Determination of Net Profit Growth of Islamic Digital Banks in Indonesia: The Role of Bank Popularity, Portion of Independent Commissioners, and Environmental, Social, and Governance

Abstract

Islamic digital banks in Indonesia have grown rapidly since 2020. This growth has been driven by accelerated digitalization, the COVID-19 pandemic, and supportive regulations. However, this growth has not always been in line with net profit growth. Bank Aladin Syariah, a representative Islamic digital bank in Indonesia, recorded quite sharp fluctuations in net profit growth during the 2020-2024 period. Therefore, it is important to examine the factors that may influence net profit growth in this Islamic digital bank. While many previous studies have examined net profit growth from a financial perspective, this study seeks to uncover the role of non-financial aspects, such as reputational assets (Bank Popularity), governance assets (Portion of Independent Commissioners), and disclosure, Environmental, Social, and Governance (ESG). This study uses a quantitative approach with multiple linear regression analysis based on monthly time series data for Bank Aladin Syariah, representing Islamic digital banks in Indonesia for the 2020-2024 period, with a total of 60 observations. The data analysis process was assisted by E-views 12 software. This research model is robust because it has undergone two stages of testing: modeling without control variables and modeling with control variables. Both models yielded similar results. The results of this study indicate that bank popularity and the proportion of independent commissioners significantly and positively influence the net profit growth of Islamic digital banks, while ESG has no significant effect. However, these three variables simultaneously have a significant positive effect on the net profit growth of Islamic digital banks in Indonesia. This finding indicates that the simultaneous influence of independent variables on net profit growth is stronger than the partial influence of each variable separately.