Judo Bank delivers a ‘black belt’ performance as interim profit surges to $36.1m

Judo Bank, a specialist bank for SME businesses, has defied challenging market conditions to post a $36.1 million profit for the first half of FY23.

Joseph Healy, the co-founder and CEO of the bank’s parent Judo Capital Holdings (ASX: JDO), has labelled the half-year performance “another black belt result”, putting the company on track to deliver on its FY23 guidance of achieving gross loans and advances of more than $9 billion.

At a time when major banks are closing branches, Judo Bank added another four locations to its network during the half year at Bunbury, Rockhampton, Orange and Albury, bringing its footprint to 18 locations nationally.

Healy says the half-year earnings, which saw income lift 67 per cent to $165.2 million and net profit before impairments surge 166 per cent to $75.5 million, demonstrates the strength of the company’s pure-play, specialist business model.

“From day one at Judo, we’ve been running our own race and our strategy has not changed. This result shows the sustainable competitive advantage we have in SME business banking,” says Healy.

"Our business is continuing to successfully scale. We are now generating a significant profit and we have achieved this outcome in our short five years, faster than any other new bank.

“Our relationship-based customer value proposition clearly resonates with customers. We continue to drive growth in current and new sectors and regions across Australia.”

Judo is making inroads into new market segments, notably agribusiness and health which the company says is experiencing increased demand.

Gross loans and advances increased 23 per cent to $7.5 billion during the half year while net interest income surged 69 per cent to $163.0 million.

Judo Bank says while it has diversified sources of funding, term deposits remain the most attractive for the business.

“We are rewarding our depositors with some of the best term deposit rates in the market, which has led to a $1.2 billion growth in deposits over the period, with our total deposits book reaching $5.3 billion,” says Healy.

Judo Bank remains confident of achieving its targets as the business scales up, with Healy highlighting Judo’s “relationship-based approach to lending” as the business’ strength in times of uncertainty.

“It enables us to stay close to customers and to proactively mitigate any emerging risks in our portfolio,” he says.

“We have great momentum across the business. We are growing profitably and continue to execute against our strategy and deliver our key priorities to grow and achieve our key business metrics at scale.

“We will continue our focus on serving our customers, hiring and retaining the best talent, investing in a strong risk culture, developing the agility with which to grow and operate, and delivering a market-leading proposition to Australia’s SME sector.”

Investors pushed Judo Captial’s shares more than 11 per cent higher in morning trade after the half-year profit result was announced. The shares were trading at $1.55, up 11 cents, at 12.15pm (AEDT).