Analysis of Banking Health before and During Covid-19 Using the RGEC Method

Abstract

Aims: This study aims to investigate the health condition of the banking sector before and during the Covid-19 pandemic. Study Design: This study uses a quantitative descriptive approach to evaluate the condition of the banking sector by analyzing the annual reports published on each bank's website. Place and Duration of Study: The author uses data from banking financial reports in Indonesia for the Bank Group Based on Core Capital (KBMI), which consists of one to four banks in the 2018-2021 period. Methodology: The RGEC model (Risk Profile, Good Corporate Governance, Earning, Capital) was utilized to analyze the data, assessing various aspects including risk profile, corporate governance, profitability, and capital adequacy. Results: The study's findings indicated that among KBMI 1, 3, and 4 banks, there were significant differences in banking Non-Performing Loans (NPLs) before and during Covid-19, while no significant differences were observed in Good Corporate Governance (GCG), Return on Assets (ROA), and Capital Adequacy Ratio (CAR). In the case of KBMI 2 bank, there were no significant differences observed in NPLs, GCG, ROA, and CAR before and during Covid-19. The NPL ratio, which measures credit risk or financing provided to third parties, showed no significant difference between the average NPL ratio before and during Covid-19. Conclusion: The advent of the Covid-19 era has resulted in a decline in the stability of banks, suggesting a reduced ability to maintain stability, efficiency, and the quality of credit ratios. However, overall, the banking sector during Covid-19 still remained in the "good" category based on the standards set by Bank Indonesia.