Managing Credit Risk to Optimize Profitability: A Survey of State-Owned Enterprise Banks in Indonesia

The purpose of this study is to determine the effect of credit risk management on optimizing the profitability of State Owned Enterprise (SOE) Banks in Indonesia. The sample in this research is employee of SOE Banks. Sampling technique in this research uses purposive sampling. This method uses certain criteria for selecting respondents; the criteria are all staff from bank credit administration group, Credit Management Committee and from SOE Banks. The data were obtained through the distribution of questionnaires with Likert scale and from the annual financial statements. The results of this study indicate that credit risk management variables have a significant positive effect on the optimization of bank profitability, while the Non-Performing Loan (NPL) level has no significant effect. This means that if credit risk management goes well then profitability will increase. Implications for Managerial and Investors should be paid attention to credit risk management in order to increase bank profitability.