State-Owned Banks' Buyback Plan Strengthens Market Confidence

Positive Signal for National Banking Sector

The planned share buyback by Himpunan Bank Milik Negara (Himbara), which includes PT Bank Mandiri (Persero) Tbk (BMRI), is being viewed as a catalyst to maintain market confidence in Indonesia's banking sector. According to Amin, a member of DPR RI from the Prosperous Justice Party (PKS) and member of Commission XI, this move sends a strong signal that the fundamentals of Indonesia's state-owned banks remain robust.

Fundamental Strength Indicators

The decision to proceed with the buyback is seen as an indication that management believes current stock prices are undervalued. Amin noted that the banks' preparation of significant funds for this purpose demonstrates their strong capital buffers and well-considered business calculations. This development comes after a period of negative sentiment that had impacted expectations of state-owned banks' performance.

Regulatory Oversight and Financial Health

Amin emphasized that key financial indicators such as Capital Adequacy Ratio (CAR), Loan to Deposit Ratio (LDR), and Non-Performing Loan (NPL) ratios remain within safe limits. As long as CAR stays above the minimum 8% threshold, NPL remains below 5%, and liquidity remains ample, the banking sector's resilience is expected to be maintained. The Financial Services Authority (OJK) and Bank Indonesia (BI) continue to strengthen the banking early warning system, further supporting sector stability.

Implementation Details

Bank Mandiri's (BMRI) buyback program, valued at Rp1.17 trillion, was approved during the Annual General Meeting of Shareholders on March 25, 2025. The buyback is to be executed through the Indonesia Stock Exchange (IDX) and/or off-market transactions, to be completed within 12 months from the AGM date.

Market Impact

The buyback plan is expected to restore public confidence among both customers and shareholders. It demonstrates optimism that these banks will continue to grow solidly amid global and domestic economic dynamics. The move is particularly significant as it comes during a period when various government programs require strong banking support, potentially impacting their operations.