Refa Gustia, Didi Ashari, Peny Cahaya Azwari, Ayke Nuraliati

Comparative Analysis of Financial Performance of Asset Portfolios between Islamic Banks and Conventional Banks in Indonesia

Introduction

Comparative analysis of financial performance of asset portfolios between islamic banks and conventional banks in indonesia. Analyze financial performance of Islamic (BSI) vs. conventional (BCA) banks in Indonesia (ROA, ROE, NPL, NPF). BSI shows better stability, BCA higher profitability but more rate-vulnerable.

Abstract

AbstracThis study aims to compare the financial performance between Islamic banks and conventional banks in Indonesia using key financial ratios such as Return on Assets (ROA), Return on Equity (ROE), Non-Performing Loan (NPL), and Non-Performing Financing (NPF). The objects of this study are Bank Syariah Indonesia (BSI) as the representative of Islamic banks, and Bank Central Asia (BCA) as the representative of conventional banks. The data used are derived from the annual financial statements of both banks over a certain period. The results of the study show that although BCA, as a conventional bank, tends to have larger assets and higher profitability, BSI demonstrates better financial stability, reflected by a lower NPF ratio. This indicates that Islamic banks, with a focus on asset-based financing, have more cautious risk management and are better able to manage financing risks effectively. In contrast, BCA, as a conventional bank, is more vulnerable to interest rate fluctuations, as evidenced by a relatively higher NPL ratio. This study is expected to provide insights for regulators, academics, and banking practitioners in formulating policies to enhance the performance and stability of the banking sector in Indonesia.Keywords: Islamic Banks, Conventional Banks, Indonesian Banking Sector

Review

This study embarks on a pertinent comparative analysis of financial performance between Islamic and conventional banks in Indonesia, a topic of significant interest given the growing prominence of Islamic finance globally. The authors aim to elucidate performance disparities using standard financial ratios—ROA, ROE, NPL, and NPF—by focusing on two prominent institutions: Bank Syariah Indonesia (BSI) and Bank Central Asia (BCA). The objective to provide insights for various stakeholders, including regulators and practitioners, underscores the practical relevance of understanding the unique dynamics and inherent strengths or weaknesses of each banking model within the Indonesian context. While the study's intention is commendable, its methodological approach, as outlined in the abstract, presents several limitations that temper the robustness of its conclusions. The comparison hinges on a single representative bank for each category (BSI and BCA), which raises concerns about the generalizability of the findings across the entire Indonesian banking sector. BCA is a long-established market leader, while BSI, though a large entity, is a relatively new merger, potentially influencing performance metrics differently than more mature Islamic banks or a wider sample of conventional banks. Furthermore, the abstract notes data from "a certain period," which lacks the necessary specificity for evaluating the temporal validity of the analysis. The core finding—BCA's higher profitability and larger assets versus BSI's claimed better financial stability due to a lower NPF ratio—merits further scrutiny, especially as the title suggests an analysis of "asset portfolios" but the abstract focuses broadly on overall financial performance ratios. To enhance the study's impact and validity, future iterations would benefit from expanding the sample size to include a more diverse range of Islamic and conventional banks. Clearly defining the data period and providing justifications for the chosen timeframe would also strengthen the research. Additionally, a deeper dive into the specific characteristics of asset portfolios, risk management frameworks, and funding structures of the selected banks, rather than just overall ratios, could offer more granular insights into the underlying causes of the observed performance differences. Addressing these points would not only bolster the academic rigor but also provide more actionable intelligence for the regulators and practitioners whom the study ultimately aims to serve.

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