The Influence of Financial Indicators on The Performance of Commercial Banks in Indonesia
DOI:
https://doi.org/10.30741/adv.v9i2.1755Keywords:
Return on Assets, Loan Growth, Non-Performing Loans, Net Interest Margin, Cost-to-Income RatioAbstract
This study aims to analyze the effect of financial indicators on the performance of commercial banks in Indonesia, as measured by Return on Assets (ROA). The indicators examined include loan growth (LG), non-performing loans (NPL), loan-to-deposit ratio (LDR), market share (MS), loan loss provision (LLP), cost-to-income ratio (CIR), effective tax rate (ETR), and net interest margin (NIM). A quantitative approach was employed using hypothesis testing and panel data regression analysis on 43 conventional banks listed on the Indonesia Stock Exchange (IDX) for the 2020–2024 period. The results show that LG, LLP, CIR, and ETR have a significant adverse effect on ROA, while LDR and NIM have a significant positive effect. Meanwhile, NPL and MS show no significant effect. These findings highlight that operational efficiency, credit and tax management strategies, and effective fund intermediation are the main determinants of bank profitability. This study is expected to provide practical insights for managerial decision-making and investment evaluation, as well as enrich the academic discourse on the drivers of financial performance in Indonesia’s banking sector. However, this study is limited to a specific data period and does not consider external factors. For future research, the analysis should be expanded to include macroeconomic variables.
Downloads
References
Abdulrauf, L. A.-O., Rabiu, S. A., Akande, J. O., & Gbadebo, A. D. (2024). How Does Financial Risk Management Impact Financial Performance of Microfinance Banks? ACTA Universitatis Danubius, 20, 118–135.
Abu Khalaf, B., Awad, A. B., & Ellis, S. (2024). The Impact of Non-Interest Income on Commercial Bank Profitability in the Middle East and North Africa (MENA) Region. Journal of Risk and Financial Management, 17. https://doi.org/10.3390/jrfm17030103
Adato, A. A. (2022). Effect of Credit Risk Management on Business Performance of Banks Operating in Ethiopia. Research Journal of Finance and Accounting, 13. https://doi.org/10.7176/rjfa/13-9-02
Adenuga, A. O., Mohammed, J. A., Laniyan, C. V, Akintola, A. A., & Asuzu, O. C. (2021). Measuring the Impact of Loan-to-Deposit Ratio (LDR) on Banks’ Liquidity in Nigeria. Economic and Financial Review, 59, 3–6.
Al Zaidanin, J. S., & Al Zaidanin, O. J. (2021). The impact of credit risk management on the financial performance of United Arab Emirates commercial banks. International Journal of Research in Business and Social Science (2147- 4478), 10, 303–319.
Aledeimat, S. R. M., & Bein, M. A. (2025). Does Uncertainty Affect the Banks’ Non-Performing Loans/Non-Performing Finance in the MENA Region? A Comparison Study Between Conventional and Islamic Banks in the MENA Regions. SAGE Open, 15, 1–22.
Allam, A. Z. (2022). Analysis of the Effect of Capital Intensity Ratio, Debt to Equity Ratio (DER) and Return on Assets Ratio (ROA) on Effective Tax Rate. International Journal of Innovative Science and Research Technology, 7. Retrieved from www.ijisrt.com
Ally, Z. (2024). Sustainability and Financial Performance in Tanzanian Banks : Examining the Role of Environmental , Social , and Governance Factors and Influence of Digital Transformation. AJER, 12, 144–167.
Alnabulsi, K., Kozarević, E., & Hakimi, A. (2023). Non-Performing Loans as a Driver of Banking Distress: A Systematic Literature Review. Commodities, 2, 111–130.
Al-Sharkas, A. A., & Al-Sharkas, T. A. (2022). The Impact on Bank Profitability: Testing For Capital Adequacy Ratio, Cost-Income Ratio and Non-Performing Loans in Emerging Markets. Journal of Governance and Regulation, 11, 231–243.
Altunbas, Y., Marques‐Ibanez, D., van Leuvensteijn, M., & Zhao, T. (2019). Competition and Bank Risk the Role of Securitization and Bank Capital. IMF Working Papers, 19, 1.
Aminah, Soewito, Erina, N., Khairudin, & Damayanti, T. (2019). Financial performance and market share in Indonesia Islamic Banking: Stakeholder theory perspective. International Journal of Scientific and Technology Research, 8, 14–18.
Andrejovska, A. (2019). Effective Tax Rate in the Context of the Economic Determinants. Montenegrin Journal of Economics, 15, 31–40.
Andrejovska, A., Glova, J., Regaskova, M., & Slyvkanyc, N. (2024). The Impact of The Effective Tax Rate Change on Financial Assets of Commercial Banks: The Case of Visegrad Group Countries. E a M: Ekonomie a Management, 27, 175–191.
Anh, N. T., & Huong, D. T. (2024). Bank-Specific Factors Influencing the Profitability of Listed Commercial Banks in Vietnam. Revista Finanzas y Politica Economica, 16, 469–488.
Antwi, F. (2019). Capital Adequacy, Cost Income Ratio and Performance of Banks in Ghana. International Journal of Academic Research in Business and Social Sciences, 9. https://doi.org/10.6007/ijarbss/v9-i10/6471
Ayinuola, T. F., & Gumel, B. I. (2023). The Impact of Cost-to-Income Ratio on Bank Performance in Nigeria. International Journal of Multidisciplinary and Current Educational Research, 5, 0408–0308.
Badirkhani, R., Majed, V., Faraji Dizaji, S., & Mehdi Naji Esfahani, S. (2019). Impact of Bankruptcy Risk and Competition on Profitability in the Iranian Banking System Using BOONE Indicator: Generalized Method of Moments. RELIGACIÓN. REVISTA DE CIENCIAS SOCIALES Y HUMANIDADES, 4, 151–160.
Begum, R., & Atiq, Z. (2023). Non-Performing Loans and Banks’ Profitability: A Review of Banking Industry in Pakistan. Periodicals of Social Sciences, 3. Retrieved from https://psocialsciences.com/poss/index.php/poss/article/view/55
Beni, S., Putra, W., & Bariyah, N. (2023). The Effect of Credit Circulation, Loan to Deposit Ratio (LDR), and Interest Rate on Return On Assets (ROA) Due to Non-Performing Loan (NPL) on Credit Unions in Indonesia. International Journal of Multi Discipline Science (IJ-MDS), 6, 60.
Bhowmik, P. K., & Sarker, N. (2021). Loan growth and bank risk: empirical evidence from SAARC countries. Heliyon, 7. https://doi.org/10.1016/j.heliyon.2021.e07036
CFA Institute. (2022). Enhancing Investors’ Trust. Retrieved from https://www.cfainstitute.org/sites/default/files/-/media/documents/article/Enhancing-Investors-Trust-Report_2022_Online.pdf
Chantha, K., Seng, S., Ratha, P., & Sovanvatthana, K. (2024). An Integrated Analysis of Key Financial Metrics Driving Commercial Bank Performance in Cambodia. 6, 517–543.
Chun, S. H., & Ardaaragchaa, N. (2024). Analysis of Factors Affecting the Loan Growth of Banks with a Focus on Non-Performing Loans. Journal of Risk and Financial Management, 17. https://doi.org/10.3390/jrfm17050203
Ciptawan, & Melly. (2022). The Influence of Loan to Deposit Ratio, Effective Tax Rate and Non-Performing Loan Toward Return on Asset in Banking Companies Listed on the Indonesia Stock Exchange. The 2nd International Conference on Entrepreneurship (IConEnt).
Çollaku, B., & Aliu, M. (2021). Impact of Non-Performing Loans on Bank s Profitability: Empirical Evidence from Commercial Banks in Kosovo. Journal of Accounting Finance and Auditing Studies (JAFAS), 7, 226–242.
Dal Maso, L., Kanagaretnam, K., Lobo, G. J., & Mazzi, F. (2024). Does Disaster Risk Relate to Banks’ Loan Loss Provisions? European Accounting Review, 33, 825–854.
Dewi, A. C., & Pernamasari, R. (2022). The Effect of Return on Assets and Debt to Equity Ratio on Tax Aggressivity: Total Asset as Moderating Variable. 15, 254–266.
Do, H. L., Ngo, T. X., & Phung, Q. A. (2020). The effect of non-performing loans on profitability of commercial banks: Case of Vietnam. Accounting, 6, 373–386.
Dwitama, A., & Hasanudin. (2024). The Influence of Loan Growth, Loan to Assets, and Size on Return on Assets Through Non-Performing Loans in Banking Companies. Jurnal Apresiasi Ekonomi, 12, 613–632.
Evci, S., Kefe, İ., & Kefe, İ. (2024). The Impact of Energy Prices on the Performance of Banks in Türkiye. International Journal of Energy Economics and Policy, 14, 492–500.
Folorunso, E. A., Schmautz, Z., Gebauer, R., & Mraz, J. (2023). The Economic Viability of Commercial-Scale Hydroponics: Nigeria as a Case Study. Heliyon, 9. https://doi.org/10.1016/j.heliyon.2023.e18979
Gabriel, O., Victor, I. E., & Innocent, I. O. (2019). Effect of Non-Performing Loans on the Financial Performance of Commercial Banks in Nigeria. American International Journal of Business and Management Studies, 1. Retrieved from www.acseusa.org/journal/index.php/aijbms
Ghimire, S. R., Chaurasiya, S., & Basnet, A. (2024). Impact of Liquidity on Profitability of Nepalese Commercial Banks. Splint International Journal of Professionals, 11, 169–181.
Ghosh, K., & Mondal, A. (2022). Credit Risk Management and Financial Performance of Indian Commercial Banks: A Study. International Journal of Financial Management, 12, 26–37.
Gledistin, E., Tawas, Y., & Kambey, A. (2021). Analisis Perbandingan Kinerja Keuangan Bank BUMN dan Bank Swasta dari Tahun 2014-2018 Menggunakan Rasio NPL, LDR, GCG, ROA, NIM, dan CAR. JAIM: Jurnal Akuntansi Manado, 2, 176–186.
Gupta, S., & Bansal, R. (2024). Manifestations of Loan Growth – Profitability and Non-Performing Loans – A Study of the Indian Banking Sector. South Asian Journal of Business Studies. https://doi.org/10.1108/SAJBS-04-2023-0100
Gurung, R., Ghimire, B., & Dahal, P. (2023). Exploring the Impact of Loan Loss Provision on Profitability: An Analysis of Commercial Banks in Nepal. The Journal of Business and Management, VII. https://doi.org/10.3126/jbm.v7i02
Hadian, N., & Phety, D. T. O. (2021). The Effect of Non-Performing Loans and Loan to Deposit Ratio on Return On Assets in the Banking Industry. Turkish Journal of Computer and Mathematics Education, 12, 791–798.
Hossain, S., & Ahamed, F. (2021). Comprehensive Analysis On Determinants Of Bank Profitability In Bangladesh. https://doi.org/10.48550/arXiv.2105.14198
Jaloudi, M., & Bakir, A. (2019). Market Structure, Efficiency, and Performance of Jordan Insurance Market. International Journal of Business and Economics Research, 8, 6.
Jaya, B. J., Nur, B., Hefri, F., Suryanti, A., & Wulandari, T. R. (2024). The Relationship Between Loan Growth, Risk, and Bank Performance: Evidence from Indonesia. Sebelas Maret Business Review, 9, 96–105.
Kalkan, G. (2024). The Impact of Non-performing Loans on Bank Profitability: Evidence from Türkiye. In İslahiye Faculty of Economics and Administrative Sciences. https://doi.org/10.13140/RG.2.2.24626.62404
Khalil, A., & Farooq, U. (2019). Determinants of Net Interest Margins in Emerging Markets: A Generalized Method of Moments Approach. Journal of Quantitative Methods, 3, 38–55.
Kohlscheen, E., Murcia, A., & Contreras, J. (2019). Determinants of bank profitability in emerging markets. Retrieved from www.bis.org
Koont, N. (2023). The Digital Banking Revolution: Effects on Competition and Stability. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.4624751
Kumar, A., & Srivastava, A. (2021). A Comparative Assessment of Cost Income Ratio of Scheduled Urban Cooperative Banks in India: Benchmarking the Operational Efficiency. Search.Ebscohost.Com, XLX, 2021–2043.
Laporšek, S., Švagan, B., Stubelj, M., & Stubelj, I. (2025). Profitability Drivers in European Banks: Analyzing Internal and External Factors in the Post-2009 Financial Landscape. Risks, 13, 1–21.
Le, T. D. Q. (2020). The interrelationship among bank profitability, bank stability, and loan growth: Evidence from Vietnam. Cogent Business and Management, 7. https://doi.org/10.1080/23311975.2020.1840488
Lew, B.-Y., & Lau, W.-T. (2022). Credit Risk and Commercial Bank Performance: Evidence from ASEAN. International Journal of Academic Research in Economics and Management Sciences, 11, 274–288.
Maina, M. M., Kiai, R., & Muchiri, J. (2024). Effect of loan-loss provisioning on financial performance of deposit taking SACCOs in Kirinyaga County, Kenya. International Journal of Research in Business and Social Science (2147- 4478), 13, 463–472.
Mala, C. M. F., Hosen, M. N., & Al Arif, M. N. R. (2023). An Analysis of Market Power and Efficiency of Islamic Banking in Indonesia and Malaysia. Jurnal Ekonomi & Keuangan Islam, 9, 1–16.
Muhammed, S., Desalegn, G., & Emese, P. (2024). Effect of Capital Structure on the Financial Performance of Ethiopian Commercial Banks. Risks, 12, 1–16.
Nguyen, H. M., Ho, T. K. T., & Ngo, T. T. (2024). The Impact of Service Innovation on Customer Satisfaction and Customer Loyalty: A Case in Vietnamese Retail Banks. Future Business Journal, 10. https://doi.org/10.1186/s43093-024-00354-0
Nguyen, V.-T., & Liu, D.-Y. (2020). The Impact of Ownership Structure on Vietnamese Commercial Banks’ Profitability. International Journal of Economics and Financial Issues, 10, 187–194.
Ogbaragu, Sunday, J., & Offor, T. N. (2024). Taxation Policies and Profitability of Deposit Money Banks in Nigeria. INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS), VIII. https://doi.org/10.47772/IJRISS
Ozili, P. K. (2024). Bank Loan Loss Provision Determinants in Non-Crisis Years: Evidence from African, European, and Asian Countries. Journal of Risk and Financial Management, 17. https://doi.org/10.3390/jrfm17030115
Parvin, S. S., Hossain, B., Mohiuddin, M., & Cao, Q. (2020). Capital Structure, Financial Performance, and Sustainability of Micro-Finance Institutions (MFIs) in Bangladesh. Sustainability (Switzerland), 12. https://doi.org/10.3390/su12156222
Patwary, Md. S. H., & Tasneem, N. (2019). Impact of Non-Performing Loan on Profitability of Banks in Bangladesh: A Study from 1997 to 2017. Global Journal of Management and Business Research: C Finance, 19. Retrieved from https://www.researchgate.net/publication/330968385
Phan, D. T., Nguyen, T. T., & Hoang, T. T. (2022). Impact of income diversification on the business performance of Vietnamese commercial banks. Cogent Business and Management, 9. https://doi.org/10.1080/23311975.2022.2132592
Psaila, A., Spiteri, J., & Grima, S. (2019). The impact of non-performing loans on the profitability of listed Euro-Mediterranean commercial banks. International Journal of Economics and Business Administration, 7, 166–196.
Rahagi, M. R., Najmudin, N., & Laksana, R. D. (2023). The Effect of Net Interest Margin as a Mediator and Selected Factors in Determining the Profitability of Digital Banks. Jurnal Riset Manajemen, 1, 10–27.
Rajindra, R., Guasmin, G., & Burhanuddin, B. (2021). Costs and Operational Revenue, Loan to Deposit Ratio Against Return on Assets: A Case Study in Indonesia. Journal of Asian Finance, Economics and Business, 8, 109–0115.
Sahyouni, A., & Wang, M. (2019). Liquidity Creation and Bank Performance: Evidence from MENA. ISRA International Journal of Islamic Finance, 11, 27–45.
Saliba, C., Farmanesh, P., & Athari, S. A. (2023). Does country risk impact the banking sectors’ non-performing loans? Evidence from BRICS emerging economies. Financial Innovation, 9. https://doi.org/10.1186/s40854-023-00494-2
Salsabila, Z., Rhamdani, E. W., Putri, A. N., & Komara, A. (2024). The Impact of Lending Growth and Financial Statistics on Bank Profitability : The Moderating Role of Credit Risk. International Journal of Business, Economics and Social Development, 5, 251–259.
Sari, L., & Septiano, R. (2020). Effects of Intervening Loan to Deposit Ratio on Profitability. Journal of Accounting and Finance Management, 1, 228–241.
Sharif, Md. J., & Khan, S. A. (2024). Determinants of Effective Tax Rate: Empirical Evidence From Selected Manufacturing Industries in Bangladesh. Accounting Analysis Journal, 12, 177–189.
Simone, P. (2019). The Determinants of the Corporate Effective Tax Rate of Italian Private Companies. African Journal of Business Management, 13, 507–518.
Sobiech, A. L., Chronopoulos, D. K., & Wilson, J. O. S. (2021). The Real Effects of Bank Taxation: Evidence for Corporate Financing and Investment. Journal of Corporate Finance, 69. https://doi.org/10.1016/j.jcorpfin.2021.101989
Sultana, A., & Jalloh, T. (2025). Loan Loss Provisioning and Profitability of the Private Commercial Banks of Bangladesh. International Journal of Economics and Financial Issues , 15, 39–45.
Sutiman, S., Suteja, J., Anwar, M., & Rachmawaty, R. (2024). Determinants of Bank Profitability and Implications for Company Value with Moderating Dividend Policy. Owner, 8, 2856–2867.
Todorovic, V., Bogicevic, J., & Vrzina, S. (2019). Income Tax Management in Banks in the Republic of Serbia. Economic Horizons, 21, 195–208.
Vu, N. T., Huong, N. T. T., & Van Anh, T. T. (2024). Navigating Risks: How External Environments Shape Nonperforming Loans In Vietnam’s Commercial Banks. Revista de Gestao Social e Ambiental, 18. https://doi.org/10.24857/rgsa.v18n3-074
Wahyuni, W., Badollahi, I., Nurhidayah, N., & Mardiastuti, W. (2023). Analyzing the Impact of Non-Performing Loans and Loan-to-Deposit Ratios on Return on Assets: A Study of Conventional Commercial Banks in Indonesia. Advances in Management & Financial Reporting, 1, 107–118.
Wiguna, A., Alfianto, E., Kumala, E. C., & Maryadi, M. G. P. (2024). Problematika dan Tantangan dalam Sektor Perbankan dan Keuangan di Tahun 2024. Jurnal Ekonomi, Manajemen Dan Akuntansi, 2, 627–632.
Wu, S. W., Nguyen, M. T., & Nguyen, P. H. (2022). Does loan growth impact on bank risk? Heliyon, 8, e10319.
Yudianto, A. (2020). Pengaruh Kinerja Keuangan Terhadap Kinerja Perusahaan pada Perusahaan Perbankan yang Terdaftar di Bursa Efek Indonesia. Jurnal Indonesia Sosial Sains, 1, 238–255.
Yuniarti, R., Sari, D., Rusmawan, W., & Fadjar, A. (2024). Influence of Net Interest Margin, Non- Performing Loan and Capital Adequacy Ratio to Return on Asset Foreign Banks 2018 – 2022. Jurnal Riset Akuntansi, 16.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Filda Rizky, Tiara Anindya Larasati, Susy Muchtar
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
