DETERMINANTS AND ALTERNATIVE STRATEGIES IN IMPROVING THE FINANCIAL PERFORMANCE OF SHARIA COMMERCIAL bANKS IN INDONESIA

: This study is to examine the impact of internal and external factors on the profitability of Islamic commercial banks and to provide suitable solutions for enhancing their financial performance. This study utilizes original data collected from Islamic banking specialists that have experience, professionalism and a proven track record, as well as are true experts in their disciplines. Secondary data are gathered from the Financial Services Authority's (OJK) annual report on the financial performance of Islamic banks in Indonesia for the period 2013-2020 and 2013-2020 macroeconomic data. Using qualitative descriptive, panel data regression, and Analytical Hierarchy Analysis (AHP), the data were evaluated. The results of the study indicate that Bank Muamalat is the bank with the worst performance, whereas BTPN Syariah is regarded as the most outstanding since it is the sharia bank with the best performance. Only BOPO and FDR have a substantial impact on the profitability of Islamic Commercial Banks (ROA), with BOPO having a negative impact and FDR having a favorable impact. Inflation and the BI Rate have no substantial impact on profitability as external factors. As the primary approach, Sharia commercial banks must improve services and develop business segmentation based on risk tolerance. Trust and capital are the most crucial aspects in the success of this strategy. Directors as top-level managers play a crucial role in setting the direction of business policies and objectives, whereas employees play a part in the successful implementation of strategies. The ultimate objective of this strategy is to enhance consumer confidence and maximize profitability


INTRODUCTION
In the midst of the COVID-19 pandemic, Islamic banking in Indonesia exhibited steady growth and improvement in 2020. According to OJK (2020), Islamic banking assets were IDR 608.9 trillion at the end of 2020, a rise of 13.11% over the previous year, while conventional banking only expanded 6.74%. Third party funds in Islamic banking expanded by 11.98%, outpacing conventional banking by 10.93%, Islamic banking financing grew by 8.08%, while conventional banking financing contracted by 4.20%. The optimistic performance provides an opportunity to increase Islamic banking's market share, which is still in the region of 6.51% of total national banking until the end of 2020. The gross non-performing finance (NPF) ratio of 3.13% at the end of 2020 demonstrates that Islamic banking's function as an intermediary institution has been running quite effectively. With the provision of 86.88% of Indonesia's Muslim population of 272.23 million people, Islamic banking has the potential to increase business growth in a more significant direction (BPS, 2020).
The financial performance of Islamic banking is one factor that can promote public interest in its services. Essentially, financial success demonstrates Islamic banking's ability to generate stable and sustained growth. This will boost stakeholder confidence in Islamic commercial banks (BUS). The expansion in the financial side of BUS as part of Islamic banking witnessed a fluctuating increase between 2012 and 2020, comprising total assets, revenues, costs, and third party funds is presented in Table 1.
The fluctuation of growth in Islamic banking's financial element has an effect on the dynamics of financial performance ratios. These financial ratios are used by stakeholders to measure the stability of Islamic banking business circumstances in the face of a country's diverse macroeconomic conditions. The level of credibility of Islamic banking to the wider community will be reflected in the steadiness of its financial performance in the face of macroeconomic difficulties. Table 2 shows the detailed growth of Islamic banking financial performance. Table 2 illustrates that the financial performance of BUS changed from 2013 to 2020, as did the expansion of the financial side of Islamic banking. Profitability is a key indication in assessing financial performance, with one of the ratios indicating the success of the organization in creating profits through the utilization of assets possessed. The ROA of the national BUS, which has continually increased. Similar rise happened in the capital adequate ratio (CAR) and financing to deposit ratio (FDR), with the CAR ratio growing somewhat continuously over the same period and the FDR ratio fluctuating from 2013 to 2016 before decreasing consistently from 2017 to 2020.
When compared to the financial performance of conventional commercial banks, the swings in Islamic banking's financial performance are thought to be substantially better. While Islamic banking's CAR increased, conventional banks' CAR dipped by 1.29% in 2018. The higher the CAR ratio, the more resilient banks are to asset depreciation caused by nonperforming assets. That is, the lower the CAR, the less likely the bank is to survive.
Another interesting phenomenon is the Operating Expenses to Operating Income Ratio (BOPO). Table 2 shows that the maximum ROA was attained in 2019 when FDR was 77.91% (second lowest from 2013 to 2020) and BOPO was 84.45% (lowest in 2013-2020). The ROA and BOPO movements are consistent with theory, however the ROA and FDR movements show that the optimal amount of FDR for achieving a high ROA was obtained in 2019. When compared to typical commercial banks (Table 3), the highest ROA was obtained when the LDR was at 89.7% (the third lowest maximum in the 2013-2019 period) and the BOPO value was at 74.06% (second lowest in the 2013-2019 period).
The increase in NPF in Islamic banking was followed by an increase in ROA in 2013-2014, whereas the fall in NPF in 2015-2016 was followed by an increase in ROA in the same year. In 2017, NPF increased while ROA remained unchanged, which was followed by a fall in NPF from 2018 to 2020, which was accompanied by a rise in ROA from 2017 to 2019, but ROA reduced in 2020 when NPF also declined. Table 3 also depicts the trend of inflation and the BI Rate, which has been constantly lowering between 2013 and 2020. Except for the conditions in 2020, the pattern of movement of inflation and ROA from 2013 to 2020 validates Basher's (2002) findings that inflation has a detrimental impact on the profitability of Islamic banks.  The impact of external and internal factors on the efficiency of banks, particularly Islamic banks, cannot be precisely identified (Sutawijaya and Lestari, 2009). This is due to the fact that banking performance is solely judged using accounting standards such as ROE (return on equity), ROA, and asset turnover. Furthermore, to measure Islamic banking performance in Indonesia, Islamic banking pays more attention to the balance of the role of intermediation and the soundness of banks in growing financing in the real sector (Paris, 2017). This contradicts the narratives of Alsatti (2014), Bordeleau and Graham (2013), and Ademi (2009), who contend that liquidity has a favorable impact on bank profitability. hence, Islamic financial performance can be evaluated using internal and external criteria.
According to these studies, there is a gap in the measuring of Islamic banking financial performance, with studies stating that performance cannot be directly quantified based on external and internal elements. Several studies, however, have found that these characteristics can have an impact on the performance of Islamic banking. As a result, this study was carried out to fill the vacuum by assessing the influence of CAR, BOPO, NPF, and FDR (internal factors), as well as external ones, namely inflation and BI Rate, on profitability with ROA proxies for Islamic commercial banks. Then, in order to maintain the confidence of Islamic banks in the community, develop alternative techniques for enhancing the financial performance of BUS in Indonesia.

METHODS
The data used in this study are both primary and secondary data acquired from in-depth interviews with Islamic banking specialists. Purposive sampling was used to pick specialists who had substantial experience, professionalism, strong credibility, and an education level suitable to Islamic banking. Nine experts were interviewed, including sharia banking Hypothesis 2: Effect of BOPO on ROA According to Abbosoglu and Aysan (2007), the influence of BOPO on bank profitability is due to the fact that a lower operating cost ratio might boost existing profitability because it indicates that banks are more effective at conducting business activities. Then the hypothesis is formulated as follows: H2 0 : BOPO has no effect on ROA H2 1 : BOPO has an influence on ROA

Hypothesis 3: Effect of NPF on ROA
The influence or relationship between NPF and bank profitability can be described as a negative relationship, with a small NPF number reflecting lower bank credit risk (Sumarlin, 2016;Lemiyana and Litriani 2016). NPF shows a bank's financing risk as a result of its financing and investment activities. Credit risk posed by NPF is the risk experienced by banks as a result of non-payment of loans provided by banks to debtors. The hypothesis is formulated as follows: H3 0 : NPF has no effect on ROA H3 1 : NPF has an influence on ROA Hypothesis 4: Effect of FDR on ROA According to Febriani and Manda (2021), a lower FDR value influences ROA because it indicates the lending efficiency of banks. So that the bank's profit obtained by the estimation of Bank Indonesia's FDR ratio is deemed capable of enhancing ROA. According to Wibisono and Wahyuni (2017); Jamaludin and Kuriyah (2016), there was no correlation between FDR and ROA. The hypothesis is formulated as follows: H4 0 : FDR has no effect on ROA H4 1 : FDR has an effect on ROA Hypothesis 5: Effect of Inflation on ROA Inflation influences ROA because excessive inflation can depress the stock price of banking assets, whereas low inflation can impede the movement of banking assets (Kalengkongan, 2013). Arumningtyas and Muliati (2019) explain that there is no influence of inflation on profitability, because there is no interest system in Islamic bank activities, however Kalengkongan (2013) notes that there is evidence of inflation harming banking organizations as assessed by ROA. The hypothesis is formulated as follows: practitioners, regulator, sharia banking consultants, and academics. Secondary data in the form of Islamic financial performance data gathered from the annual reports of 12 Islamic commercial banks released by the OJK between 2013 and 2020, as well as Indonesian macroeconomic data from 2013 to 2020. This study employs descriptive analysis by mapping internal performance based on financial ratios, panel data regression analysis, and decision-making analysis using the Analytical Hierarchy Process (AHP) are all used.
The approach of panel data regression analysis is used to demonstrate the influence of internal and external influences on the dependent variable, ROA. In and of themselves, panel data is a combination of time series data and cross section data. Common effects, fixed effects, and random effects are among the techniques to panel data regression (Gujarati and Dawn, 2009). The equation model is as follows: NPFit + β4X4_FDRit + β5X5_INFLASIit + β6X6_BI_RATEit + eit Information: Y (ROA); β (slope coefficient); X1_CAR (Capital Adequacy Ratio(CAR)); X2_BOPO (Operating Expenses on Operating Income(FDR)); X3_NPF (Non Performing Financing (NPF)); X4_FDR (Financing to Deposit to Ratio (FDR)); X5_INFLATION (INFLATION); X6_BI_RATE (BI RATE).
Hypothesis 1: CAR has an effect on ROA According to Kuncoro and Suhardjono (2002), the influence of CAR on ROA is that a high CAR value demonstrates the ability of banks to finance their operations and preserve current deposits, hence increasing public trust in banks. The effect occurs as a result of the fact that the capital ratio shows the capacity of banks to offer funds utilized as business development capital and to overcome the possible risk of loss. In conclusion, a high CAR indicates a sound bank operating state (Tarmidhi and Kusumo, 2003). The hypothesis is formulated as follows: H1 0 : CAR has no effect on ROA H1 1 : CAR has an influence on ROA H5 0 : Inflation has no effect on ROA H5 1 : Inflation has an effect on ROA

Hypothesis 6: Effect of BI Rate on ROA
The BI Rate influences profitability since Bank Indonesia's BI Rate policy aims to reduce inflationary pressures. Despite the fact that high interest rates can raise people's willingness to use bank deposit services, bank funds will increase. Consequently, it may be stated that the BI Rate influences profitability. According to Kurniawati et al. (2018), the impact of the BI Rate on bank profitability should be equivalent to that of the inflation rate. Therefore, it may be stated that the BI Rate influences profitability. The hypothesis can be formulated as follows: H6 0 : BI Rate has no effect on ROA H6 1 : BI Rate has an influence on ROA AHP is the following analytical tool for determining the optimal alternative plan for enhancing the financial performance of BUS in Indonesia. Figure 1 depicts the general shape of the AHP process flow, as described by Saaty (1993).

Map of Islamic Commercial bank Financial Performance (Mapping Analysis)
The examination of the financial performance mapping of Islamic commercial banks in Indonesia refers to Bank Indonesia laws guiding the rating system for the soundness of Sharia-compliant Commercial Banks. Table 4 displays the findings of the mapping study of BUS performance in Indonesia throughout the observation period. Table 4 shows that the BUS with the best overall performance is BTPN Syariah, as seen by its extremely high ROA value, extremely low BOPO, CAR that is significantly higher than the requirements, and low NPF (very good). BTPN Syariah's attainment of a strong financial performance can be supported by a variety of grounds. The client capacity-building program also contributes to the success of the business. Where the program's unique value proposition focuses on three primary pillars: 1) the power of health and well-being for senior clients; 2) the power of company growth for MSME businesses; and 3) the power of community growth.

Determinants of Financial Performance of Islamic Commercial banks in Indonesia
Using ROA as the dependent variable and CAR, BOPO, NPF, Inflation, and BI rate as independent factors, panel data regression analysis was utilized to assess the elements influencing BUS's financial success. On the basis of the estimation test, the fixed effect model was selected as the estimation model. A summary of test results for the model is presented in Table 5.
Based on Table 5, the value of the F-statistical test indicates an error probability of 0.000 < 0.05 level of significance (5%), means that H0 is rejected and H1 is accepted. Therefore, the resulting model is practical and there are variables with a major impact on the profitability of Islamic commercial banks.   Akter and Mahmud (2014) and Almunawwaroh and Marlianan (2018), who found that FDR has a positive influence on ROA. This is because a high FDR can increase the allocation of funds for funding growing capital. The goal is that banks will use these cash to boost their profitability. This, however, contradicts the findings of Lemiyana (2016), which suggest that FDR has no influence on ROA. Similarly, these findings contradict Sumarlin's (2016) conclusion that FDR has a detrimental impact on banking ROA.
With a CAR probability value of 0.5138>alpha 0.05 and a coefficient value of 0.0265, CAR has insignificant effect on ROA. These findings imply that there is little data to suggest that a high CAR yields a greater profit potential. CAR is a capital adequacy ratio that demonstrates a bank's ability to retain adequate capital and its management's capacity to recognize, assess, monitor, and respond to emerging risks. Almunawwaroh and Marliana (2018) found that an increase in the bank's capacity to provide funds for business expansion did not result in a significant rise in profitability. This finding is consistent with the findings of Saputra et al. (2018), which indicate that the insignificant CAR to ROA ratio is a result of BI regulations that require each bank to maintain CAR so that additional capital is provided in the form of credit expansion or loans so that the Bank's capital adequacy ratio can meet BI requirements. Nevertheless, according to Lemiyana (2016), CAR has no effect on ROA. Sumarlin (2016) demonstrates in his research that CAR has a considerable detrimental effect on ROA.
NPF has an insignificant positive impact on ROA due to the fact that its probability value is 0.1644> alpha 0.05 and its coefficient value is 0.132944. These data suggest that NPF has no effect and is not the primary factor in achieving ROA. This is owing to the fact that an increase in the value of the NPF results in a lost opportunity to make money from the funding supplied, which can lower earnings and have a negative influence on ROA (Wibisono, 2017). According to Kuswahariani et al. (2020), the effect of NPF is related to the fact that a high NPF level signals poor performance of Islamic banks because of numerous funding issues. According to Mawardi (2004), NPF has no discernible influence

Analysis of The Strategy to Improve the Financial Performance of Islamic Commercial banks
AHP analysis is employed to select various ways for enhancing the financial performance of BUS in relation to planning, implementation, and communication control. Nine experts from Islamic banking, Bank Indonesia, Islamic economics practitioners, and academics filled out the AHP questionnaire. The AHP framework consists of five levels: the primary focus/ goals, the factors that can influence the alternative strategies, the actors involved, the implicit goals to be attained from the strategy, and the primary strategic alternatives that will be implemented to enhance the financial performance of Islamic commercial banks (Figure 2).
The results of the AHP indicate that increasing customer service quality is the most important alternative approach for enhancing BUS's financial performance, with a weight of 0.321. (32.1%). Where service quality is one of the most critical indicators of a bank's success as a service provider. Thus, Islamic commercial banks can raise client satisfaction by delivering superior services; this would subsequently boost their performance (Triandini, 2013).
The second strategic priority that Islamic commercial banks might employ is to remain focused on the targeted business area, which must be consistent with the bank's intended risk (risk appetite) (0.231). Whereas, in order to improve the financial performance of Islamic commercial banks, banks must develop rules addressing risk management for liquidity, strategy formulation, and risk management limits. Banks must tailor these policies to their corporate strategy, goal, and risk tolerance (risk tolerance) (Indonesian Bankers Association, 2015). Staying focused on the products given to consumers is one sort of segmentation that banks can employ.
With a weight of 0.228, the third strategic aim for Islamic commercial banks is to continue improving the quality and productivity of their staff (22.8%).
Where work productivity is the employees' ability to create output relative to the amount of input issued. With the achievement of boosting work productivity, the business will be able to increase its competitiveness (Ikhwana and Anggraini, 2021).
on ROA, which is supported by these findings. This indicates that a rise in the number of Islamic banks in financial distress does not always result in a rise in profit before taxes. This study contradicts the findings of Pratiwi (2012), who found that NPF has a favorable influence on profitability. Furthermore, Sumarlin (2016) and Lemiyana (2016) found that NPF has a negative impact on ROA.
With a probability (p-value) of 0.4399>alpha = 0.05 and a coefficient of -0.077327, inflation has no direct effect on ROA. Inflation does not appear to have a major impact on ROA via the transmission mechanism of macroeconomic factors to the real sector, however there is a trend for a negative impact. Inflation has an effect on the rising of interest rates and profitsharing ratios, which restricts the public's access to banking funds. As intermediaries, banks are typically susceptible to inflation risk due to the liquidity of their funds (Haramain et al. 2020). In accordance with the findings of Gunartin (2015) and Sumarlin (2016), inflation has no substantial impact on ROA, despite the fact that inflation typically has a negative effect on ROA. Fathoni (2017) also concluded that inflation had no detrimental effect on profitability. However, these results contradict the findings of Lailiyah (2017), who discovered that inflation has a beneficial influence on profitability (ROA).
ROA is unaffected by BI Rate since the probability value of BI Rate is 0.6466> alpha 0.05 and the coefficient value is -0.106546. The BI Rate has no effect on ROA because the increase in the BI Rate is offset by an increase in conventional bank interest rates, but the increase in interest rates does not directly affect banks, hence bank profitability will continue to increase even as the BI Rate increases (Hidayati, 2014). This result is consistent with the findings of Hidayati (2014), which indicate that the BI Rate has no significant effect on the increase in interest rates of conventional banks. According to Alim (2014), the BI rate had no influence on banking operations, particularly with regard to the financing and distribution of funds. This is unlikely to affect the revenue and profitability of banks. This discovery, however, contradicts the findings of Hagwiza (2014), who discovered that interest rates have a significant impact on ROA.

Figure 2. BUS financial performance improvement strategy
shareholders is of utmost importance. This trust issue is regarded to be one of the primary reasons for the stagnant expansion of Islamic banking's market share, as well as the inclusion or exclusion of the community towards Islamic banks.
Obviously, efforts to improve the performance of Islamic commercial banks cannot be implemented without the participation of the key actors. The most significant contributors to the sequential improvement of Islamic banking performance are the Directors who have the highest weight of 0.298 (29.8%), then employees or staff with a weight of 0.217 (21.7%), then in the third position, namely customers with a weight of of 0.182 (18.2%). While the order of the rest of the actors can be seen in Figure 2. The main objectives implicitly to be achieved from the strategy of improving the performance of Islamic commercial banks are to increase public trust and confidence (0.352), increase bank profits (0.299), improve service quality (0.305), and the last goal to be achieved is to increase efficiency (0.192).

Managerial Implications
An understanding of the character of the Islamic banking industry and its determinants of financial performance in the industry is expected to improve the quality of decision making for management, investors The fourth strategy with a weight of 0.128 (12.8%) is IT optimization, while the fifth strategy with a weight of 0.092 is huge product and service socializing (9.2%). Where the strengthening of technology and information infrastructure is a form of banking efforts in strengthening services, including by increasing the dependability of access to banking services so that customers feel convenience, there is an aspect that must be optimized to encourage higher performance. Because a bank is considered good if the storage of transaction data is secure and reliable, including the maintenance of client personal information (Ronny, 2018).
Determination of strategies to improve the performance of Islamic banking is tied to several factors that directly have an influence on improving the performance of Islamic banking, the factor that has the greatest influence is the trust of stakeholders and shareholders towards Islamic banks which has a weight of 0.350 (35%), the second factor is the influence of capital Islamic bank itself with a weight of 0.231 (23.1%), Islamic bank management with a weight of 0.188 (18.8%), while the fourth and fifth factors respectively are information technology and Islamic banking regulations with each weight of 0.141 (14.1%) and 0.090 (0.90%).
In determining a plan to improve the performance of Islamic banking, it is evident that maintaining and enhancing the confidence of stakeholders and

Conclusions
Based on the state of Islamic commercial banks in Indonesia, BTPN Syariah has the best financial performance, while Bank Muamalat has the lowest. Internal factors that have a substantial impact on the profitability of Islamic Commercial Banks are limited to BOPO and FDR. BOPO has a substantial negative effect on ROA, but FDR has a substantial positive effect. The profitability of Islamic commercial banks is largely unaffected by external factors such as inflation and the BI Rate. The most appropriate method for increasing the finances of Islamic commercial banks is the establishment of service excellence for clients, with a focus on the targeted business areas that must be consistent with the bank's risk appetite.

Recommendations
This study employs financial performance metrics such as CAR, BOPO, FDR, and NPF as internal factors and macroeconomic data such as inflation and BI Rate as external factors to examine the determinants of Islamic commercial bank profitability. Islamic commercial banks are included in the regulated business, therefore future study can model using characteristics associated with good governance. To pay attention to important corporate action events in the Islamic banking industry in Indonesia, namely the merger of BSM, BNI Syariah, and BRI Syariah into Bank Syariah Indonesia (BSI), it is interesting to conduct research on the merger event and its impact on BSI's financial performance following the merger. and regulators. The findings of this study reveal that BOPO and FDR have a considerable impact on BUS's profitability, which is the primary metric of its primary financial performance, while CAR and NPF have an insignificant impact. The non-reserve financing component (non-NPF) has an effect on profitability, and it is management's obligation to create efficiency programs that lower operational costs. Management of fund collection and financing has also been shown to affect profitability. Therefore, management must develop a strategy for achieving optimal FDR through asset liability management (ALMA), fund raising programs (deposits), and financing in conjunction with an effective profit-sharing ratio policy. This approach must be supported by the program for service excellence and the use of information technology in several BUS business programs and strategies. The service excellence program must be founded on the premise that banking is a trust-based institution, and that a breach of trust will undermine business continuity. This approach must be supported by the program for service excellence and the use of information technology in several BUS business programs and strategies. The service excellence program must be founded on the premise that banking is a trust-based institution, and that a breach of trust will undermine business continuity. This approach must be supported by the program for service excellence and the use of information technology in several BUS business programs and strategies. The service excellence program must be founded on the premise that banking is a trust-based institution, and that a breach of trust will undermine business continuity.
It is anticipated that the findings will inspire regulators to pay greater attention to the achievement of efficiency efforts, good governance, and management in the program for collecting and financing BUS money. The greatest issue for regulators in establishing Islamic banking is how to raise market share, which will remain at 6.51% until the end of 2020. Taking into consideration the majority of the Muslim population in Indonesia, the market share growth of Islamic banking is still quite open, and the regulator (OJK) as one of the stakeholders has a significant impact on the market share growth. Investors can use the findings of this study to make investment decisions on sharia-compliant financial instruments. By gaining an understanding of BUS's financial performance, particularly BOPO and FDR.