Credit Risk and Factors Affecting Profitability: Empirical Evidence from Republic of Indonesia State-Owned Banks

This study aims to examine the determinants of profitability as measured by return on assets, with capital adequacy ratio, loan to deposit ratio, net interest margin as independent variables, and non-performing loans as independent and moderating variables.The research was conducted through the Indonesia Stock Exchange (IDX) website, namely www.idx.co.id with the population being the saturated sample being State-Owned Enterprise Banks of the Republic of Indonesia.The research period is ten years, from 2011 to 2020.The test is carried out using panel data regression using a common effect model.The results show that the capital adequacy ratio has a significant negative effect, the loan to deposit ratio has a significant negative effect, the net interest margin has a significant positive effect and non-performing loans have a significant negative effect on profitability.In addition, as a moderating variable, the results show that non-performing loans are proven to be moderating by weakening the effect of the loan to deposit ratio on profitability.While the effect on the capital adequacy ratio and net interest margin is not proven.