Analysis of Non Performing Loans (NPL) and Net Interest Margin (NIM) on the Bank’s performance based on the Classification of Business Activities (BUKU) Registered with the Financial Services Authority (OJK) Period 2016 to 2018 (Published)
The Banking Sector is a very important one for the economic activities of a country that functions as a stabilizer and also supports the economic activity of the real sector by channeling funds to the real sector in the form of working capital loans from sources of funds collected by banks from communities that have excess funds. Therefore bank management must be careful in managing finances so that banks can be said to be healthy and the economic sector will grow. Sources of bank income are from loans disbursed in the form of Net Interest Margin (NIM) which is profit in the banking sector, with a high Net Interest Margin, banks will be healthier, but in lending not all loans are disbursed into the current category, there are some who experience to a loss so that company profits will decline due to bad loans called Non Performing Loans (NPL), so that it affects the bank’s performance in terms of its fundamentals, Return on Assets (ROA). Therefore management must pay attention to both of the above. Based on the results of the study found that from banks that are classified based on Bank Core Capital (BUKU) then in BUKU 1 it occurs that NIM has no effect on ROA, this is because banks in BUKU 1 banks with core capital below 1 trillion IDR, then lending to generally to small and medium entrepreneurs and individuals so that it does not take large profits, but NPL has a negative effect on ROA this means that management pays more attention to NPL levels compared to NIMs, because if the NPL increases it will worsen bank performance. On the other hand, NPL BUKU 4 does not affect ROA because banks in BUKU 4 are large banks with capital of more than IDR 30 trillion. They are very free to distribute credit and are generally given to corporations and large companies for investment capital and working capital so that NPL in the short term is not too disturbing bank performance because it already has a high NIM.