REGIONAL BANK PERFORMANCE AS A REFLECTION OF REGIONAL ECONOMY: A COMPARATIVE ANALYSIS BETWEEN EAST NUSA TENGGARA AND JAVA

Abstract

This study aims to analyze the performance of six Regional Development Banks (BPD)—Bank BJB, Bank DIY, Bank DKI, Bank Jateng, Bank Jatim, and Bank NTT— during the 2020–2024 period, and to evaluate the extent to which this performance represents the economic conditions of their respective regions. As regional
government-owned financial institutions, BPDs play a strategic role in supporting regional economic development through financing micro, small, and medium enterprises (MSMEs), providing regional financial services, and contributing to
Regional Original Income (PAD). However, there is a significant economic gap between Java and eastern Indonesia, such as East Nusa Tenggara, making it important to examine whether BPD performance reflects the strength of the local economies
where the banks operate. This study uses the Risk-Based Bank Rating (RGEC) method. The results showed that all regional banks were in good health, with NPLs below 5%, ROA above 1%, and CARs well above the minimum threshold of 8%. Bank DIY performed best with the lowest NPL and highest ROA, reflecting efficient asset management and effective risk management. Bank DKI excelled in terms of capitalization, with the highest CAR, demonstrating a robust capital structure. Meanwhile, Bank NTT maintained solid profitability with an average ROA of 1.88%,
even surpassing the average for regional development banks (BPDs) in Java of 1.82%.