Analysis of Financial Performance of BUMD Banks in Indonesia

This study aims to obtain an explanation and in-depth understanding of the financial performance of regional development banks in Indonesia. Financial performance is measured using Capital Adequacy Ratio (CAR), Non Performing Loans (NPL), Net Interest Margin (NIM), Operating Expenses compared to Operating Income (BOPO), Return on Assets (ROA), and Loan to Deposit Ratio (LDR) ). The specific target of this research is to contribute to the teaching material of financial statement financial analysis, while in the long run the results of this study can be used as a reference for subsequent studies, especially in the field of financial accounting. To achieve this goal, the study was conducted using a quantitative research model with descriptive analysis, of 27 regional development banks registered with OJK. From the analysis it was found that the financial performance of BUMD banks during the observation year still showed an unstable and not as expected movement


History of Regional Development Banks in Indonesia
On May 25, 1960 a Regional Development Bank (Bapindo) was established. The establishment of Bapindo is the beginning of the history of the establishment of the Regional Development Bank in Indonesia. The main task of Bapindo is to assist the government by raising funds from the community in the regions and assisting in financing national development efforts.
Before the establishment of Bapindo, Bank Industri Negara (BIN) was a bank that carried out this function. The function was then transferred to Bapindo in 1960. Besides Bapindo, by issuing Law No. 13/1962 the government also formed the Regional Development Bank (BPD). The establishment of this bank with the main task of helping the government carry out development that is evenly distributed to all regions in Indonesia, by opening operational networks in the regions.

Analysis of Bank Financial Performance
In analyzing bank financial performance, the approach used is an analysis of bank financial performance or analysis based on CAMEL (capital, assets, management, earnings, and liquidity) associated with the principles of transparency and accountability of public financial management by BPD. CAMEL analysis is based on aspects of how to manage capital / finance of public banks, such as capital adequacy ratio (CAR), return on assets (ROA), analysis of operating expenses vs. operating income (BOPO); rentability analysis, namely the analysis of income or operating income (earnings); and analysis of liquidity (liquidity ratio) including loan to deposit ratio (LDR) and non-performing loan (NPL) credit performance managed by bank management.

Capital Adequacy Ratio (CAR)
CAR analysis is a ratio that shows the extent to which a bank's ability to anticipate the need for the availability of its own funds for business growth and bear the risk of losses arising in running its business Formula: CAR = Bank Capital x 100%

Analysis of Business Efficiency
Business efficiency analysis is done by calculating "Net Interest Margin (NIM)" and "operating expenses compared to operating income (BOPO)" (Kashmir, 2016) The BOPO ratio can provide an assessment of the efficiency of banks, including conventional commercial banks and rural banks. If the bank's BOPO ratio in a certain year has decreased from the previous year, the bank's operations will be more efficient. Conversely, if the bank's BOPO ratio in one year has increased from the previous year, the bank's operations will be increasingly inefficient.

Analysis of Profitability and Profitability
The higher ROA, the greater the rate of return on liquid or productive assets, so that the possibility of banks in problematic conditions is smaller. Profitability / profitability analysis is one method of analyzing bank financial performance to measure the ability of banks to generate profits compared to the capital or assets used by the bank concerned to generate profits. In other words, profitability is the ability of a bank to generate profits for a certain period.
Formula: ROA = Profit before tax x 100% Average Total Assets

Research Methods
The stages carried out in this study are as follows European Journal of Business and Management www.iiste.org ISSN 2222-1905(Paper) ISSN 2222-2839(Online) Vol.12, No.3, 2020 1. Identifying the phenomena that exist, in this case are issues related to Regional Development Banks, as one of the spearheads of regional development, which is allegedly not yet optimal in carrying out its functions. 2. Conducting a literature review, looking for references regarding indicators used in assessing the financial performance of a bank. 3. Collecting and processing data, in the form of data from the Regional Development Bank's financial statements, 2014 -2018. 4. Analyze data, discuss and draw conclusions and provide advice.

Research Result
Calculation of Capital Adequacy Ratio (CAR) From the CAR calculation above, it can be seen that the decline in CAR ratio (decline in performance) occurred in 2018 where compared to 2017, 17 banks or 65.38% experienced a decrease in CAR value. The year 2015 showed the best fluctuation, namely only 6 banks or 23.08% which experienced a decrease in CAR compared to 2014. In 2016 and 2017 the CAR ratio showed the same performance, namely 10 banks or 38.46% experienced a decline.

Figure 1. Capital Adequacy Ratio (CAR)
From the bar chart above, it can be seen that Bank Sulselbar and Bank NTB are banks with the highest CAR fluctuations during the observation period. Besides fluctuating with the highest level of fluctuation, the two banks also showed the highest CAR ratio compared to other banks. In contrast to CAR, the NPL ratio shows that the biggest increase (decrease in performance) occurred in 2016 and 2018, as many as 15 banks or 57.69% experienced an increase in NPL (decreased performance). The best NPL performance actually occurred in 2014, with a decrease in NPL occurred in 19 companies or 73.08%.

Figure 2. Non Performing Loans (NPL)
From the bar chart above, it can be seen that the Papuan and East Kalimantan Banks are the banks with the highest NPL fluctuations, and both banks also show the highest NPL values compared to other banks.  From the bar chart above, it can be seen that fluctuations in the BOPO ratio tend to be stable. Only Bank Banten in 2016 experienced high fluctuations, and the bank also showed the highest average BOPO ratio. The   From the diagram above it can be seen that Bank Banten in 2016 experienced a fairly high surge and far above the ROA of other banks, but in subsequent years directly experienced a very significant decline, even ROA of Bank Banten in 2017 and 2018 became more small compared to ROA of other banks. From all banks, it appears that Bank Papua has the smallest ROA compared to other banks.   www.iiste.org ISSN 2222-1905(Paper) ISSN 2222-2839(Online) Vol.12, No.3, 2020 Discussion Capital Adequacy Ratio CAR analysis is a ratio that shows the extent to which a bank's ability to anticipate the need for the availability of its own funds for business growth and bear the risk of losses arising in running its business. The point is CAR is the capital adequacy ratio of a bank in carrying out its business activities. Usually the bank's capital adequacy ratio is compared to the level of credit risk, market risk, and business operational risk. CAR is one of the important indicators measuring the level of quality of bank capital.

Non Performing Loans (NPL)
NPL is a ratio that shows the level of problem loans compared to the total loans issued. In contrast to CAR, the NPL ratio shows that the biggest increase (decrease in performance) occurred in 2016 and 2018, as many as 15 banks or 57.69% experienced an increase in NPL (decreased performance). The best NPL performance actually occurred in 2014, with a decrease in NPL occurred in 19 companies or 73.08%. The highest decline in performance in terms of NPLs is still inherent in 2018, still due to the issue of the benchmark interest rate, where an increase in interest rates and weakening the economy will increase the risk of bad credit.

BOPO
The BOPO ratio can provide an assessment of the efficiency of banks, including conventional commercial banks and rural banks. If the bank's BOPO ratio in a certain year has decreased from the previous year, the bank's operations will be more efficient. Conversely, if the bank's BOPO ratio in one year has increased from the previous year, the bank's operations will be increasingly inefficient (BPS, 2017) Judging from the BOPO ratio, the highest number of banks that experienced an increase in BOPO (performance decreased) occurred in 2016 and 2017. In that year, as many as 15 banks or 57.69% of banks experienced an increase in BOPO ratio. In 2018, there were 10 banks or 38.46% of banks that experienced an increase in the BOPO ratio (decreased performance). 2014 was the year that showed the best performance, with only 6 companies or 23.08% of companies experiencing an increase in BOPO.
If CAR and NPL experience the worst performance decline in 2018, BOPO experienced the worst performance decline in 2016 and 2017. This is because BOPO is a ratio that shows efficiency in managing operational funds, where macro factors are not too influential. Whereas NPL and CAR are ratios that show performance which is strongly influenced by macro factors such as regulation and economic conditions.

ROA
ROA is used to measure the company's ability to generate profits with the total assets (wealth) the company has after adjusting for costs incurred to fund these assets. The higher the ROA, the greater the rate of return on liquid or productive assets4, so the possibility of banks in problematic conditions is smaller. Profitability / profitability analysis is one method of analyzing bank financial performance to measure the ability of banks to generate profits compared to the capital or assets used by the bank concerned to generate profits. In other words, profitability is the ability of a bank to generate profits for a certain period. Analysis of profitability or profitability of a bank illustrates the extent of the success of banks using funds or capital invested to increase profits. To maintain a reasonable or good profitability / profitability level, banks must obtain income that can cover all costs. In addition, the bank must strive to maintain income at a minimum level by taking into account various risks faced (Artarina and Masdjojo, 2013).

Loan to Deposit Ratio
Liquidity is translated by the LDR indicator ( ). LDR is a ratio of "credit given to third party funds, which is intended to measure the ability of banks to meet repayments of deposits that are past due to their depositors and can fulfill loan applications submitted without delay" (Kashmir, 2016) From the calculation results, it can be seen that the bank's performance in terms of LDR ratio showed the most decline in performance in 2017, where the number of banks that experienced an increase in LDR was 18 banks or 69.23% of the total number of banks. Followed in 2014, there were 17 banks or 65.38% of the total banks. The European Journal of Business and Management www.iiste.org ISSN 2222-1905(Paper) ISSN 2222-2839(Online) Vol.12, No.3, 2020 163 year 2015 saw the lowest decline in performance, with only 9 banks or 34.62% experiencing an increase in LDR.