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n an effort to maintain its financial performance at healthy levels amid a gloomy economic outlook, state-owned lender Bank Mandiri has significantly cut its operating expenses and reduced its loan growth target for this year.

The publicly listed bank, which is the country’s largest lender by assets, expects to keep the growth of its costs below 15 percent by the end of this year after it saw the figure increase by 20 percent year-on-year (yoy) in the first quarter, finance and treasury director Pahala N. Mansury said.

In order to achieve the target, the bank, Pahala said, had reduced its operating costs significantly by around Rp 900 billion (US$67.2 million). The budget was initially slated to support the bank’s payment outlet expansion.

“We have cut our costs quite deeply as we want to reduce expansion in our electronic channels [e-channels], such as ATMs and electronic data capture [EDC] units,” Pahala said Wednesday.

Mandiri initially planned to install 50,000 new EDC units and ATMs this year. The budget cut has forced the company to reduce the figure by 50 percent. The company will focus on increasing the productivity level of its existing machines.

Pahala said the bank was currently assessing its low-productivity ATMs in order to seek ways to improve them. It also plans to reduce a number of promotional campaigns for certain products.

However, Pahala said that such reductions might not necessarily reduce the company’s capital expenditure (capex) as the funds could be reallocated to other projects, including developments for digital solutions to support its e-channels.

“The e-channel development may take the form of digital app innovations, which won’t need higher operational expenditures compared to ATM operations,” he said.

Previously, Mandiri president director Kartika “Tiko” Wirjoatmodjo, who used to serve as the bank’s finance and strategy director, said Mandiri would allocate Rp 1.7 trillion in capex this year, consisting of IT expenditures worth $100 million and non-IT expenditures amounting to Rp 400 billion.

The 2016 capex is lower than the total Rp 3.5 trillion set in 2015, of which only 75 percent was absorbed by the end of the year.

Pahala added that there would be minor reductions in employee recruitment this year due to the lower number of new outlets opening up.

“The more significant cutback will probably occur in our outsourced workers, but we will still recruit new ones as they are needed in the loan collections department, especially in the retail segment,” he said.

The reductions occur not only in expenses, but also in the bank’s loan growth target for this year, which it has revised to 8-10 percent from an initial target of 12-14 percent on the back of weak demand in several loan segments. Pahala, however, said loan disbursement for the micro and automotive credit segments was still able to grow by above 20 percent, while the disbursement for corporate lending could increase by double-digit margins.

Despite these cuts, Mandiri is still poised to get fresh funds from the capital market as it prepares a continuous bond offering plan worth up to Rp 14 trillion over the next three years.

“For this year, we will issue bonds worth of Rp 5 trillion in August or September. In 2017 and 2018, we will issue another Rp 5 trillion and Rp 4 trillion worth of bonds, respectively,” Pahala said.