ISLAMIC BANK CONVERSION ANALYSIS BASED ON RISK BASED BANK RATING (CASE STUDY: PT. BANK ACEH SYARIAH)

• Main Author: Ediyen, Alre
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/49769
• Institution: Institut Teknologi Bandung

Conventional commercial banks are required to separate sharia business units into sharia commercial banks. This requirement is applied on Sharia Business Unit with the provision of assets at least 50 percent of the total assets of the main banks or 15 years since 2008. It is stated on regulation Number 21 of 2008 Article 68 about Sharia Banking in Indonesia. Based on this regulation, all sharia business units on 2023 must spin off as well as those from regional banks. These banks can be separated into subordinate business units of conventional banks. Another option is converting the bank into an Islamic bank. However, spin offs may not be a realistic choice for regional banks for three reasons: large capital problems, common market segmentations, and high costs. Thus, it will be more realistic if regional banks that already have Sharia Business Units do not spin off, but banks can convert to Islamic banks. This study examines the comparative financial performance of PT. Bank Aceh Syariah between pre-conversion and post-conversion in Risk Based Bank Rating (RBBR). At the same time, this research examines the ratios factors such as Risk Profiles, Profitability (Earnings), and Capital. These factors have statistically significant differences on a nonparametric test (Mann-Whitney U Test). The data are quarterly data. Pre-conversion data are from the 3 rd Quarter in 2013 to the 2 nd Quarter in 2016. Post-conversion data are from the 4 th Quarter in 2016 until the 3 rd Quarter of 2019. Based on descriptive statistics on means of data, out of the fifteen RBBR ratios used as indicators of assessment, there are nine increased ratios in performance and six decreased ratios in performance after converting to a Sharia Bank. Based on the results of the MannWhitey U Test, this study found ten statistically significant difference ratios between pre and post-conversion. Specifically, five statistically significant different ratios show better performance: NPL, LDR, Reserve Cost to Average Total Assets, CAR, and Problematic Earning Assets minus CKPN for Earning Assets to Core Capital plus General Reserves. Furthermore, three statistically significant different ratios show declining performance: NIM, Overhead Cost to Average Total Assets, and ROE. However, the remaining two ratios show statistically significant differences. These ratios show declining performance but are still on the same criteria of scores and ranking: ROA and OER. Therefore, PT. Bank Aceh Syariah changed to better financial performance after converting to Islamic banks.