Judo Bank ‘on clear path to scale’ says its CEO
Judo Bank said its margins will shrink as cheap funding rolls off, but expects lending to small businesses to grow after delivering a full-year net profit eight times higher than a year earlier.
Judo doubled expenses for impaired loans as it lending grew, but the bank said small business balance sheets and liquidity remained strong, and its outlook for business investment remains upbeat.
Judo Bank CEO Joseph Healy. “We are very pleased to once again deliver on the targets we set for ourselves.” Louie Douvis
Net profit after tax for the year to June was $73.4 million, up from $9.1 million in 2022, hitting consensus expectations as revenue doubled to $353 million, more than twice the growth of operating expenses. It said this year it expected cost growth to moderate.
There were some signs that SME customers are doing it tougher, with loans more than 90 days overdue jumping to 1.09 per cent, up from 0.16 per cent this time a year ago. But the higher figure still remains below the average of other banks.
“We are on a clear path to becoming a scale player in Australian banking,” said Judo CEO Joseph Healy.
The bank, which listed on the ASX in November 2021, had hit “profitability faster than any other challenger bank we know of, in just four years from receiving our banking licence,” he added.
Judo has been paying up for deposits to fund loan growth and expanded its term deposit base to $6 billion, up by $1.9 billion over the year. It’s loan book of $8.9 billion is up 46 per cent.
It has $3 billion in funding capacity in a warehouse, which provided “significant flexibility to fund continued lending growth” and repay the Reserve Bank’s term funding facility by June, it said.
The underlying net interest margin of 3.53 per cent
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