ABSTRACT : This study aims to analyze the effect of profitability and credit risk on lending in conventional banks listed on the Indonesia Stock Exchange (IDX) during the 2019–2023 period. Profitability is measured using Return on Assets (ROA) and Return on Equity (ROE), while credit risk is measured using the Non-Performing Loan (NPL) ratio. This research employs a quantitative approach using panel data regression analysis, with the Fixed Effect Model (FEM) selected as the most appropriate model. The results indicate that ROA has a positive and significant effect on lending, ROE has a negative and significant effect on lending, while NPL has a negative but insignificant effect on lending. These findings support Signaling Theory and Agency Theory, suggesting that profitability serves as a signal of a bank’s capability to expand lending, while the management of credit risk reflects managerial efforts to achieve the company’s objectives.

KEYWORDS – Lending, profitability, Return on Assets (ROA), Return on Equity (ROE), Non-Performing Loan (NPL).