DETERMINANTS OF PROFITABILITY BEFORE AND AFTER ACQUISITION OF BANK COMMONWEALTH INDONESIA

Abstract

This study is aim to find out determinants of ROA as profitability of Bank Commonwealth Indonesia both before and after acquisition. Due to Indonesian Banking Architecture (API) on 2004, Bank Commonwealth Indonesia was allowed to acquire Bank Arta Niaga Kencana on latter of 2007. It had fluctuated ROA before acquisition, and down-trend afterward; these condition could probably impress as unprofitable bank. This study can be a reference on bank performance management if willing to do acquisition in the future. Besides that, it provides a literature on similar research, since this kind of research method is still less applied on this topic. Bank Commonwealth Indonesia is chosen by judgemental sampling. This quantitative study takes secondary data from monthly financial report of the bank, which was published on Bank Indonesia website. This research takes 66 samples from 2002-2007 and 82 samples from 2008-2014 as before and after acquisition, respectively. SPSS version 22 is employed to do multiple regression analysis of CAR, LDR, OEOI, and NPL toward ROA. Before acquisition, only CAR and OEOI have significant influences; whereas after acquisition, LDR, OEOI, and NPL do. Moreover, OEOI is calculated as the most significant ratio which influences ROA in both periods.