Internal and External Factors Affecting Profitability in Private Banking for the Period 2019-2023
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Lailatus Sa'adah*
Putri Marsella Zalianti
This research investigates how internal and external variables affect the profitability of private banks traded on the Indonesia Stock Exchange from 2019 to 2023. The internal variables analyzed are Capital Adequacy Ratio (CAR) and Non-Performing Loans (NPL), while the external variables include inflation and the benchmark interest rate (BI Rate). Bank profitability is assessed through Return on Assets (ROA), which measures how efficiently banks convert their assets into profits. The study uses panel data regression methodology with secondary data obtained from official financial reports. Results indicate that CAR significantly and positively influences ROA, whereas NPL has a significant negative impact. In contrast, inflation and BI Rate show no significant effects on ROA. This research contributes original insights by examining the joint effects of these factors specifically within Indonesia's private banking sector. The study concludes with strategic recommendations for improving capital adequacy and credit risk management to boost profitability.
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