and other Social Fund. Qarhdhul Hasan Fund income per 31 December 2017 amounted to Rp49.61 billion, bigger than the previous period amounted to Rp40.68 billion. Qarhdhul Hasan Fund has been channeled through LAZNAS BSM in 2017 amounted to Rp21,349 billion.

Table of Qarhdhul Hasan Fund (in Million Rupiah)

Source of Fund 2016 2017

Penalty 40,168 49,532

Non-Halal Income 428 76

Other Social Fund 81 5

Total Sources of Virtue Fund 40,677 49,613

Table of the Use of Qarhdhul Hasan Fund)

The Use of Qarhdhul Hasan Fund

2016 2017

Initial balance of qarhdhul hasan fund

132,486 136,051

Qarhdhul hasan fund from BSM

40,677 49,613

Exchange rate profit (122) 31

Total of qarhdhul hasan fund 173,041 185,695

The use of qarhdhul hasan fund

36,990 21,349

End balance of qarhdhul hasan fund

136,051 164,346


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Qarhdhul hasan fund distribution program is based on 3 pillars as follows: 1. Spirituality (Character Building)

a. Assistance of masjid/mushalla and its supporting facilities

b. Assistance in dawah and religious activities 2. Nationalism (National Contribution)

a. Scholarship for poor studentsb. Assistance for construction of school/Islamic

school (pesantren) c. Assistance for natural disaster

3. Welfare (Economic Empowerment) a. BSM-ized of culinary area b. Assistance for training and working capital c. Assistance for economic empowerment

Services/Activities that are funded by Qarhdhul Hasan Fund distribution program include: buying school facilities and infrastructures, constructing/renovating prayer facilities, etc.

Distribution of Social Fund in 2017

Services/Activities Amount (Rp)

Campus operation vehicle aid 100,000,000

BSM Mengalirkan Berkah 20,338,000,000

Amil Right for Laznas BSM 911,000,000

Total 21,349,000,000

CSR RELATED TO ENVIRONMENT CSR policy on Environment BSM has high commitment to CSR implementation related to the environment, although the core business engaged in the banking business that does not have the direct impact to the environment. This commitment is expressed in: 1. SE No. 8/001/PEM dated on 2 Januari 2006 regarding

Financing Policy Revision.2. Financing Policy Book dated April 2, 2007, which

contains as follows: Provisions on environmental management obligations for financing customers are regulated in: a. Chapter II Article 210 Item E Financing Policy, "Banks

must avoid financing for business fields that do not / do not meet environmental requirements / AMDAL so that it endangers the environment"

b. Chapter VI Item A on Earning Assets Quality (Kualitas Activa Produksi). Evaluation of the quality of financing assets for the pillar of the prospects

for financing customer business is associated with the efforts of customers in preserving the environment.

c. Chapter XI Item D of the Process of Providing Financing for the Sub-section on Earning Financing Analysis. In assessing the technical / production aspects, the Bank is required to carry out an analysis of environmental impacts, including:• Levelofpollutionintheproductionprocess• Whetherthemeanstoavoidpollution/waste

treatment is in accordance with the provisions or not.

• Complaints fromoccupants in thebusiness /factory premises.

• Mustpayattentiontoapplicablegovernmentregulations / provisions, namely whether the applicant / customer has an AMDAL permit from the authorized agency.

3. Circular Letter (SE) No. 9/029-PEM dated July 26, 2007 regarding Revision of Policy Guidelines Chapter VI. About Earning Assets Quality. Sub Chapter A.3.b.3). Assessment of prospects for financing customer business, especially for components related to customer efforts in environmental preservation.

CSR Program on Environment Bank realizes that the continuity of the business entity is also influenced by the environmental ecosystem balance. Efforts to contribute on continuity of ecosystem balance and environmental sustainability continues to be done. It is as BSM’s commitment to participate in preserving the harmony of the universe.

The Use of Material and Energy that are Environmental Friendly and Recyclable BSM has policy based on effectiveness and efficiency principles in using material and energy.In supporting Bank operational activities, BSM uses environmentally friendly material such as paper, ink and others. Related to energy, BSM uses LCGC (low cost green car) vehicle with fuel as provided by government.

BSM considers that material recycling is one of the solid waste management strategy in accordance with the principles of the 3R (Reuse, Reduce, and Recycle). These principles make sure that the utilization of waste materials in the form of new stuff has benefits. In line with this, the use of paper in BSM still trying to apply the principles


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of saving and efficiency. BSM reusing waste paper that unused through the use of waste paper to print BSM internal documents. Besides this, the management has implemented the use of recycled paper or environmental friendly paper in the making of the Annual Report.

Company waste Management System Bank specifically does not have a company waste management system. It is associated with the main business of the company engaged in banking. However, efforts to contribute in applying the principles of 3R (Reuse, Reduce, and Recycle) continue carried out by the Bank.

Consideration of Environment Aspects in Providing Credit/Financing to the Customers As stated in the CSR policy, that BSM has implemented the provision of financing/credit to customers by considering environmental aspect. In the policy in Chapter XI point D regarding Financing Disbursement Process related to Productive Financing Analysis, in the evaluation of technical/ production aspects, Bank conducts an analysis of environmental impact, include: 1. The level of contamination in the production process 2. Facility to avoid pollution/waste treatment in accordance

with the provision or not. 3. Complaints by occupant in the business/factory

environment. 4. Should pay attention to the applicable government

rules/ regulations namely whether applicant/customer has AMDAL license from the competent authority.

Certificate in Environmental Sector Bank runs the business/banking business does not directly relate to utilize/use of natural resources and energy sources. Therefore, BSM does not have the certification in the environmental sector.

CSR RELATED TO EMPLOYMENT, HEALTH AND OCCUPATIONAL SAFETY Employee Health Policy Employee health policy mentioned in Circular Letter (SE) No. 12/007/SDI, dated April 8, 2010, concerning Health Facility of PT Bank Syariah Mandiri with health services facilities as follows: a. Health facilities provision for contract employees,

permanent employees, and employees’ children.

b. Health facilities include in-patient, childbirth, out-patient, general check up (GCU), and abroad medical treatment.

Bank’s commitment related to employment is proved by the fulfillment of the liabilities of company in the form of benefits for employees recognized as an operating expense of the company as in the Bank’s financial statements.

Table of Benefit for Employees (in Rp billion)

Descriptions 2016 2017

Costs of salary, wage, benefit and prosperity of the employees

1,323,399 1,339,142

Costs of employment benefits 59,409 79,420

Medical costs 59,027 67,397

Costs of education and training 25,100 52,602

Costs of social activities 7,146 8,809

Recruitment costs 5,281 5,837

Other costs 5,813 46,055

Total 1,485,175 1,599,262

Policy on Facility and Employment Safety Safety guidelines mentioned in the Manual of Management Manual (Manual Procedure) Chapter II, Sub Chapter B. Maintenance of the working environment No. MP / SI / PK / 2/02, with provisions as follows: 1. Conducting periodic evaluation of the work environment,

especially regarding: a. Complete and proper facilities and work environment. b. Cleanliness of work environment. c. Lay out harmony of the work room. The accuracy of

placing the work facilities. d. Complete and proper security services.

2. The manager makes memos / fills out the form using check list (Form: MP.DHC.II.2.1), notes the work / office environment that is not adequate / needs to be equipped. If there is any inadequacy / lack of equipment, then an evaluation is conducted and proposed to the Group Head.

Besides this, the Bank has the policy on Contingency Plan that is stipulated under SE No.13/009/OPS dated 28 April 2011 regarding Contingency Plan Core Banking System with the following core provisions, among others: a. Organizations of crisis management of headquarter and

branch offices.


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b. Implementation of operations during disaster.This policy aims to ensure that BSM operational can still run well during disaster time.

Equality of Gender and working Opportunity BSM has the motto “Terdepan, Modern, Menenteramkan” The motto means that BSM presents a modern corporate governance by providing security and reassuring for internal (employees) and external (customer/stakeholders). The commitment is reflected by the guarantee of fair treatment of gender equality in employment for every BSM employees. In the management of employees, the Bank apply the 3P principles, namely:1. Pay for Performance, Employees are compensated

according to performance 2. Pay for Position, Employees are compensated according

to position/title 3. Pay for Person, Employees are compensated according

to individual expertise.

The Bank’s policy support to their fair treatment and gender equality to employees are as follows:

1) Implementation of Human Capital Strategy; 2) An employee rewards include: Benefit Performance Work Unit (TPUK) quarterly, incentives and bonus; 3) The application of sanctions for employees who breaches of discipline in the form of coaching, warning (SP1, SP2, SP3) and termination of employment (PHK) for problematic employees (fraud); 4) Mutation, promotion/ rotation/demotion of employees and work unit officials; 5) Provision of appreciation in the form of award of gift/for employees/Branch with achievement; 6) Implementation of screening program for new employees, especially related to family relations; 7) Program of Employee Assessment Center.

Employee Turn OverThe number of employee in 2017 was 15.659 people. Comparing to the total employees of BSM in 2016 that was 16.926 people, turn over level in 2017 was 511 employees or 3.16%. However, this turn over has no significant impact on the financial performance and the entire performance of the company.

work Accident Rate The Bank continues to strive to create a work atmosphere which is convenient for every employee of BSM, by providing work facilities and infrastructure. The completeness of facilities and infrastructure to ensure the security of

operational needs of the company and ensure the safety for employees. Besides this, the Bank adopted working practices with the principles of prudence and obedient with regulations so that it can achieve “Zero Accident”.

CSR RELATED TO SOCIAL COMMUNITY DEVELOPMENT CSR Policy on Social Development Implementation of CSR program on social development refer to Cooperation Agreement (PKS) BSM and Lembaga Amil Zakat Nasional (LAZNAS) BSM No.18/586-PKS/DIR; No.15/007-PKS/ LAZNAS dated August 30, 2016 regarding Disbursement of Zakat and Fund Program.

CSR Program with Laznas BSMBSM along with LAZNAS BSM have carried out distribution through effective and useful programs namely Mitra Umat (Ummah Partner), Didik Umat (Ummah Education) and Simpati Umat (Ummah Sympathy) to 68,677 people (mustahikin), increase from the previous period, in 2016 amounted to 9,660 people (mustahikin).

The CSR activities through collaboration with LAZNAS BSM that have been implemented in 2015 include: 1. Mitra Umat (Ummah Partner)

a. Micro Entrepreneurship It is a program through assistance on capital funds to start and develop the mustahik entrepreneurship.

b. The Young Muzakki It is a program of training and briefing of life skills and micro business capital in the form of the group.

2. Didik Umat (Ummah Education) To provide education assistance (scholarship) to those

who are in need and to work on sustainability of learning activities. This assistance includes learning facilities and infrastructures.

3. Simpati Umat (Ummah Sympathy)a. Health In form of assistance to required parties

in health sectors, including its facilities and infrastructures.

b. Natural Disaster and Environment Assistance to anticipate emergency condition and active in reducing the impact of social disaster. Active in participating in repair or improvement of life quality in wide perspective.


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BSM Mengalirkan Berkah (BSM Bestowing Blessings)In accordance with the sixth BSM mission, namely, "Increasing concern for the community and the environment", the existence of BSM should be balanced in the community. In addition to its perceived role in fostering the financial capacity of customers, BSM also has the role in social contribution (bestowing blessings).

In addition to growing community welfare, BSM also has a concern to bestow blessings for customers, BSM itself, as well as for employees.

Program types:a. Basic Program: Assistance in paying the maintenance

costs to mosques by each outlet (preferably mosques / mushollas closest to outlets).

b. Special Program1) Special Program Quarterly: physical repair of mosque

/ mosque and supporting facilities.2) Annual Special Program: Assistance for mosque

development / renovation / prayer room and other CSR assistance that is beneficial for the surrounding environment.

In 2017, religious facilities that received program assistance from BSM Mengalirkan Berkah in total are around 409 mosques in Indonesia.

CONSTRUCTION OF MASJID AL AMIN SYARIAH MANDIRI One of BSM CSR activities related to social community is the construction of Al Amin Syariah Mandiri Mosque in Kinahrejo, Merapi, Yogyakarta.

The mosque is located in Petilasan Mbah Maridjan, Kinahrejo, Merapi Yogyakarta. Petilasan Mbah Maridjan is one of the locations visited in the Lava Tour Merapi tour program.

Ummah Economic Development The implementation of CSR in ummah economic development aims to create self reliance in achieving improved welfare in the long term. CSR program is executed in the provision of capital, work facilities, etc.

Education and Training Program CSR BSM programs in the sector of educational development during 2017 has been distributed to 9,136 people, an increase compared to 2016 amounted to 313 people. The program focused on improving the quality of education, which is

manifested in the form of scholarships to students from poor families starting from Elementary School (SD) students to the Higher Education (PT). Activities implemented fully in both the BSM Head Office in Jakarta and branch offices throughout the country.While CSR programs of BSM in the sector of education facilities and infrastructure improvements during 2017 reached Rp21.81 billion, compared to realization in 2016 amounted to Rp2.36 billion.

Social Community ProgramCSR programs of BSM in the sector of social/cultural use funds during 2017 amounted to Rp17.19 billion, an increase compared to realization in 2016 amounted to Rp3,20 billion. CSR programs for the sector of social/culture manifested in the form of orphans donation (santunan dhuafa), Ramadhan donation (santunan Ramadhan), assistance for victims of natural disasters, assistance for construction and renovation of mosques and madrasah, and other programs.

CSR RELATED TO RESPONSIBILITIES TO CONSUMERCSR Policy towards CustomerstIn carrying out their business activities, BSM always prioritizes customer satisfaction by providing the best service. BSM not only sells banking products that are safe and beneficial for the community but also provides maximum protection to consumers (product responsibility).

Responding to this, the Policy taken by BSM is in the form of a Guarantee Policy for Customer Deposit Protection. The form of collateral for customer deposit protection that has been carried out by the Bank is by registering as a participant of the Deposit Guarantee Agency (LPS) and establishing a reserve for losses on earning assets financing.

CSR Program Related to Customer Safety / DepositPublic confidence in the banking industry is one of the keys to maintaining stability in the system. Trust is born when there is legal certainty in the arrangement, supervision of banks, and the guarantee of customer deposits Bank.

As stipulated in the Law No. 24 of 2004 concerning the Deposit Insurance Agency (LPS), BSM guarantees the protection of money deposited by customers through the Deposit Insurance Corporation. As a form of compliance with the issuance of the Law, in the same year BSM registered


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itself as a participant bank for LPS. Furthermore, to support the safety of customer's savings (Bank's consumer safety), BSM has established reserves for financing disbursed.

Product Information Center and Customer Complaint Center (Customer Care)BSM has established a center for information products and services as well as a means of complaints for consumers of banking services. The easy access to information and banking services network has been provided by the Bank, as follows: through the Internet Website with website address: www.syariahmandiri.co.id., Social networks: Facebook, Twitter, availability of mobile banking and internet banking services and the existence of branch offices and ATM Bank.

The consumer complaints center can be accessed by consumers through several channels, which are:1. Syariah Mandiri Call Center which operates 24 hours by

calling 14040 or (021) 29534040. 2. Email: [email protected]. Customer service located in the nearest BSM branches.

Through this product and complaint information service center, BSM responds quickly to requests for information on banking products and services and incoming complaints. Furthermore, the Bank can resolve a complaint promptly and wisely.

Handling the Customer’s ComplaintsThrough the complaint center, the Bank responds promptly to incoming complaints and gives solutions wisely. BSM has established a Service Quality Management & Customer Care (SQM & CC) unit under the Culture & Customer Care Group focusing on monitoring customer complaints.

Customer complaints can be submitted via all branches by filling out customer request / complaint forms which are regulated separately in the Bank's internal regulations or customers can also submit complaints via BSM Call. Furthermore, Bank will follow up complaints from customers. Summarily, the follow-up mechanism for customer complaints are as follows:


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• CustomermaysubmitcomplaintsviabranchorBSMCall;• BranchorBSMCallinputcomplaintssubmittedbycustomerstotheComplaintManagementSystem(CMS);• DatarecordedintheCMSwillbemonitoredandfollowedupbyCustomerCareunitsintheSQM&CCsection;• Information/responsesreceivedfromtheworkunitswillbeforwardedtothecomplainant(BranchorBSMCall);• Thecomplainantwillforwardinformation/answerstocomplaintsreceivedtothecustomer;• ThecomplainantwillchangethecomplaintstatusintheCMSto"Done".

Supporting Circulated Letter and Related Provision a. a. Regulation No. 21 year 2008 concerning Sharia Banking.b. Regulation No. 8 year 2010 concerning Money Laundry criminal act prevention and eradication. c. Regulation No. 8 year 1999 concerning Consumer Protection. d. Bank Indonesia Regulation No. 7/7/PBI/2005 dated January 20, 2005 concerning Customer Complaint Settlement. e. Bank Indonesia Regulation No. 10/10/PBI/2008 dated February 28, concerning Amendment on Bank Indonesia

Regulation No. 7/7/PBI/2005 dated January 20, 2005 concerning Customer Complaint Settlement. f. Bank Indonesia Regulation No. 13/23/PBI/2011 dated November 2, 2011 concerning Risk Management

Implementation for Sharia Commercial Bank and Sharia Business Unit. g. Bank Indonesia Regulation No. 11/3/PBI/2009 concerning Sharia Commercial Bank.h. Bank Indonesia SE No. 15/21/DPNP dated June 14, 2013 concerning Anti Money Laundry Program Implementation

and Terrorism Funding Prevention for Commercial Bank.i. OJK Regulation No. 1/POJK.07/2013 concerning Financial Service Sector Consumer. j. OJK Regulation No. 1/POJK.07/2014 concerning Alternative Institution Dispute Settlement in Financial Service

Sector. k. Bank Indonesia Regulation No. 16/1/PBI/2014 concerning Consumer Protection of Payment System Service. l. OJK SE No. 2/SEOJK.07/2014 concerning Consumer Complaint Service and Settlement to Financial Service Business. m. Bank Indonesia Regulation No. 15/13/PBI/2013 dated December 24, 2013 concerning Amendment on Bank

Indonesia Regulation No. 11/3/PBI/2009 concerning Sharia Commercial Bank. n. Operation SE No. 12/026/OPS dated May 31, 2010 concerning Determination of Loss Expense Person in Charge due

to Operational Risk. o. Operation SE No. 16/124/OPS dated June 27, 2014 concerning Standard Operational Procedure (SOP) on Customer

Complaint Handling related to Fraud Indication. p. Operation SE No. 160/039/OPS dated September 22, 2014 concerning Standard Operational Procedure (SOP) on

Bank Syariah Mandiri Customer Complaint Handling and Follow Up.


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Management Team Currently the customer complaints received by BSM managed by Working Unit of Customer Handling Management in Culture & Customer Care Group.

Flow of Customer Complaints Handling The recording of customer complaints has been using an application called Complaint Handling Management System (CHMS).

Types and SLA of Customer ComplaintstComplaints submitted by customers can be divided into two types, namely: a. Verbal Complaints

- Complaints shall be addressed and/or resolved by the Complaints Receiver Working Unit/Customer Care Working Unit within 2 (two) working days after the complaint is received;

- If the complaint cannot be resolved within a period of 2 (two) working days, the Complaints Receiver Working Unit shall request the customer to submit his complaint in written.

b. Written Complaints- Complaints must be resolved by the Complaints Receiver Working Unit/Customer Care Working Unit within

maximum of 14 (fourteen) working days after the complaint is received; - If the complaint cannot be resolved within 14 (fourteen) working days, the complaint receiver shall submit

information of extra time to customers in written; - Bank may extend the period of complaints settlement up to 20 (twenty) working days (if necessary).

Costumer Bank

Customer Complaints

Complaints can be submitted via:• Branch• BSMCall• Media

Complaint Handling Management System CCG – CCM Work Units

Complaints received are recorded in the Complaint Handling Management System Ver. 3

Customer Care perform the monitoring process and the escalation of the complaints that require handling of other work units

Work units associated with the complaint follow up and provide solutions


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Customer Complaints Graphs in 2017 According to SLAt

Customer Complaints in 2017 Customer Complaints Resolving Time in 2017

Total Complaints : 44,003 complaintsResolved : 44,003 complaints (100%)

44,003100%

44,003

331828

Customer Complaints in 2017 by Category a. Customer complaints have 4 types of categories as follows:

- Products - Transaction Process and Facilities - Service - Banking Crime

b. The top 5 majority of complaints in 2017 by category:

Customer Complaints Based on Product Category in 2017

100

40

99

31 41

12 6 63 513 1110 7

267

113

47

142

51

BSM Saving Account

Q 1 Q 3Q 2 Q 4

Financing Mabrur Saving Account

Depositt TIC


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Customer Complaints Based on Process/Transaction & Facility Category in 2017

1.417832

1.430 1.1391.732

1.094 1.7851.0451.010 955813 834

1.233

1.2651.015 1.507

4.003

967

7.925

3.235

MBG

Q 1 Q 3Q 2 Q 4

ATM BSM ATM Bersama ATM Mandiri Net Banking

Costumer Complaints Based on Service Category in 2017

10

0

21

3

0 13

1 1 1 1

5

02 3

6

3

11

17

Slow Work of CS

Q 1 Q 3Q 2 Q 4

Branch Office is Difficult to Contact

Security Services is Inadequate

Working Hours Disappointed with Marketing

Customer Complaints Based on Banking Crime Category in 2017

71

40

58

68

10 0 02

0 2 004

0

73

565762

Fraud by BSM Customer

Fraud by Non-BSM Customer

Suspect Skimming ATM Prima

Suspect Skimming ATM Bersama

Suspect Skimming ATM Mandiri

Q 1 Q 3Q 2 Q 4


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Development of the Customer Complaint HandlingtThe recording system for customer complaints via Complaint Handling Management System (CHMS) continues to be developed to be user friendly and the more accuracy in generated data.

BSM CALL 14040In improving service quality to customer, Bank Syariah Mandiri formed service unit which is BSM Call 14040 that can be accessed in 24/7.

The function of the service unit is to serve customer needs on information related to BSM product, facility and service as well as customer complaint that can be submitted via communication media such as: phone, mobile phone, fax and email.

Duties and Responsibilities of BSM Call 14040BSM Call services category comprise of: 1. Information, consists of:

a. Balance Informationb. Mutation Information c. BSM Product Information

2. Blocking a. BSM Card blocking b. MBG blocking/closing

3. Customer complaint recipient 4. Transaction

a. Balance inquiry through IVR machine b. Mutation information on the last 7 transactions c. Request of transaction history through fax and email

BSM Call 14040 Service Achievements Performance Target (Success Call Ratio) of BSM Call 14040 service is amounted to 95%.

Consumer Service Improvement ProgramIn order to improve the quality of services provided to consumers, BSM implemented programs such as:1. The newest service guides based on customers' demands

and expectations.2. Service Quality Assurance (SQA) activities conducted

consistently in the branch, I.e. Communication forum, Role play, Morning briefing.

3. Forum Service Champion Officer (SCO), which is a briefing to SCO Branch officers who are responsible for the implementation of Branch service standards.


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4. Improvement of guides and service tools, include: simplified account opening application forms and cash deposit transaction slips, product sales kits and preparation of CS and Teller transaction scripts.

5. Increased competence for employees, through CS and Teller certification, excellent service training, service leadership training and guest speaker services.

6. Development of Customer Complaint Management System Application.

7. Conducting a monitoring program for the implementation of service standards through on site and on desk.

Customer Engagement ProgramBSM continues to develop various programs / activities either directly or indirectly involving the customers' active participation in banking services products. It aims to maintain customer loyalty using BSM service products and not switch to other banking products.

Activities involving consumers as an effort to improve service quality and maintain customer loyalty include:1. BSM Friend (Customer Get Customer)

2. BSM Fantasy (Direct Gift)3. BSM Brand Awareness - Spekta / Gerai (Direct Sales event

conducted in indoor / outdoor with various themes)4. Gebyar (Gathering with Customer with bike riding

activities, fun walk and gymnastics);5. iBvaganza (Islamic banking education program for

Indonesian customers)6. Direct gift for fresh customers of regular customers7. Priority Gathering (Customer Priority Gathering)8. Customer Visits shall be in the form of visits of central

office employees to large individual customers or institutions in the Branch.


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Documents

PT Bank Syariah Mandiri Sustainable Healthy, Distributing ... AR 2017 - ENG - Lap... · FRONT BROSUR BACK gunakan mandiri syariah debit ... kartu mandiri syariah debit adalah produk