A Different Story Amid a Banking Crisis
The COVID-19 pandemic created severe disruptions across the global banking industry. In Indonesia, banks faced increasing non-performing loans, declining economic activity, and pressure on profit margins. Numerous studies published between 2020 and 2023 reported deteriorating financial performance across the banking sector.
Against this backdrop, Bank Jatim emerged as an unusual success story.
According to the research, the bank’s Return on Assets (ROA) increased dramatically from 2.89 percent in 2019 to 7.60 percent in 2021, while its Operational Costs to Operating Income ratio (BOPO) dropped from 72.32 percent to 34.32 percent during the same period. These figures represented one of the strongest performances among Indonesian banks during the pandemic.
The case attracted attention because it challenged the widely accepted assumption that all banks inevitably suffered financial decline during COVID-19.
Investigating the Sources of Resilience
To understand how Bank Jatim achieved this performance, Prasetyo and Rahmawati analyzed financial reports from 2018 to 2022, internal banking records related to digital banking adoption, and regulatory data issued by Indonesia’s Financial Services Authority (OJK).
The researchers focused on Bank Jatim’s Kraksaan Branch in Probolinggo Regency, East Java. Instead of examining only profit figures, they evaluated several key indicators, including profitability, credit risk, liquidity, and operational efficiency.
The analysis revealed a consistent pattern: Bank Jatim was able to adapt quickly to changing conditions while maintaining financial stability.
Three Key Factors Behind Bank Jatim’s Success
The study identified three major resilience mechanisms that helped Bank Jatim improve its performance during and after the pandemic.
1. Accelerated Digital Transformation
The first factor was the rapid expansion of the bank’s digital banking platform, JConnect.
As mobility restrictions limited in-person banking activities, Bank Jatim accelerated digital service deployment and encouraged customers to use mobile banking channels. The bank also supported adoption through customer education programs and promotional initiatives.
This strategy generated multiple benefits:
- Reduced transaction costs
- Increased fee-based income
- Maintained customer activity during lockdowns
- Lowered dependence on physical branches
The researchers concluded that digital transformation played a central role in improving operational efficiency.
2. Proactive Credit Restructuring
The second factor was a proactive approach to loan restructuring.
Rather than waiting for borrowers to default, Bank Jatim identified vulnerable sectors early and offered flexible repayment arrangements in accordance with OJK Regulation No. 11/POJK.03/2020.
This strategy helped protect both customers and the bank.
During the pandemic, Bank Jatim maintained its Non-Performing Loan (NPL) ratio below 2 percent, significantly lower than the regulatory threshold of 5 percent. The bank achieved this by restructuring loans before financial problems escalated and by focusing lending activities on sectors with relatively lower default risks.
3. Strong Cost Discipline
The third resilience mechanism involved strict operational cost management.
Bank Jatim implemented a series of efficiency measures, including:
- Reducing non-essential travel
- Delaying non-critical training programs
- Freezing unnecessary recruitment
- Renegotiating vendor contracts
- Expanding digital service delivery
These measures contributed to the dramatic reduction in the BOPO ratio from 72.32 percent in 2020 to 34.32 percent in 2021.
According to the study, this level of efficiency was even stronger than that reported by many major national banks.
Financial Performance That Stood Out
The study documented several remarkable financial indicators.
Between 2019 and 2021:
- ROA increased by approximately 163 percent.
- NPL remained below 2 percent throughout the crisis.
- BOPO fell by more than half.
- Liquidity remained manageable despite temporary fluctuations in lending demand.
By 2022, some indicators had returned to more normal levels, but the bank continued to outperform its pre-pandemic performance, suggesting that the improvements were sustainable rather than temporary.
The researchers describe this outcome as a case of positive deviance, where an organization performs substantially better than expected under adverse conditions.
Lessons for Banks and Policymakers
The findings have implications beyond Bank Jatim.
Many financial institutions focus on crisis survival strategies. However, the study suggests that crises can also create opportunities for transformation when organizations respond quickly and strategically.
According to Prasetyo and Rahmawati of STIE Malangkuçeçwara, organizational resilience should not be viewed only as the ability to absorb shocks. Resilience can also involve using a crisis as a catalyst for innovation, efficiency improvements, and long-term competitive advantage.
For regional banks, the study offers three practical recommendations:
- Invest in digital banking infrastructure before future crises occur.
- Implement proactive loan restructuring programs to manage credit risk.
- Use periods of disruption to strengthen cost discipline and operational efficiency.
The authors argue that regional banks may possess an important advantage over larger institutions: greater organizational agility. Faster decision-making processes can allow regional banks to respond more effectively to sudden changes in economic conditions.
Why the Research Matters Today
Global economic uncertainty continues to affect financial institutions through inflation pressures, changing customer behavior, and rapid technological transformation.
The Bank Jatim case demonstrates that successful crisis management is not solely about minimizing losses. It can also involve creating new opportunities for growth.
The experience of Bank Jatim provides a practical example of how digital innovation, prudent risk management, and disciplined cost control can strengthen financial performance even during periods of significant economic disruption.
Author Profiles
Irawan Budi Prasetyo is a researcher from STIE Malangkuçeçwara, Indonesia, specializing in banking performance, financial management, and organizational resilience.
Rina Rahmawati is a lecturer and researcher at STIE Malangkuçeçwara, Indonesia, whose expertise includes financial management, business strategy, digital transformation, and organizational development.
Source
Article Title: When a Regional Bank Thrived: A Resilience Case Study of PT Bank Jawa Timur During and After COVID-19
Authors: Irawan Budi Prasetyo and Rina Rahmawati
Affiliation: STIE Malangkuçeçwara, Indonesia
Journal: International Journal of Sustainable Applied Sciences (IJSAS)
Year: 2026
Volume: 4(5), pp. 365–374
DOI: https://doi.org/10.59890/ijsas.v4i5.449
Official Journal URL: https://dmimultitechpublisher.my.id/index.php/ijsas
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