The Effect of Camel Ratios on the Financial Performance of State-Owned Banks During the 2020–2025 Period

Abstract

This study aims to analyze the effect of the CAMEL ratio proxied with Capital Adequacy Ratio (CAR), Non-Performing Loan (NPL), Net Interest Margin (NIM), Operating Costs to Operating Income (BOPO), and Loan to Deposit Ratio (LDR) on financial performance proxied by Return on Assets (ROA) in state-owned banks for the 2020–2025 period. This study uses a quantitative approach with a type of causal research. The data used is secondary data obtained from the annual financial statements of four state-owned banks with a sample number of 24 observations obtained through saturated sampling techniques. Data analysis was performed using multiple linear regression with the help of IBM SPSS Statistics 22. The results showed that CAR, NPL, and LDR had no significant effect on ROA. Meanwhile, NIM has a positive and significant effect on ROA, while BOPO has a negative and significant effect on ROA. Simultaneously, the CAMEL ratio has a significant effect on ROA. The Adjusted R Square value of 0.351 indicates that 35.1% of the ROA variation can be explained by the study variable, while the remaining 64.9% is influenced by other factors outside the model. This study concludes that the bank's ability to generate net interest income and maintain operational efficiency is the main factor in improving the financial performance of state-owned banks.