The Effects of Non-Performing Loans (NPLs) and the Loan-to-Deposit Ratio (LDR) on Return on Assets (ROA) of State-Owned Banks Listed on the Indonesia Stock Exchange, 2022–2025

Abstract

This research is motivated by the profitability fluctuations of state-owned banks during the economic recovery period, which are highly susceptible to non-performing credit risks and liquidity management. This research aims to analyze the partial and simultaneous effects of the Non-Performing Loan (NPL) and Loan to Deposit Ratio (LDR) on the Return on Assets (ROA) of State-Owned Banks listed on the Indonesia Stock Exchange for the 2022–2025 period. Employing a quantitative approach, secondary data was collected from quarterly financial statements. The sample comprises 4 state-owned banks (Himbara) selected via purposive sampling. Following outlier elimination and AR (1) lag adjustment, a final sample of 56 observations was obtained. Data analysis was conducted using panel data regression with the Fixed Effect Model (FEM) applying White cross-section corrections via EViews 14. The t-test results reveal that NPL has a significant negative effect on ROA (t = -3.4257; p = 0.0041), while LDR exerts a significant positive effect on ROA (t = 2.6160; p = 0.0203). Simultaneously (F-test), NPL and LDR collectively have a significant effect on ROA with an F-statistic of 495.4271. Furthermore, the Adjusted R-Squared value of 0.9818 demonstrates that 98.18% of the variance in ROA is explained by NPL and LDR. The study concludes that state-owned banks must proactively suppress bad credit while optimizing fund disbursement expansion to maximize asset profitability.