Judo set to meet its prospectus forecasts

  • By Zilla Efrat

Judo Capital Holdings, which listed on the ASX in November last year, is on track to achieve or exceed all its prospectus metrics for the 2022 financial year, its CEO and Co-Founder, Joseph Healy, said yesterday.

Speaking at its inaugural investor day in Sydney, Healy said the company, the first fully licensed Australian bank to list in 25 years, had a unique model which created sustainable competitive advantages.

“We believe specialists beat generalists every time. Judo is a specialist SME bank that operates with risk management at its core,” he said.

“Our relationship-led approach to lending positions us well to outperform in periods of economic uncertainty, as we have proven throughout the pandemic.

“All we think and talk about are SMEs and we assess each of our customer’s circumstances individually, beginning with their character. We believe this sets us apart from our peers and gives us an advantage in assessing the merits of every transaction.”

Healy said Judo Bank was a young business with strong growth ambitions. “Our year-to-date performance shows we have strong momentum. We continue to drive strong lending growth and remain confident of achieving our prospectus forecast for gross loans and advances (GLAs) of $6 billion by 30 June 2022.”

In an update on its loan book last week, Judo said its closing balance for GLAs as of 30 April 2022 was $5.56 billion.

Healy added that the team at Judo was also growing as it continued to attract talented bankers who want to be part of Judo as we scale towards becoming a world-class SME business bank.

“We now have 110 relationship bankers, well ahead of our prospectus forecast for 98 bankers at 30 June 2022,” he said.

Judo’s deputy CEO and CFO, Chris Bayliss, said rising interest rates were positive for the company’s net interest margins and the business had a clear funding strategy to support an at-scale net interest margin (NIM) of over 3 per cent.

“The outlook for ongoing cash rate increases provides a significant tailwind for our margins given our lending portfolio is largely floating-rate while our funding costs are predominantly fixed.

“As well as accessing fixed-rate funding from the RBA’s term funding facility, term deposits remain a very attractive source of funding. We are rewarding retail depositors with some of the most competitive term deposit rates in the market.

“At the same time, by utilising hedges, we are locking in our funding margins well below the levels required to deliver our at-scale NIM of over 3 per cent.”

Judo’s chief operating officer, Lisa Frazier, added that Judo’s legacy free, cloud-native technology platform also offered a distinct competitive advantage.

“As a specialist SME bank, Judo’s purpose-built technology stack has less operational complexity and risk. Being cloud native, it is easier for us to innovate, expand and integrate our systems.

“Our technology expertise and platforms enable our relationship-led model. Technology plays a major role in supporting our growth plans and in driving our CTI down towards our at-scale target of approaching 30 per cent.”