DOES PRICE COMMODITY PALM OIL , RUBBER AND NON PERFORMING LOAN ( NPL ) AFFECT ON FINANCIAL PERFORMANCE ?

The purpose of this study was to analyze the effect of commodity prices of rubber and palm oil, as well as Non Performing Loan (NPL) on financial performance (return on assets (ROA)) PT. Bank BRI Agro Tbk, either partially or simultaneously. Data used is secondary data, where data commodity prices of rubber and palm oil obtained from the Directorate General of Plantation while data on financial performance (return on assets (ROA)) obtained from the Annual report 2015 AGRO Bank BRI. The data were analyzed using multiple linear regression techniques. Results of statistical t test proves that partially price of rubber and palm oil does not significantly to influence of financial performance Bank BRI Agro Tbk, while NPL significant effect on financial performance Bank BRI Agro, Tbk. Results of statistical F test proves that simultaneously the price of rubber and palm oil as well as NPL has significant impact on financial performance. Bank BRI Agro, Tbk. The results of the study has implications for efforts to reduce the NPL ratio while maintaining the bank's function as intermediary (prudence) in extending credit, especially in the agricultural sector to reduce the high value of NPL (non-performing loans), considering the contribution of NPL sizeable influence on the financial performance of banks.


Introduction
The banking industry has the duty and obligation to hold a commitment as a driver of the economy or development agent.This can be seen when the economic sector in Indonesia has decreased, then one way to restore economic stability by rearranging the banking sector for the better.In addition, the bank also has a goal as a financial intermediary or financial intermediary of two parties.Where the bank as a financial institution to be an intermediary between parties who have excess funds and also parties who lack the funds.The party in need of funds will make a loan to the bank, where the loan is given in the form of credit to the debtor (party applying for loan).
In a bank, with the provision of credit is very useful, where the credit repayment can generate interest on the loan.The loan interest can be utilized to increase the income of a bank in the credit activity and continuity of its business.In lending to customers, the bank will be exposed to credit risk that can not be paid by the debtor causing problem loans.According to Ismail (2009: 224), problem loans are a situation where the customer is not able to pay part or all of his obligations to the bank as has been agreed.The risk of non-performing loans is measured based on a ratio showing the level of non-performing loans in a bank, which is known as NPL.
NPL (Non Performing Loan) is a credit in arrears exceeding 90 days, where NPL is divided into Substandard, Doubtful, and Loss Credits (Ismail, 2009: 226).The amount of NPLs allowed by Bank Indonesia is currently at a maximum of 5%.The greater the NPL level indicates that the bank is not professional in its credit management which will have an impact on bank losses.Therefore, the magnitude of the percentage of NPLs should be the attention of the management because of the increasingly problematic credit can endanger the health of the bank.If the credit repayment rate drops, it can cause the interest income and the resulting profit to decrease so that it can disrupt the bank's own operations.In addition, if the NPL continues to increase, it can cause the occurrence of cash circulation in the bank concerned.If it continues then the bank will no longer be able to provide credit to other customers in large amounts due to the bank itself is experiencing difficulties in the cash flow turnover caused by bad debts / problems.
In Indonesia, one of the lending banks is BRI Agro bank.BRI Agro was established by Dana Pensiun Perkebunan (Dapenbun) on September 27, 1989, AGRO Bank has an important and strategic role in the development of the Indonesian agribusiness sector.As a bank focusing on agribusiness financing, since its establishment to date, AGRO Bank's loan portfolio is mostly (between 60% -75%) disbursed in the agribusiness sector, both on farm and off farm, where oil palm and rubber are the main sectors in financing agribusiness, in addition to coffee.
In Indonesia, rubber and oil palm is the highest number of plantation crops (BPS, 2015).In developing the plantation, most farmers depend on micro-loans in banks.Based on data from the Central Bureau of Statistics listing the price fluctuations of oil palm and rubber commodities in the last five years.Symptoms of price fluctuations in both commodities are predicted to affect the performance of debtors, especially oil palm and rubber farmers in credit repayment in Indonesia.This is because rubber and palm oil are quite sectors financed by banks, especially agribusiness banks.Price fluctuations of oil palm and rubber commodities were also followed by fluctuations in NPL and Return On Asset (ROA) at PT. Bank BRI Agro, Tbk.Based on NPL data in the Annual Report published by Bank BRI Agro shows that the highest NPL rate occurred in 2006 that amounted to 10.41%, which is above the limit level of NPL set by Bank Indonesia, which is 5%.In addition, from the ROA data published by BRI Agro Bank shows that the lowest ROA also occurred in 2006 at -49%.Figures indicate that the company suffered a loss in which there was a decrease in earnings in the year, due to the NPL's soaring rate.This explains that the weakening prices of rubber and oil palm commodities, followed by an increase in NPL figures, has an impact on the company's ability to generate profits by using all its assets.
The results of a study by Bank Indonesia of Jambi Representative under the title "The Impact of Weakening of Rubber and Oil Palm Commodity Prices on the Performance of Rural Banks in Jambi Province in 2015" shows that the decline in agricultural commodity prices affects the performance of banks, especially BPRs by 2015 The performance of rural banks in Jambi province during 2015 shows a decrease compared to last year.This is indicated by the development of total assets which decreased by 1.86% per year from December 2014 position valued at Rp.759.00Billion becomes Rp.744.84 Billion in December 2015.
Reduced prices of palm oil and rubber have an impact on the decreasing ability of debtors in paying obligations, as well as reduced supply of BPRs in the supply of funds for fear that debtors can not afford to pay.The performance slowdown is primarily derived from loan disbursements in 2015.Loans disbursed in 2014 were recorded at Rp. 524.67 billion decreased in the year 2015 to Rp. 509.94 Billion.The decrease in the ability of rural banks to disburse loans is also reflected by the Loan Debt Ratio (LDR) which dropped to 1.42% in 2015 (KEKR Jambi, 2015).
The results of research on the effect of Non Performing Loan (NPL) on Return On Assets (ROA) showed different results.Research on credit risk was conducted by Wisnu M (2004) which stated that high Non Performing Loan (NPL) condition will increase the cost of both provisioning of earning assets and other costs, thus potentially causing losses to the bank, or in other words Non Performing Loans (NPLs) reduce bank profitability.This shows that Non Performing Loan (NPL) has a negative effect on profitability.The results of this study differs from the research Supatra ( 2007) which shows that Non Performing Loan (NPL) has a significant positive effect on Return On Assets (ROA).
Price fluctuations of oil palm and rubber commodities were also followed by fluctuations in NPL and Return On Asset (ROA) at PT. Bank BRI Agro, Tbk.Based on NPL data in the Annual Report published by Bank BRI Agro shows that the highest NPL rate occurred in 2006 that amounted to 10.41%, which is above the limit level of NPL set by Bank Indonesia, which is 5%.In addition, from the ROA data published by BRI Agro Bank shows that the lowest ROA also occurred in 2006 at -49%.Figures indicate that the company suffered a loss in which there was a decrease in earnings in the year, due to the NPL's soaring rate.This explains that the weakening prices of rubber and oil palm commodities, followed by an increase in NPL figures, has an impact on the company's ability to generate profits by using all its assets.
The results of a study by Bank Indonesia of Jambi Representative under the title "The Impact of Weakening of Rubber and Oil Palm Commodity Prices on the Performance of Rural Banks in Jambi Province in 2015" shows that the decline in agricultural commodity prices affects the performance of banks, especially BPRs by 2015 The performance of rural banks in Jambi province during 2015 shows a decrease compared to last year.This is indicated by the development of total assets which decreased by 1.86% per year from December 2014 position valued at Rp.759.00Billion becomes Rp.744.84 Billion in December 2015.
Reduced prices of palm oil and rubber have an impact on the decreasing ability of debtors in paying obligations, as well as reduced supply of BPRs in the supply of funds for fear that debtors can not afford to pay.The performance slowdown is primarily derived from loan disbursements in 2015.Loans disbursed in 2014 were recorded at Rp. 524.67 billion decreased in the year 2015 to Rp. 509.94 Billion.The decrease in the ability of rural banks to disburse loans is also reflected by the Loan Debt Ratio (LDR) which dropped to 1.42% in 2015 (KEKR Jambi, 2015).
The results of research on the effect of Non Performing Loan (NPL) on Return On Assets (ROA) showed different results.Research on credit risk was conducted by Wisnu M (2004) which stated that high Non Performing Loan (NPL) condition will increase the cost of both provisioning of earning assets and other costs, thus potentially causing losses to the bank, or in other words Non Performing Loans (NPLs) reduce bank profitability.This shows that Non Performing Loan (NPL) has a negative effect on profitability.The results of this study differs from the research Supatra ( 2007) which shows that Non Performing Loan (NPL) has a significant positive effect on Return On Assets (ROA).
To determine whether multiple linear regression models can be expressed as good models, the model must meet the BLUE (Best Linear Unbiased Estimator) criteria.To meet these criteria then the classical assumption test is performed.According Setyadharma (2010: 2) there are at least four classical assumption test that must be done on a multiple linear regression model, namely; normality test, autocorrelation test, multicollinearity test, and heteroscedasticity test.

Description of research variables
Based on secondary data obtained from the financial statements of PT Bank BRI Agro, Tbk and Directorate General of Plantation obtained information about the development of financial statements can be seen in Table 3

Price of oil palm commodity
Based on data from Directorate General of Estate Crops report 2006 to year 2015, shows the price of fresh fruit bunches (FFB) tends to fluctuate, where the lowest price of oil palm fell in 2015 amounted to Rp. 838 / kg.In 2007-2008 the price of oil palm FFB increased, with an average price increase of Rp. 282,5 / Kg.However, in 2009 the price of oil palm FFB decreased by Rp. 10.In 2010-2011 the price of oil palm FFB has increased again, with an average price increase of Rp. 41.In the year 2012 CPS price of palm oil has decreased by Rp. 425 / kg, and increased again in 2013 and 2014 with each increase of Rp. 274 / kg (in 2013) and Rp.536 / kg or 33% (in 2014).The low price of FFB is the impact of the weakening of world crude oil price which push the global CPO price weakening as one of crude substitution product.

Price of rubber commodities
From the data of the Directorate General of Estate Crops 2006-2015 report, the average annual price growth of natural rubber in the domestic market also experienced price fluctuations during the last five years, where the lowest price of natural rubber occurred in 2008 of Rp. 5,533 / kg.In 2007-2008 the price of natural rubber decreased, with the average price drop of Rp. 3.225 / Kg.However, in 2009-2011 increased, with an average price increase of Rp. 3.581 / Kg, and decreased again in 2012 as much as Rp.5.460 / Kg.In the year 2013-2014 has increased again, with each increase value of Rp. 4.002 / kg (in 2013) and Rp.1,025 / kg (in 2014).The increase is due to the high demand for imports of natural rubber from China caused by the development of the automotive industry in the country, as well as the appreciation of the rupiah exchange rate against the foreign exchange rate of yuan (China).

Non Performing Loan (NPL)
Secondary data obtained from the financial statements of PT Bank BRI Agro, Tbk obtained information from 2006-2015 that the level of non performing loans (NPLs) tend to be stable and maintained at a set standard, in accordance with the provisions of Bank Indonedsia with SE NO. 6/23 / BPNP May 31, 2004, it is said that the NPL level is said to be good if less than 5% (<5%).This shows that the risk of non performing loans (NPLs) at Bank BRI Agro is still well maintained.has a tendency value ratio rose from the lift 0.77% to 1.32%.Data in the year 2006 shows the highest non-performing loans (NPLs) above the NPL level limit, as determined by Bank Indonesia. In 2007-2008, the company's management succeeded in reducing the NPL to below the established limit, with an average decrease of NPL of 3.52% per year.In 2009, however, it experienced an increase of 0.18%, but this increase is still below the set NPL limit.In 2010-2011 NPLs decreased, with an average NPL decrease of 1.85% annually.In 2012 there was an increase in NPL level by 0.8%, then decreased in the year 2013 by 62%, and increased again in 2014 by 37% and tend to remain until 2015.The increase in NPL level is due to the decrease in the performance of debtors, especially farmers or business actors in the field of agribusiness (oil palm and rubber) in fulfilling their obligations.This is due to the impact of weakening prices of rubber and palm oil commodities, as well as lending rates.

Return On Assets (ROA)
Secondary data is derived from information about the development of Return On Asset (ROA) PT.Bank BRI Agro, Tbk which can be explained that the movement of ROA during the year 2006-2015 tends to increase.In 2006-2013 there was an increase in ROA, with an average increase of 7.23% per year.This demonstrates good corporate management capability in managing all the resources (assets) owned to generate profit.In 2014 there was a 19% decline in ROA, but it rebounded in 2015 by 8%.Increase of ROA level at PT. Bank BRI Agro, Tbk due to the growth rate of third party funds, the growth rate of credit disbursed, as well as net interest income along which tend to increase over the last five years.

Statistical Analysis and Hypothesis Testing Classical Assumption Testing
The calculation result of regression coefficient for each variable in equation model which has been formulated (Y = B0 + b1X1 + b2X2 + b3X3 + e), then obtained equation model is, Y = 3,586 + 0,206 X1 + 0,346 X2 -0,915 X3.From the regression equation model, the financial performance (ROA) (Y) will increase if the price of oil palm (X1) and rubber price (X2) is increased, and will decrease if non-perfoming loan (NPL) (X3) is increased.The predictions of the relationship between variables within the model equation are as follows: 1. Constanta (a) = 3,586, meaning that if the price variable of oil palm (X1), rubber price (X2), and and non perfoming loan (NPL) (X3) is absent, then the financial performance (ROA) will increased or increased in value by 3,586.2. Regression coefficient X1 (β1X1) = 0,206, meaning if there is increase of palm oil price equal to 1 rupiah, hence will improve financial performance (ROA) equal to 0,206%.3. Regression coefficient X2 (β2X2) = 0.346, meaning that if there is an increase of rubber price by 1 rupiah, it will improve financial performance (ROA) equal to 0,346%.4. Regression coefficient X3 (β3X3) = -0.915,meaning if there is an increase in non-performing loan by 1%, it will reduce the financial performance (ROA) of 0.915%.The results of the classical assumption test get the decision that the multiple linear regression model that is obtained is Y = 3,586 + 0,206 X1 + 0,346 X2 -0,915 X3, can be expressed as good model and have fulfilled BLUE (Best Linear Unbiased Estimator) criterion, did not experience symptoms of multicolinearity, autocorrelation, and heteroskedastity, and the data taken came from a normally distributed population.This is evidenced from the test results as follows:

Multicollinearity test
The results of this test indicate that each independent variable has a VIF value <10, which means that each variable is not correlated.

Test autocorrelation
The results of autocellation testing using test run test showed that the model did not experience as sympton of autocorrelation, where the value of significance obtained> 0.05.

Test autocorrelation
The results of autocellation testing using test run test showed that the model did not experience as sympton of autocorrelation, where the value of significance obtained> 0.05.

Normality test
The results of normality test data by using Kolmogorov-Smirnov test showed that the data in this study were taken from the normal distributed population, where the significance value obtained> 0,05.

Hypothesis testing
Test of coefficient of determination (R2) The test results show that the coefficient of determination (Adjusted R2) is equal to 0.840.This means that variations in the ups and downs of financial performance variables (ROA) can be explained by the price of palm oil, rubber prices, and NPLs by 84 percent, while the remaining 16 percent is explained by other variables not examined in this study.The statistical t test The test results show that the price of oil palm (X1) and rubber price (X2) no effect on financial performance (ROA) (Y), while the NPL has an effect on financial performance (ROA) (Y).This is evidenced from the value of significance obtained for the NPL variable <0.05.

Test F statistics
The test results show that simultaneously (oil) price of palm oil (X1), rubber price (X2), and non perfoming loan (X3) have significant effect on financial performance (ROA) (Y) in PT.Bank BRI Agro.Tbk.This is evidenced from the significance value obtained <0,05.

Discussion
Symptoms of price fluctuations in oil palm and rubber, and NPL, based on the results of testing the hypothesis, shows that all three simultaneously predicted to affect the financial performance of PT.Bank BRI Agro, Tbk mainly from the aspect of the bank's ability to generate profit (ROA).This is in line with the results of a study by Bank Indonesia of Jambi Representative under the title "The Impact of Weak Rubber and Rubber Commodity Prices on BPR Performance in Jambi Province in 2015" shows that the weakening of agricultural commodity prices has an impact on the performance of banks, especially Rural Banks (BPRs ) in 2015.This is because rubber and palm oil are quite sectors financed by Bank BRI Agro.
The decrease in the ability of debtors to pay their liabilities, as well as the reduced supply of BPRs in the supply of funds, is certainly at risk of increasing the NPL ratio, which ultimately affects the bank's profitability or the ability of banks to earn profits in the company's overall operations (ROA).The results of other studies indicate that the fluctuation of global crude palm oil prices and world rubber prices fluctuating trend, affect the level of credit risk, especially the quality of non-performing loans (NPL) for the sub-sector of oil palm and