On the Clustering of Islamic Rural Banks Based on Financial Performance

Islamic Rural Banks In Indonesia as Rakyat Sharia Financing Bank (Bank Pembiayaan Rakyat Syariah, BPRS) is a sharia bank which runs its business activities with sharia principle which activities do not provide services in payment traffic. Banking must always be evaluated for its healthiness in order to remain excellent in serving its customers. To measure the healthiness of a bank can be see from the level of bank performance. This study aims to classify BPRS which is homogenous based on the level of bank performance. The variables used to measure the Bank's performance are capital (Cap), productive assets (PA), credit (Cred), third-party funds (TPF), income (Inc), capital adequacy ratio (CAR), returns on assets (ROA), returns on equity (ROE), financing to deposit ratio (FDR), non performing financing (NPF), and operational costs of operating income (OCOI) that are part of the CAMELS method. The result shows that the financial performance of BPRS from 2014-2017 tends to be not good enough. Although some of the variables used to measure performance generally are still in good condition except FDR, NPF and OCOI, but BPRS in Indonesia has always decreased its performance. As seen from the financial side of BPRS such as capital, productive assets, third-party funds, and the increasing of credit every year, which indicate that BPRS has a great opportunity to change in a better way. Through cluster analysis with Two Step Cluster method in 2014 with consisting 159 BPRS divided into 3 clusters were only 13 BPRS in good performance as the best cluster. In 2015 and 2016 Islamic Rural Banks consist 161 BPRS and 166 BPRS respectively, in 2015 was divided into 2 clusters ware only 16 BPRS in good performance and only 12 BPRS in 2016. In 2017 it is consisted 167 BPRS divided into 3 clusters were only 12 BPRS in good performance as the best cluster. It is also obtained only 3 BPRS always maintain their good financial performance for four years.