Penelitian ini bertujuan untuk memahami pengaruh risiko kredit secara independen terhadap profitabilitas bank tercatat di Bursa Efek Indonesia (BEI), serta peran income diversification sebagai moderator hubungan tersebut. Dengan menggunakan data dari 36 bank konvensional selama periode 2009-2021, ditemukan bahwa risiko kredit (NPL) memiliki pengaruh negatif signifikan terhadap profitabilitas bank (ROA). Terlebih, penelitian ini menemukan adanya peran moderasi dari income diversification terhadap hubungan tersebut yang secara signifikan melemahkan pengaruh negatif risiko kredit terhadap profitabilitas bank. Implikasi penelitian ini memberikan pandangan baru bagi praktisi, regulator, dan akademisi, mengenai mitigasi kerugian dari pengambilan risiko kredit yang tinggi melalui income diversification.

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This study aims to understand the independent influence of credit risk on the profitability of banks listed on the Indonesia Stock Exchange (IDX), as well as exploring income diversification as a moderator of the relationship. Using data from 36 conventional banks during the 2009-2021 period, it was found that credit risk (NPL) has a significant negative effect on bank profitability (ROA). Most importantly, this study finds that there is a moderating role of income diversification on the relationship, which significantly weakens credit risk's negative effect on bank profitability. The implications of this study provide a new perspective for practitioners, regulators, and academics, regarding mitigating losses from taking high credit risk through income diversification.