The Impact of Non-Performing Loan (NPL) and Loan-to-Deposit Ratio (LDR) on Return on Assets (ROA) in the Banking Sector Listed on the Indonesia Stock Exchange for the Period 2022–2024

Abstract

This study aims to analyze the effect of Non-Performing Loans (NPLs) and the Loan-to-Deposit Ratio (LDR) on Return on Assets (ROA) at banking companies listed on the Indonesia Stock Exchange for the period 2022–2024. This study employs a quantitative approach using secondary data in the form of banks’ annual financial reports. The sampling technique utilized purposive sampling, resulting in 15 banks selected as the study sample, comprising a total of 45 data observations. The analysis method employed is panel data regression using the Random Effects Model (REM) approach with EViews 13. The results indicate that NPL has a negative and significant effect on ROA. This indicates that as the level of non-performing loans increases, bank profitability tends to decline. Meanwhile, the LDR does not have a significant effect on ROA, suggesting that high levels of credit disbursement do not necessarily improve bank profitability. Simultaneously, both NPL and LDR have a significant effect on ROA.