ACHIEVING FINANCIAL PERFORMANCE THROUGH THE IMPLEMENTATION OF SUSTAINABLE BANKING AND CREDIT RISK: ANALYSIS BASED ON NATURAL ENVIRONMENTAL SUSTAINABILITY

A company was founded to obtain profits and sustainably improve the quality of life by utilising minimal resources and is committed to preserving the natural environment to create environmental sustainability through financial performance as an indicator used to measure the success of a bank and show how efficiently management meets profit creation targets. This research aims to analyse the influence of sustainable banking on financial performance which is mediated by credit risk. The research was conducted on conventional commercial banks that have annual financial reports and sustainability reports registered on the IDX with a sample of 252 banks from 2017-2022. Based on the analysis, it was discovered that sustainable banking has a positive effect on financial performance and a negative effect on credit risk, and sustainable banking has a positive effect on financial performance by reducing credit risk. This means that sustainable banking that pays attention to non-financial factors, namely the preservation of the natural environment, can improve financial performance. The research contribution states consistency in environmental control to achieve environmental sustainability in line with the principles of profit, people and planet by making banking policies that contribute to environmental sustainability.