Judo Bank Posts 14% Profit Rise with $12.5bn Loan Book Expansion
Judo Capital Holdings delivered a robust FY25 with strong loan and deposit growth, improved profitability, and a strategic technology upgrade, setting the stage for ambitious FY26 targets.
- 16% growth in gross loans and advances to $12.5 billion
- Stable net interest margin at 2.93% despite market volatility
- Cost-to-income ratio improved to 52.4%, reflecting operating leverage
- Deposit base grew 20%, supported by new product launches
- Strong credit quality maintained with CET1 capital ratio at 13.1%
Robust Growth Amidst Market Challenges
Judo Capital Holdings Limited has reported a solid financial performance for the fiscal year ending June 2025, underscoring its position as a growing challenger in the Australian SME banking sector. The bank achieved a 16% increase in gross loans and advances (GLA), reaching $12.5 billion, significantly outpacing sector growth. This expansion was complemented by a 20% rise in deposits, reflecting strong customer acquisition and retention efforts.
Despite a challenging interest rate environment and competitive pressures, Judo maintained a stable net interest margin (NIM) of 2.93%, supported by disciplined pricing and portfolio management. The bank’s cost-to-income ratio (CTI) improved to 52.4%, signaling emerging operating leverage as the business scales.
Strategic Expansion and Technology Investment
Judo expanded its physical footprint to 31 locations by adding 10 new branches in FY25, enhancing its regional presence across Australia. This growth was underpinned by a comprehensive technology re-platforming completed during the year, which modernised core banking systems and improved operational efficiency. The upgraded platforms are expected to enable faster loan processing and better customer service, positioning Judo for continued growth.
The bank also increased its workforce, particularly relationship bankers, to 161, and grew its accredited broker network to 1,563, reinforcing its commitment to deepening SME relationships and broker partnerships.
Credit Quality and Capital Strength
Credit quality remained stable with 90+ days past due and impaired assets below the bank’s at-scale thesis, despite some sector-specific pressures. Impairment expenses rose modestly to $75.5 million, reflecting portfolio seasoning and targeted provisioning. Judo’s capital position remains robust with a Common Equity Tier 1 (CET1) ratio of 13.1%, supported by organic capital generation and recent Tier 2 and senior unsecured bond issuances.
Outlook and FY26 Guidance
Looking ahead, Judo targets continued strong lending growth to between $14.2 billion and $14.7 billion, with an expected NIM range of 3.00% to 3.10%. The bank aims to reduce its CTI below 50% and maintain a cost of risk between 60 and 65 basis points. Profit before tax (PBT) is forecasted to rise to $180 million–$190 million, with return on equity (ROE) expected to reach the low-to-mid teens, reflecting ongoing operating leverage and strategic investments.
New deposit products, including an intermediated savings account and a direct online savings account, are planned for launch in FY26 to diversify funding sources and improve deposit pricing. Judo also plans to continue optimising its funding stack and capital management to support growth ambitions.
CEO Chris Bayliss emphasised the bank’s focus on scaling lending, enhancing customer value through technology, and maintaining disciplined risk management as key pillars for future success.
Bottom Line?
Judo’s FY25 results confirm its rising stature in SME banking, with FY26 set to test its ability to sustain growth and profitability amid evolving market dynamics.
Questions in the middle?
- How will Judo manage margin pressures amid ongoing RBA rate cuts and competitive lending markets?
- What impact will new deposit products have on funding costs and customer acquisition?
- Can Judo maintain credit quality as it expands aggressively into regional and agribusiness sectors?
