Abstract
This study aims to determine the effect of Net Performing Loans, Loan to Deposit Ratio, and Net Interest Margin on profitability. Profitability is proxied by Return On Assets (ROA). Whereas the factor for the existence of Net Performing Loans (NPL) is proxied by non-performing loans, the Loan to Deposit Ratio (LDR) factor is proxied by third-party fund distribution, and the Net Interest Margin (NIM) factor is net interest income proxied. The population in this study amounted to 25 Rural Banks (BPR) in the Jember Regency, and for the study, the sample was 19 People's Credit Banks (BPR) in the Jember Regency, which were selected using the purposive sampling method for the 2017-2018 period. Data were analyzed using multiple linear regression. Based on the test results, it was concluded that the components of the Net Performing Loan (NPL), Loan to Deposit Ratio (LDR), and Net Interest Margin (NIM) affect the profitability using the Return on Assets (ROA) ratio. This proves that Non-Performing Loans (NPLs), Loans to Deposit Ratio (LDR), and Net Interest Margin (NIM) can be used to measure how much income the Bank earns.
Highlights
The role of the Bank is very important in encouraging a country's economic growth
That the Bank's value to this ratio is good, Bank Indonesia sets the net Net Performing Loans (NPL) ratio criteria below 5%
This study aims to determine the effect of the variable Net Performing Loans (NPL), Loan to Deposit Ratio (LDR), and Net Interest Margin (NIM) on the profitability variable Return on Assets (ROA) at PT
Summary
The role of the Bank is very important in encouraging a country's economic growth. All business sectors, including industry, trade, agriculture, plantation, services, housing, or other consumptive needs, really need banks as partners in developing their businesses. Credit risk is a risk due to the failure or inability of the customer to return the loan amount received along with interest, according to a predetermined time period. This risk is even greater if commercial banks are not able to increase or improve the quality of loans extended because basically, banks invest a number of funds in the form of loans in the hope that they can increase profits. The Bank must improve the quality of credit to customers. Debtors who meet all 5C principles are customers who are eligible for credit
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