Journal of Finance and Islamic Banking
Full Lenght Article
Financial Performance of Bank NTB Syariah: Before and After Becoming an Islamic Commercial Bank
Abstract
This study evaluates the financial performance of Bank NTB Syariah before and after its conversion into an Islamic Commercial Bank (BUS) in 2018. The conversion aimed to foster more equitable economic growth and improve the overall status of the NTB community. Utilizing Financial Ratio Analysis (FRA), this research examines various financial ratios, including ROA, ROE, NIM, NPF, BOPO, FAR, FDR, ELR, EAR, CAR, DER, and DAR, to assess performance differences pre- and post-conversion. The findings indicate significant improvements in key financial indicators such as ROA, ROE, NIM, NPF Net, and BOPO after the conversion, demonstrating enhanced profitability and efficiency. However, there were no notable changes in the ratios of FAR, FDR, ELR, EAR, CAR, DER, DAR, and NPF Gross, suggesting stability in these areas. This comprehensive analysis highlights the positive impact of the conversion on Bank NTB Syariah's financial performance and provides valuable insights for investors, bank managers, and policymakers regarding the benefits of converting to an Islamic Commercial Bank. The study's findings underscore the importance of strategic structural changes in enhancing the financial health and operational efficiency of financial institutions.
Keywords
Declarations
Publisher's Note
Universitas Islam Negeri Raden Mas Said Surakarta remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
References
Abdul-Rahman, A., Abdul Latif, R., Muda, R., & Abdullah, M. A. (2014). Failure and potential of profit-loss sharing contracts: A perspective of New Institutional, Economic (NIE) Theory. Pacific Basin Finance Journal, 28, 136–151. https://doi.org/10.1016/j.pacfin.2014.01.004
Abou Elseoud, M. S., Yassin, M., & Ali, M. A. M. (2020). Using a panel data approach to determining the key factors of Islamic banks’ profitability in Bahrain. Cogent Business and Management, 7(1). https://doi.org/10.1080/23311975.2020.1831754
Al-Hunnayan, S. H. (2020). The capital structure decisions of Islamic banks in the GCC. Journal of Islamic Accounting and Business Research, 11(3), 745–764. https://doi.org/10.1108/JIABR-02-2017-0026
Al Arif, M. N. R., Ihsan, D. N., & Fatah, D. A. (2023). The impact of conversion on market share in Indonesian Islamic banks. Banks and Bank Systems, 18(2), 1–12. https://doi.org/10.21511/bbs.18(2).2023.01
Al Arif, M. N. R., Mufraini, M. A., & Prabowo, M. A. (2020). Market Structure, Spin-Off, and Efficiency: Evidence from Indonesian Islamic Banking Industry. Emerging Markets Finance and Trade, 56(2), 329–337. https://doi.org/10.1080/1540496X.2018.1553162
Alam, K., Rahman, S. A., Mustafa, H., Shah, S. M., & Hossain, S. (2019). Shariah governance framework of Islamic banks in Bangladesh: Practices, problems and recommendations. International Journal of English Language and Literature Studies, 9(1), 118–132. https://doi.org/10.18488/journal.aefr.2019.91.118.132
Amin, S. I. M., Ali, M. H., & Nor, S. M. (2018). Cost efficiency and liquidity risk in banking: New evidence from oic countries. International Journal of Business and Management Science, 8(2), 255–276.
Bougatef, K., & Korbi, F. (2018). The determinants of intermediation margins in Islamic and conventional banks. Managerial Finance, 44(6), 704–721. https://doi.org/10.1108/MF-11-2016-0327
Chang, M.-Y., Cui, X., Liu, C.-C., & Lai, Y.-T. (2019). Evaluating the criteria for financial holding company operating ability based on the DEMATEL approach–the case of Taiwan. Economic Research-Ekonomska Istrazivanja , 32(1), 2972–2988. https://doi.org/10.1080/1331677X.2019.1656096
Gafrej, O., & Boujelbéne, M. (2022). The impact of performance, liquidity and credit risks on banking diversification in a context of financial stress. International Journal of Islamic and Middle Eastern Finance and Management, 15(1), 66–82. https://doi.org/10.1108/IMEFM-09-2020-0488
Gazi, M. A. I., Alam, M. S., Hossain, G. M. A., Islam, S. M. N., Rahman, M. K., Nahiduzzaman, M., & Hossain, A. I. (2021). Determinants of profitability in banking sector: Empirical evidence from bangladesh. Universal Journal of Accounting and Finance, 9(6), 1377–1386. https://doi.org/10.13189/ujaf.2021.090616
Irwan Tri Nugroho. (2020). Is spin-off policy an effective way to improve performance of Islamic banks?Evidence from Indonesia. Journal Pre-Proof.
Jati, K. W., Agustina, L., Muliasari, I., & Armeliza, D. (2020). Islamic social reporting disclosure as a form of social responsibility of Islamic banks in Indonesia. Banks and Bank Systems, 15(2), 47–55. https://doi.org/10.21511/bbs.15(2).2020.05
Khan, Z. T., Ramirez, A., & Ketcham, D. (2020). The effect of the Arab spring on the performance of Islamic and conventional banks in Egypt: Which model performs better amidst crisis? International Journal of Financial Research, 11(4), 180–194. https://doi.org/10.5430/ijfr.v11n4p180
Kumba Digdowiseiso, S.E., M. A. E. (2017). Metode Penelitian Ekonomi dan Bisnis. In Universitas Pendidikan Indonesia (Vol. 1, Issue Metodologi Penelitian).
Liu, M.-H., & Margaritis, D. (2014). Inflation, monetary policy and reserve requirement ratio adjustments in China. Frontiers of Business Research in China, 8(2), 137–153. https://doi.org/10.3868/s070-003-014-0007-6
Maghfuriyah, A., Ferdous Azam, S. M., & Shukri, S. (2019). Market structure and islamic banking performance in indonesia: An error correction model. Management Science Letters, 9(9), 1407–1418. https://doi.org/10.5267/j.msl.2019.5.010
Majeed, M. T., & Zainab, A. (2021). A comparative analysis of financial performance of Islamic banks vis-à-vis conventional banks: evidence from Pakistan. ISRA International Journal of Islamic Finance. https://doi.org/10.1108/IJIF-08-2018-0093
Majid, R., & Nugraha, R. A. (2022). Crowdfunding and Islamic Securities: the Role of Financial Literacy. Journal of Islamic Monetary Economics and Finance, 8(1), 89–112. https://doi.org/10.21098/jimf.v8i1.1420
Masvood, Y., & Lokeswara Choudary, Y. (2015). Islamic banking-a cross cultural patronage study among the students in Chennai. Asian Social Science, 11(4), 310–318. https://doi.org/10.5539/ass.v11n4p310
Misman, F. N., Ahmad, W., Khairani, N. S., & Amran, N. H. (2020). Credit risk, Islamic contracts and ownership status: Evidence from Malaysian Islamic banks. International Journal of Financial Research, 11(3), 106–114. https://doi.org/10.5430/ijfr.v11n3p106
Mulyadi, D., & Sinaga, O. (2020). Analysis of current ratio, net profit margin, and good corporate governance against company value. Systematic Reviews in Pharmacy, 11(1), 588–600. https://doi.org/10.5530/srp.2020.1.74
Musa, H., Musova, Z., Natorin, V., Lazaroiu, G., & Boďa, M. (2021). Comparison of factors influencing liquidity of European Islamic and conventional banks. Oeconomia Copernicana, 12(2), 375–398. https://doi.org/10.24136/OC.2021.013
Nur Rianto Al Arif, M., Nachrowi, N. D., Nasution, M. E., & Zakir Mahmud, T. M. (2017). The Islamic banking spin-off: Lessons from Indonesian Islamic banking experiences. Journal of King Abdulaziz University, Islamic Economics, 30(2), 117–133. https://doi.org/10.4197/Islec.30-2.11
Priyadi, U., Utami, K. D. S., Muhammad, R., & Nugraheni, P. (2021). Determinants of credit risk of Indonesian Sharīʿah rural banks. ISRA International Journal of Islamic Finance, 13(3), 284–301. https://doi.org/10.1108/IJIF-09-2019-0134
PT. Bank NTB Syariah. (2021). Laporan Tahunan PT. Bank NTB Syariah 2021.
Qayyum, N., & Noreen, U. (2019). Impact of capital structure on profitability: A comparative study of islamic and conventional banks of Pakistan. Journal of Asian Finance, Economics and Business, 6(4), 65–74. https://doi.org/10.13106/jafeb.2019.vol6.no4.65
Religiosa, M. W., & Surjandari, D. A. (2021). The Relation of Company Risk, Liquidity, Leverage, Capital Adequacy and Earning Management: Evidence from Indonesia Banking Companies. Mediterranean Journal of Social Sciences, 12(1), 1. https://doi.org/10.36941/mjss-2021-0001
Rokhmawati, A., & Halim, E. H. (2022). Does Spin-off Obligation of Sharia Business Units from its Parent Commercial Banks Enhance Their Performance? Iranian Economic Review, 26(4), 819–832. https://doi.org/10.22059/ier.2022.90658
Salih, A., Ghecham, M. A., & Al-Barghouthi, S. (2019). The impact of global financial crisis on conventional and Islamic banks in the GCC countries. International Journal of Finance and Economics, 24(3), 1225–1237. https://doi.org/10.1002/ijfe.1713
Suliyanto, S. E., & MM, S. (2017). Metode Penelitian Kuantitatif.
Thaker, K., Charles, V., Pant, A., & Gherman, T. (2022). A DEA and random forest regression approach to studying bank efficiency and corporate governance. Journal of the Operational Research Society, 73(6), 1258–1277. https://doi.org/10.1080/01605682.2021.1907239
Trinugroho, I., Santoso, W., Irawanto, R., & Pamungkas, P. (2021). Is spin-off policy an effective way to improve performance of Islamic banks? Evidence from Indonesia. Research in International Business and Finance, 56. https://doi.org/10.1016/j.ribaf.2020.101352
Yuspin, W., & Fauzie, A. (2018). The effectiveness of Spin off as a breakthrough in promoting Islamic Banking in Indonesia. Journal of Social Sciences Research, 2018(Special Issue 6), 213–216. https://doi.org/10.32861/jssr.spi6.213.216
Yuspin, W., & Wardiono, K. (2017). Islamic banking trajectories of Indonesia: Dealing with the present and shaping the future. International Journal of Economic Research, 14(16), 29–42.
Copyright and permissions
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.