Income Diversification and Bank Performance: Evidence from Indonesian Commercial Banks
In the last few years it has been possible to observe decreasing interest margins for Indonesian banks. Banks are now moving towards diversification of their revenues to reduce risk of their portofolios and to increase profitability. Non-interest incomes have become an increasingly important of Indonesian banks’ operating income as one of the stable sources of bank revenues. Non-interest income now accounts 25 percent of operating income in the Indonesian banks.