This article is intended to examine the effect of Covid-19 on financial performance in the banking industry represented by Bank BNI, Bank BRI, Bank CIMB Niaga, and Bank Mandiri with the variables Net Performing Loan, Loan to Deposit Ratio and Non Performing Loan as a measure of financial performance. The analysis used is the Mann Whitney test and the Kolmogrov Smirnov test. Based on the results of the different tests, it was found that; 1) Covid-19 has a negative but not significant effect on the net profit margin, 2) Covid-19 has a negative and significant effect on the loan to deposit ratio, and Covid-19 has a positive and significant effect on non-performing loans

Farhan, Ali

Kustiningsih, Nanik

Sukatmadiredja, Noneng R.

Wardhani, Parwita Setya

English

Universitas Narotama Surabaya (UNNAR): Journals

:: IJIEEB :: (International Journal of Integrated Education, Engineering Business) Volume 05 Number 01 March 2022 This work is licensed under a Creative Commons Attribution-  ShareAlike 4.0 International License. ISSN : 2615-2312 (ONLINE) ISSN : 2615-1596 (PRINTED)   4 Does Covid-19’s Influence on Commercial Banking Performance ?  :  Evidence from Indonesia  Nanik Kustiningsih, Ali Farhan, Parwita Setya Warhani, Noneng. R. Sukatmadiredja Departement of Management, STIE Mahardhika, Surabaya nanik@stiemahardhika.ac.id, ali.farhan@stiemahardhika.ac.id, parwita@stiemahardhika.ac.id, rheina1060@gmail.com   Abstract This article is intended to examine the effect of Covid-19 on financial performance in the banking industry represented by Bank BNI, Bank BRI, Bank CIMB Niaga, and Bank Mandiri with the variables Net Performing Loan, Loan to Deposit Ratio and Non Performing Loan as a measure of financial performance. The analysis used is the Mann Whitney test and the Kolmogrov Smirnov test. Based on the results of the different tests, it was found that; 1) Covid-19 has a negative but not significant effect on the net profit margin, 2) Covid-19 has a negative and significant effect on the loan to deposit ratio, and Covid-19 has a positive and significant effect on non-performing loans.  Keywords:  Banking, Covid-19, Financial Crisis  1. Background The current outbreak of the COVID-19 pandemic in Indonesia has an impact on almost all sectors of life, both in terms of economy, politics, social and culture. Likewise experienced by one of the economic sectors which is the heart of a country's economy, namely the banking sector (Adeabah & Andoh, 2020). The banking sector is currently experiencing major challenges due to the COVID-19 pandemic. The dynamic development of the banking sector as a determining factor for economic development in a country. The banking sector slumped impacted the economic sector as well. Likewise, the stagnation of economic activity will have an impact on the banking sector because the intermediation function does not run normally. Banking is an institution that has long given color to the country's economic activities. The existence of banking in the era of the modern economy as a media/intermediary/financial intermediary institution is very important. Banks are required to have good performance as their role as media/intermediary institutions, because with this, banks get "trust" from the public (agent of trust). Banks as financial institutions must be supported by a sense of trust from customers. Smooth bank operational activities will determine as a supporting factor for the welfare of stakeholders and increasing company value. Tiono & Djaddang (2021) argue that Covid-19 has an impact on slowing banking performance, which is indicated by differences in financial performance at several national banks, especially in ROE, BOPO, NPL and ROA, while Iswahyuni's findings (2021) in Islamic banking suggest that Covid-19 causes a decrease in the number of lending and a decrease in asset quality. Sholihah (2021) in his research on the efficiency level of Islamic banks during the pandemic found that Islamic banking experienced a substantial decrease in efficiency levels during the Covid-19 pandemic. Some of the studies mentioned above have explained the impact caused by Coivd-19 on the banking industry. However, the research carried out is limited to revealing performance before and after Covid-19, furthermore this article will try to examine the effect of Covid-19 on the performance of the banking industry with the variables of Net Performing Loans, Loans to Deposit Ratios and Non Performing Loans as a measure of financial performance. tested.  1.1. Hypothesis Based on the background that has been prepared in the previous paragraph, the hypotheses that will be tested in this article are as follows; 1. H01 : There is no difference in the financial performance of conventional banks in the NPM ratio caused by Covid-19 2. Ha1 : There is a difference in the financial performance of conventional banks in the NPM ratio caused by Covid-19 :: IJIEEB :: (International Journal of Integrated Education, Engineering Business) Volume 05 Number 01 March 2022 This work is licensed under a Creative Commons Attribution-  ShareAlike 4.0 International License. ISSN : 2615-2312 (ONLINE) ISSN : 2615-1596 (PRINTED)   5 3. H02 : There is no difference in the financial performance of conventional banks in the LDR ratio caused by Covid-19 4. Ha2 : There is a difference in the financial performance of conventional banks in the LDR ratio caused by Covid-19 5. H03 : There is no difference in the financial performance of conventional banks in the NPL ratio caused by Covid-19 6. H03 : There is a difference in the financial performance of conventional banks in the NPL ratio caused by Covid-19  2. Literature Review 2.1. Covid-19 Severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) better known as the Corona virus is a new type of coronavirus that is transmitted to humans. This virus can attack anyone, such as the elderly (older people), adults, children, and infants, including pregnant women and breastfeeding mothers. Corona virus infection is called COVID-19 (Corona Virus Disease 2019) and was first discovered in the city of Wuhan, China at the end of December 2019. This virus spreads very quickly and has spread to almost all countries, including Indonesia, in just a few months. Coronavirus is a collection of viruses that can infect the respiratory system. In most cases, this virus causes only mild respiratory infections, such as the flu. However, this virus can also cause severe respiratory infections, such as lung infections (pneumonia). This virus is transmitted through phlegm (droplets) from the respiratory tract, for example when in a crowded closed room with poor air circulation or direct contact with droplets. In addition to the SARS-CoV-2 virus or Corona virus, viruses that also include: in this group are viruses that cause Severe Acute Respiratory Syndrome (SARS) and viruses that cause Middle-East Respiratory Syndrome (MERS). Although caused by viruses from the same group, namely coronaviruses, COVID-19 has several differences with SARS and MERS, including in terms of speed of spread and severity of symptoms.  2.2. Financial performance According to Utari et al. in Harahap (2017), financial performance is the result of the company's operating activities for a certain period which is presented in the form of a report in the form of financial figures. Financial performance can be assessed with several analytical tools. According to Hery in Harahap (2017), based on the technique, financial analysis can be divided into nine types. a) Comparative analysis of financial statements is carried out by comparing changes that occur in two or more financial reporting periods, both in numbers and percentages. b) Trend analysis to determine the tendency of financial condition whether it shows an increase or decrease. c) Percentage analysis per component (common size) is an analytical technique to determine the percentage of investment in each one assets to the total or total assets or liabilities. d) Analysis of sources and uses of working capital to compare sources and uses of working capital for two specific periods. e) Analysis of the source and use of cash to analyze the company's cash position and the causes of changes in cash in a certain period of time. f) Financial ratio analysis to determine the relationship between certain items in the balance sheet and income statement. g) Analysis of changes in gross profit to determine the position of the company's gross profit and the causes of these changes between certain periods. h) Break-even analysis to analyze the minimum level of sales that the company must achieve so as not to experience losses or profits. i) Credit analysis to assess the feasibility of the debtor's credit application to the creditor. Kustiningsih et al. (2020) Stated Fundamentally, a company's financial success is achieved by using the company's current resources as efficiently and effectively as possible to achieve the management goals and banking performance as well as by managing its resources as effectively and effectively as possible to achieve its objectives.  3. Research Method 3.1. Population and Research Sample According to Sugiyono (2011), the population is a general group in the form of objects or subjects that meet certain criteria according to the researcher's determination to then be analyzed and drawn conclusions. The population in this study is conventional banking consisting of 4 banks, namely BRI, BNI, Mandiri, and CIMB Niaga. The data used is monthly financial performance from the period 2018 to 2021.  :: IJIEEB :: (International Journal of Integrated Education, Engineering Business) Volume 05 Number 01 March 2022 This work is licensed under a Creative Commons Attribution-  ShareAlike 4.0 International License. ISSN : 2615-2312 (ONLINE) ISSN : 2615-1596 (PRINTED)   6 Tabel 1. Nama Bank dan Bentuk Data No. Bank Name Indicator Scale 1 Bank BRI Income statement & Balance Sheet Ratio 2 Bank BNI Income statement & Balance Sheet Ratio 3 Bank CIMB Niaga Income statement & Balance Sheet Ratio 4 Bank Mandiri Income statement & Balance Sheet Ratio  Tabel 2. Definisi Operasional Variabel Variable Indicator Measurement Skala Net Profit Margin Tingkat keuntungan bank NPM =  Net Profit    x 100% Rasio                 Total Cost           Loan to Deposit Ratio Liquidity LDR = Total Distributed Financing    x 100% Rasio                     Third Parties Fund           Non Performing Loan Productive Assets’s Qualities NPL =  Doubtful Receivable  x 100% Rasio                        Total Receivable    3.2. Data Collection and Processing Method This research is a quantitative comparative study, so that in the process, conventional banking monthly financial report data for 2018-2021 is collected on the company's official website using the digital research method. Digital research is a data collection technique by conducting a review of literature, records, or reports whose data is obtained through digital searches on internet media. The data collected includes the ratio of earning asset quality (NPL), profitability ratio (NPM) and liquidity ratio (LDR). Data from 2018 to 2019 is used as research data before the COVID-19 pandemic, while data from 2020 to 2021 is for after the pandemic. After that, the data is validated using a normality test followed by an analysis process using the Mann-Whitney and Kolmogrov-Smirnov test with a tool in the form of SPSS 21. The test using regression is intended to be able to see objectively whether Covid-19 really has an effect which is significant to the banking industry. Based on the results of the processing, the data is then analyzed and the hypothesis is tested based on the existing provisions.  4. Results and Discussion Like other parametric tests, linear regression also has classical conditions or assumptions that must be met. So that the resulting prediction model will be BLUE (Best Linear Unbiased Estimation). Classical assumptions on multiple linear regression include: normality and non-multicollinearity tests a. Normality: Classical Assumption Testing Normality test using the one-sample Kolmogorov-Smirnor test of 0.495, greater than the value of Sig > 0.05, it can be concluded that the data in the model is normally distributed.    :: IJIEEB :: (International Journal of Integrated Education, Engineering Business) Volume 05 Number 01 March 2022 This work is licensed under a Creative Commons Attribution-  ShareAlike 4.0 International License. ISSN : 2615-2312 (ONLINE) ISSN : 2615-1596 (PRINTED)   7 Tabel 3. Uji Normalitas Data Kolmogorof-Smirnov Test One-Sample Kolmogorov-Smirnov Test     Unstandardized Residual N   108 Normal Parametersa Mean .0000000   Std. Deviation .17570361 Most Extreme Differences Absolute .080   Positive .080   Negative -.039 Kolmogorov-Smirnov Z   .831 Asymp. Sig. (2-tailed)   .495 a. Test distribution is Normal.      Tabel 4. Uji Beda Mann Whitney   Test Statistics(a)     NPM LDR NPL Mann-Whitney U 632.000 480.000 .000 Wilcoxon W 1,13E+06 976.000 3,00E+06 Z -3.823 -4.863 -8.417 Asymp. Sig. (2-tailed) .000 .000 .000  Based on the results of the Mann Whitney test in the table above, it can be seen that the Sig value in the NPM, LDR and NPL variables is 0.000 < 0.005, thus statistically there is a difference in banking performance between before and after Covid-19, based on this, H0 which states there is no difference between banking performance on the variables NPM, LDR, and NPL is rejected and Ha is accepted. 1) Net Profit Margin In line with the results of the different test, the profitability of banks also decreased. This happened to all the banks that were sampled in this study; BNI, BRI, CIMB and Mandiri.  Table 5. NPM Ratio 201 – 2020   BNI experienced a 10% decrease in net profit in 2020, as well as BRI which experienced a net profit decline of 8%, CIMB although relatively stable but also experiencing the impact of this pandemic, net profit decreased by 2% from the previous year, while Bank Mandiri experienced a decrease in net profit of up to 9%.  2)  Non-Performing Loans The decline in the level of banking profits during Covid-19 could be caused by a decrease in the level of banking efficiency (Sholihah, 2021), but this research also found that non-performing loans during the pandemic increased between 2% to 3%, as we know that non-performing loans is the level of bad loans experienced by banks, an increase in the number of non-performing loans can result in a decrease in the level of banking profits. Bank 2018 2019 2020 BNI 40% 39% 29% BRI 40% 39% 31% CIMB 27% 26% 24% Mandiri 42% 45% 36% :: IJIEEB :: (International Journal of Integrated Education, Engineering Business) Volume 05 Number 01 March 2022 This work is licensed under a Creative Commons Attribution-  ShareAlike 4.0 International License. ISSN : 2615-2312 (ONLINE) ISSN : 2615-1596 (PRINTED)   8 Table 6. NPL Ratio 2019 – 2020 Bank 2018 2019 2020 BNI 3% 3% 6% BRI 4% 5% 7% CIMB 4% 4% 7% Mandiri 5% 4% 7% Grand Total 4% 4% 7%  3) Loan to Deposit Ratio As in the NPM and NPL variables which have decreased, the crisis triggered by this pandemic has an impact on all segments of the economy. Not only did banks experience a decline in profits and an increase in credit risk, but also a decline in lending. This is shown in table 7. below, where the loan disbursement ratio (Loan to Deposit Ratio) has decreased between 4% to 10%. This is due to the decline in economic activity, so banks tend to be conservative in providing financing.  Table 7. LDR Ratio 2018 - 2020 Bank 2018 2019 2020 BNI 78% 85% 82% BRI 86% 87% 82% CIMB 87% 90% 80% Mandiri 85% 86% 82%  5. Conclusion Banking financial performance has clearly decreased after the Covid-19 pandemic hit. This is indicated by the financial performance of banks, which include NPM, LDR, and NPL, which experienced a decline in performance compared to before Covid-19. The level of net profit has decreased, the risk of default has increased, and the ability to disburse credit has decreased.  Referencess Adeabah, D., & Andoh, C. (2020). Cost efficiency and welfare performance of banks: evidence from an emerging economy. International Journal of Managerial Finance, 16(5), 549–574. https://doi.org/10.1108/IJMF-06-2019-0212 Harahap, Y. M. H. (2017). Analisis Perbandingan Kinerja Keuangan Antara Perusahaan Pertambangan Milik Negara (BUMN) dengan Perusahaan Pertambangan Milik Swasta (BUMS) yang Terdaftar di BEI (Periode 2011-2015). https://repositori.usu.ac.id/handle/123456789/1900 Iswahyuni, I. (2021). Analisis Dampak Covid-19 Terhadap Perbankan Syariah. Jurnal Ilmu Pendidikan Dan Ekonomi, 6(1), 42–58. https://doi.org/10.53958/WB.V6I11.74 Kustiningsih, N., Kalbuana, N., Rochman, A. S., Farid, M. M., Bharmawan, A. S., Farida, I., Sholikha, S. M., Setiawan, D., Hidayat, W., Rusdiyanto, Junus, O., Amar, S. S., & Suryansah, A. (2020). Study Ratio Financial of Bank Performance: Evidence from Indonesia. Palarch’s Journal of Archaeology of Egypt/Egyptology, 17(9), 6571–6605. https://archives.palarch.nl/index.php/jae/article/view/5216 Sholihah, E. (2021). Efisiensi Kinerja Keuangan Sektor Perbankan Indonesia di Masa Pandemi Covid-19. JRMSI - Jurnal Riset Manajemen Sains Indonesia, 12(2), 287–304. https://doi.org/10.21009/JRMSI.012.2.06 Sugiyono. (2011). Research Methodology for Qualitative and Quantitative and Research Development. Alfabeta. Tiono, I., & Djaddang, S. (2021). Analisis Komparasi Kinerja Keuangan pada Perbankan Konvensional Buku IV di Indonesia Sebelum dan Sesudah Pandemi Covid-19. BALANCE: Jurnal Akuntansi, Auditing Dan Keuangan, 18(1), 72–90. https://doi.org/10.25170/BALANCE.V18I1.2336  

Does Covid-19’s Influence on Commercial Banking Performance ?  :  Evidence from Indonesia

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Does Covid-19’s Influence on Commercial Banking Performance ? : Evidence from Indonesia

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