THE EFFECT OF OPERATIONAL COSTS TO OPERATING INCOME (BOPO), NON PERFORMING LOAN (NPL), BANK SIZE AND BANK AGE ON PROFITABILITY OF BANKING COMPANIES LISTED ON THE INDONESIA STOCK EXCHANGE

Abstract

This study aims to examine and analyze the effect of operational costs to operating   income (BOPO), non performing loans (NPL), bank size dan bank age on profitability. The sampling technique used in this research is purposive sampling. This study utilizes secondary data in the form of annual financial statements of banking companies listed on the Indonesia Stock Exchange (IDX) fot the period 2021 – 2024. The data analysis technique applied is panel data regression using Eviews 13 software. The results of this study indicate that the BOPO variable has a negative and significant effect on profitability. This finding suggests that a higher BOPO indicates that the bank’s expenditure for operational activities becomes less efficient. This inefficiency leads to a decrease in the bank’s net income, thus resulting in lower profitability. Meanwhile, the variabels of non performing loans (NPL), bank size and bank age do not show a significant influence on profitability. These findings emphasize that operational efficiency is the main factor affecting the level of banking profitability. Therefore, bank management is advised to focus more on improving operational cost efficiency to drive an increase in the company’s profitability.