<![CDATA[Banking stability depends on banks’ ability to maintain operational efficiency and adequate capital while managing the trade-off between profitability and credit risk. This study aims to examine the impact of operational efficiency, measured by the Operating Expenses to Operating Income ratio (BOPO), and capital adequacy, measured by the Capital Adequacy Ratio (CAR), on financial performance (profitability) and the banking risk profile. Within the framework of financial system stability, profitability is represented by Return on Assets (ROA), while credit risk is measured by Non-Performing Loans (NPL). In addition, this study incorporates Bank Size and the Loan to Deposit Ratio (LDR) as control variables to improve the robustness of the analytical model. This research employs panel data analysis using a sample of banks listed on the Indonesia Stock Exchange over the period 2015 to 2025. The findings indicate that operational efficiency has a positive effect on NPL, suggesting that higher operating inefficiency is associated with increased credit risk, while it has a negative effect on ROA, indicating a deterioration in profitability. Meanwhile, the CAR is found to have a negative effect on NPL, implying that stronger capital buffers reduce credit risk, and a positive effect on ROA, reflecting improved financial performance.]]>
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