The Effect of BI-Rate, Net Interest Margin (NIM), and BOPO on Non-Performing Loans (NPL) in Conventional Banks Listed on the Indonesia Stock Exchange (IDX) in 2021-2024

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Cirebon– BI-Rate and Net Interest Margin Significantly Influence Non-Performing Loans in Indonesian Banks. A recent study conducted by Putri Nur Asih Linggawati and Krisdiana from Gunung Jati Swadaya University (UGJ) Cirebon. The results of the study were published in the Indonesian Journal of Business Analytics (IJBA) Vol. 6 No. 1 (February 2026).

A recent study conducted by Putri Nur Asih Linggawati and Krisdiana from Gunung Jati Swadaya University (UGJ) Cirebon found that Bank Indonesia’s policy interest rate (BI-Rate) and Net Interest Margin (NIM) significantly influence the level of Non-Performing Loans (NPL) in conventional banks listed on the Indonesia Stock Exchange.

Banks Play a Central Role in Economic Growth

In modern financial systems, banks act as financial intermediaries, collecting funds from the public and distributing them in the form of loans. This intermediation function supports economic growth by stimulating investment and consumption.

However, lending activities also expose banks to credit risk, which is commonly measured using the Non-Performing Loan (NPL) ratio. This ratio represents the proportion of problematic loans compared to the total loans issued by a bank.

A high NPL ratio indicates deteriorating asset quality and may threaten the stability of the banking sector.

Rising NPLs During Economic Recovery

Data from the Financial Services Authority (OJK) shows that banking credit quality experienced pressure during the early stages of economic recovery in 2024.

Key findings include:

• Gross NPL ratio increased to 2.35% in January 2024, up from 2.19% in December 2023
• Net NPL ratio rose from 0.71% to 0.79%

Several large banks also reported higher credit risk levels:

• Bank Rakyat Indonesia (BRI) recorded an NPL ratio of about 3.08%
• Bank Tabungan Negara (BTN) recorded around 3.4%
• Bank Mandiri experienced an increase from 1.13% to 1.19%

These developments indicate that banking credit quality continues to face pressure amid domestic and global economic uncertainty.

Analysis of Conventional Banks Listed on the IDX

The research applied a quantitative approach using panel data regression analysis to examine the relationship between three key variables:

1. BI-Rate – Bank Indonesia’s benchmark interest rate
2. Net Interest Margin (NIM)
3. BOPO (Operating Expenses to Operating Income Ratio)

These variables were analyzed to determine their impact on Non-Performing Loans (NPL) in conventional banks listed on the Indonesia Stock Exchange during the 2021–2024 period.

The data used in the study were obtained from annual financial reports of banks published on the official Indonesia Stock Exchange website. From the total population of 43 banks, the research focused on foreign exchange conventional banks, which share relatively similar operational characteristics.

BI-Rate and NIM Show Significant Influence on NPL

The results of the statistical analysis indicate that two variables significantly affect credit risk.

Key findings of the study include:

• BI-Rate significantly affects NPL with a negative relationship
• Net Interest Margin (NIM) significantly affects NPL
• BOPO does not show a significant partial effect

The regression equation obtained in the study is:

NPL = 7.331 – 0.271(BI-Rate) – 0.519(NIM) – 0.007(BOPO)

The negative coefficient of the BI-Rate suggests that during the research period, an increase in Bank Indonesia’s policy rate was followed by a decrease in the NPL ratio.

This condition may occur because higher interest rates encourage banks to tighten lending standards, making them more selective when issuing loans and thereby reducing credit risk.

Bank Profitability Helps Control Credit Risk

The study also found that Net Interest Margin (NIM) significantly influences NPL levels.

NIM measures a bank’s ability to generate net interest income from productive assets. A higher NIM indicates that the bank has a stronger capacity to:

• generate profits from lending activities
• absorb potential losses from problematic loans
• maintain financial stability

Therefore, banks with higher profitability tend to have stronger credit risk management capacity.

Operational Efficiency Does Not Directly Affect Credit Risk

Unlike the other variables, BOPO was not found to have a significant effect on NPL.

BOPO measures a bank’s operational efficiency, comparing operating costs to operating income. While operational efficiency is important for bank management, the study indicates that during the research period it did not directly influence credit risk.

This situation may be influenced by several factors, including:

• post-pandemic credit restructuring policies
• stronger banking risk management frameworks
• increased credit loss reserves.

Internal and External Factors Influence Credit Risk Together

Although BOPO was not significant individually, the statistical test results show that BI-Rate, NIM, and BOPO simultaneously have a significant effect on NPL.

This means that banking credit risk is shaped by a combination of macroeconomic conditions and internal bank performance.

However, the Adjusted R-Square value of 20.8% indicates that many other factors also influence NPL levels, such as:

• economic growth
• credit management quality
• conditions in the real sector
• banking regulations and financial policies.

Implications for the Banking Industry

The findings provide several strategic implications for banks and regulators.

Banks are encouraged to:

• strengthen credit risk management
• maintain a balance between profitability and prudential lending principles
• improve credit assessment and monitoring systems

Meanwhile, policymakers should also consider how monetary policy decisions, particularly interest rate adjustments, affect banking credit stability.

Conclusion

The study confirms that BI-Rate and Net Interest Margin significantly influence Non-Performing Loans in Indonesian conventional banks.

The interaction between macroeconomic policy and internal bank performance plays an important role in determining credit risk levels within the banking system.

These findings provide valuable insights for the financial industry in maintaining the stability and resilience of Indonesia’s banking sector.

Author Profiles

• Putri Nur Asih Linggawati- Universitas Swadaya Gunung Jati
• Krisdiana- Universitas Swadaya Gunung Jati

Research Source

Linggawati, P. N. A., & Krisdiana. (2026).The Effect of BI-Rate, Net Interest Margin (NIM), and BOPO on Non-Performing Loans (NPL) in Conventional Banks Listed on the Indonesia Stock Exchange (IDX) in 2021–2024. Indonesian Journal of Business Analytics (IJBA), Vol. 6 No. 1, 127–144.

DOI: https://doi.org/10.55927/ijba.v6i1.16227

URL: https://journal.formosapublisher.org/index.php/ijba