Bank Mandiri: quarterly profit up 33.5%, but revenue down 9.3% — impact of sharia bank deconsolidation

On August 25, Bank Mandiri reported Q2 2026 results. Net profit rose 33.5% YoY to IDR 15,028.2 million, while revenue (net interest income) fell 9.3% to IDR 30,292.8 million. The revenue decline is due to the deconsolidation of PT Bank Syariah Indonesia since February 1, 2026. Shares trade at a P/E LTM of 6.5 and a dividend yield of 10.8%, which looks attractive, especially given the portal's model estimating upside potential of +14%.

Key takeaways

— Net profit rose 33.5% YoY despite falling revenue — helped by one-off factors and lower provisions

— Revenue fell 9.3% due to sharia bank deconsolidation, but operating efficiency improved

— Return on equity (ROE) remains high at 20.1%, confirming business efficiency

— Shares trade at P/E LTM of 6.5 and dividend yield of 10.8% — valuation below historical levels

— Portal's model estimates upside potential of +14% from current price

— Bank maintains strong lending position despite balance sheet contraction after deconsolidation

Attractiveness

Key figures, IDR bn

Net profit rose 33.5% YoY despite falling revenue — helped by one-off factors and lower provisions

In Q2 2026, Bank Mandiri's net profit reached IDR 15,028.2 million, up 33.5% from the same period last year. Profit growth occurred despite a 9.3% decline in revenue, indicating the effect of one-off factors and improved cost control.

A key factor was the reduction in impairment provisions: in Q1 2026, provisions fell to IDR 2,580.3 million from IDR 3,645.1 million a year earlier. This reflects improved credit portfolio quality and lower cost of risk.

Operating profit for Q1 2026 (the latest quarter with full breakdown) rose to IDR 19,921.9 million from IDR 18,113.8 million a year earlier, confirming operational efficiency even amid business contraction.

Revenue fell 9.3% due to sharia bank deconsolidation, but operating efficiency improved

Net interest income in Q2 2026 was IDR 30,292.8 million, down 9.3% from a year earlier. The main reason is the deconsolidation of PT Bank Syariah Indonesia since February 1, 2026, which excluded significant volumes of assets and income of the sharia bank from reporting.

Excluding this effect, revenue dynamics would have been positive: in Q1 2026, the decline was only 0.7%, and in Q4 2025, growth was 2.9%. The deconsolidation also led to a reduction in total assets from IDR 2,829,948.0 million at end-2025 to IDR 2,432,620.8 million as of March 31, 2026.

Operating efficiency improved: the ratio of operating profit to revenue in Q1 2026 was about 78.6% versus 71.0% a year earlier. This indicates the bank has adapted to the new business structure.

Return on equity (ROE) remains high at 20.1%, confirming business efficiency

Return on equity for the trailing twelve months was 20.1%. This is a high figure for the banking sector, especially given the bank operates amid narrowing interest margins and intensifying competition.

High ROE is supported by strong operating profit and cost-of-risk control. Even after the sharia bank deconsolidation, the bank retained the ability to generate returns on capital above the market average.

For comparison, ROE in the same period last year was lower, confirming improved capital efficiency.

Shares trade at P/E LTM of 6.5 and dividend yield of 10.8% — valuation below historical levels

Bank Mandiri's market capitalization is IDR 410,666.5 million, which, with trailing twelve-month net profit of IDR 63,080.4 million, gives a P/E LTM of 6.5. This is below the three-year average of around 8–9.

Dividend yield for the trailing twelve months reached 10.8%, significantly higher than the Indonesian market average, making the shares attractive for income-oriented investors.

The low valuation reflects concerns about slowing revenue growth and the deconsolidation effect, but current levels already price in much of the negativity.

Portal's model estimates upside potential of +14% from current price

According to the portal's model, the fair value of Bank Mandiri shares is 14% above the current market price. The model is based on the ROE-to-P/B ratio and considers business sustainability and dividend yield.

This means that if current financial indicators persist, the shares have potential to rise to levels consistent with historical multiples.

The shares are included in the 'Frontier AI Selection' strategy on the portal, reflecting their attractiveness from a model perspective, but this is not a buy recommendation.

Bank maintains strong lending position despite balance sheet contraction after deconsolidation

The bank's loan portfolio (loans and receivables) as of March 31, 2026, was IDR 1,568,084.9 million (net of allowances — IDR 1,530,511.8 million). The decline from end-2025 is mainly due to the sharia bank deconsolidation.

The bank continues to attract customer deposits: as of March 31, 2026, deposits totaled IDR 1,730,302.5 million, providing a stable funding base.

The deconsolidation allowed the bank to simplify its structure and focus on traditional banking, which could improve operational efficiency in the future.

Valuation on the latest reported figures

Bottom line

Bank Mandiri showed strong net profit growth in Q2 2026, but it was achieved amid falling revenue and one-off factors, including lower provisions. The sharia bank deconsolidation distorts comparisons and creates uncertainty about future growth rates. Nevertheless, ROE of 20.1% and a dividend yield of 10.8% at a P/E of 6.5 make the shares attractive for long-term investors. The portal's model confirms upside potential of 14%. The key question is whether the bank can restore revenue growth without the sharia unit and maintain asset quality.