Judo Bank Posts 14% Profit Rise, 16% Loan Growth, and 52% Cost Efficiency

Strong Financial Momentum

Judo Capital Holdings Limited, the parent company of Judo Bank, Australia’s dedicated challenger SME business bank, has delivered a solid set of financial results for the fiscal year ended 30 June 2025. The bank reported a 16% increase in its gross loans and advances (GLA), reaching $12.5 billion, nearly double the system growth rate, reflecting strong demand for its relationship-led lending approach.

Term deposits grew by 20% to $9.9 billion, driven primarily by direct retail channels, underpinning the bank’s funding diversification strategy. This deposit growth supported the expansion of the loan book and contributed to a stable net interest margin (NIM) of 2.93%, which improved in the second half of the year to 3.04%.

Operational Efficiency and Credit Quality

Judo’s operating leverage is becoming increasingly evident, with the cost-to-income (CTI) ratio improving to 52.4%, down from 54.6% the previous year. Operating expenses rose modestly by 2%, reflecting prudent cost management amid investments in technology and people.

Credit quality remained stable despite some economic uncertainty, with the 90+ days past due and impaired assets ratio slightly increasing to 2.43%. The bank’s disciplined risk management framework and proactive portfolio oversight helped maintain a balanced provision coverage ratio of 1.49% of GLA.

Strategic Expansion and Technology Transformation

Judo expanded its physical footprint to 31 locations nationally, adding 10 new branches focused on regional and rural Australia, reinforcing its commitment to underserved SME communities. The bank’s relationship bankers maintain a low customer-to-banker ratio, enabling tailored lending decisions based on deep understanding of customer businesses.

FY25 also marked the completion of a major technology replatforming initiative, transitioning core lending and deposit systems onto a modern, cloud-native stack. This transformation enhances scalability, operational efficiency, and product innovation capabilities, positioning Judo to accelerate growth and improve customer experience in the coming years.

Governance and Leadership Updates

Governance remained a focus with the appointment of David Hornery as Chair in March 2025, succeeding Peter Hodgson, who remains on the board as Senior Independent Director. The executive team saw the addition of Renée Roberts as Chief Risk Officer, bringing extensive prudential supervision experience from APRA.

Judo’s remuneration framework evolved to emphasize longer-term incentives aligned with shareholder interests, reflecting the bank’s maturing growth phase and commitment to sustainable performance.

Outlook for FY26

Looking ahead, Judo provided guidance targeting continued loan book 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 improve its CTI ratio to below 50% and increase profit before tax to between $180 million and $190 million, targeting a return on equity in the low to mid-teens. New deposit products and ongoing technology enhancements are expected to support these ambitions.