CREDIT ASSET QUALITY ANALYSIS AND FINANCIAL PERFORMANCE RECOVERY RECOMMENDATIONS FOR AN INDONESIAN GOVERNMENT-OWNED RURAL BANK: A CASE STUDY OF PT BPR SERANG (PERSERODA), 2020–2025
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2026-08-31Downloads
Abstract
Non-performing loans (NPL) among Indonesian Bank Perekonomian Rakyat (BPR, rural banks) rose nationally from 7.89% in 2022 to 11.75% in 2025, well above the 5% prudential guideline. PT BPR Serang (Perseroda), a rural bank wholly owned by the Serang Regency government, experienced a more severe deterioration: Net NPL rose from 3.86% in 2020 to 18.39% in 2025, Gross NPL reached 22.21%, Return on Assets (ROA) fell to 1.48%, and net profit declined from IDR 13.66 billion in 2022 to IDR 6.49 billion in 2025. This study examines the bank's credit asset quality over 2020–2025, investigates the internal and external factors driving its deterioration, evaluates the resulting impact on financial performance, and develops empirically grounded recovery recommendations. A single-case, sequential explanatory mixed-methods design was used, combining CAMEL-based gap analysis of secondary financial data against SEOJK No. 11/SEOJK.03/2022 thresholds and national industry averages with qualitative content analysis of semi-structured interviews with three key informants (Direktur Bisnis, Manajer Kredit, and Kepala Manajemen Risiko/Kepatuhan), and a supplementary Pearson correlation analysis of internal financial indicators. Findings indicate that structural deterioration in credit asset quality reduced both profitability and capital adequacy through four internal factors — high portfolio concentration in ASN (civil servant) payroll-deduction loans, underwriting that relies on payroll-deduction collection rather than fully verified repayment capacity, insufficient oversight of broker-mediated financing, and an early-warning system that functions as a monitoring dashboard rather than a triggered escalation mechanism — compounded by intensifying competition from larger payroll banks and volatility in ASN allowance disbursement. A supplementary correlation analysis (n=6 annual observations, descriptive only) found the loan-to-deposit ratio to be the most robust internal correlate of Net NPL. Six recovery recommendations are proposed using the Robbins and Pearce (1992) retrenchment/recovery turnaround model, mapped to the four rencana tindak categories of SEOJK No. 11/SEOJK.03/2022: credit risk reduction, governance improvement, capital reinforcement, and financial performance improvement. Credit policy is one operational instrument within this broader recovery package rather than a substitute for it.
Keywords:
credit asset quality rural bank non-performing loan credit policy bank turnaroundReferences
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