The paper emperically predicts the Return On Asset (ROA) performance of the public sector banks in Indonesia Stock Exchange for the years 2007 until 2011. A sample of 25 banks is taken for the study. A regression analysis is used to study the impact of these determinants on the performance of the banks. ROA is taken as the dependent variable, while other variables like Capital Adequacy Ratio, Credit-Deposit Ratio, Investments-Deposit Ratio, Non Interest Income, Non-Performing Assets, Operating Expense, Provision and Contingencies and, Spread have been controlled in the study. The result reveal capital adequacy ratio, spread and provision and contogencies have the capacity of predicting the profitability (measured by ROA) of public sector banks in IDX. This condition implies that the higher the value of Spread, so any increase in net interest income is the difference between total interest expense and interest income resulted in an increase in total earnings, and ultimately increased Return on Assets. Mean while, provision and contigencies condition implies that the higher value of provision and contigencies the resulting lower Return on Assets, its meaning the funds of the Estimate on the provision and contigencies may indicate greater risk borne by the bank to reduce bank earnings.
Kata Kunci / Keywords:
banks, capital adequacy ratio, credit-deposit ratio, investments-deposit ratio, non interest income, non-performing assets, operating expense, provision and contingencies, return on asset, spread.