Judo Bank has reported a robust half-year result with profit before tax surging 53% year-on-year, driven by strong SME loan growth and improved operating efficiency. The bank reaffirms its FY26 guidance, signalling confidence in continued momentum.
- Profit before tax up 53% year-on-year to $86.5 million
- Gross loans and advances grew 15% year-on-year to $13.4 billion
- Net interest margin stable at 3.03%, with guidance upgraded for 2H26
- Cost-to-income ratio improved by 890 basis points versus prior year
- Common Equity Tier 1 ratio remains strong at 12.6%, supporting growth
Strong Financial Momentum
Judo Bank has delivered a standout half-year performance for the six months ending December 2025, reporting a statutory net profit after tax of $59.9 million, marking a 46% increase compared to the previous corresponding period. Profit before tax rose even more sharply, up 53% year-on-year to $86.5 million, underscoring the bank’s accelerating profitability trajectory.
This robust profit growth was underpinned by a 15% year-on-year expansion in gross loans and advances, which reached $13.4 billion. The bank’s ability to grow its lending book above the broader market reflects its differentiated, customer-centric approach to SME banking and enhanced productivity initiatives.
Operational Efficiency and Capital Strength
Judo’s net interest margin (NIM) remained broadly stable at 3.03%, with guidance for the second half of FY26 upgraded to approximately 3.15%, reflecting improved funding costs. Meanwhile, the cost-to-income ratio improved significantly by 890 basis points compared to the prior year, highlighting the bank’s emerging operating leverage as it scales.
Capital adequacy remains a key strength, with a Common Equity Tier 1 ratio of 12.6% and a total capital ratio of 16.9%. The bank successfully completed a $150 million Tier 2 capital raising at improved pricing, enhancing its capacity to support ongoing growth without the immediate need for additional core equity.
Strategic Growth and Product Innovation
Judo continues to expand its footprint with 167 relationship bankers driving record loan originations, particularly in regional and agribusiness sectors. The bank’s award-winning deposit franchise grew by $1 billion to $10.9 billion, supported by new product launches including an intermediated at-call savings account, with plans for a direct online savings product later this year.
CEO Chris Bayliss emphasised the bank’s decade-long journey as Australia’s first specialist SME business bank, highlighting the strong culture, customer loyalty evidenced by a sector-leading Net Promoter Score of +52, and the ongoing focus on technology and productivity to achieve a sector-leading return on equity.
Outlook and Guidance
Looking ahead, Judo reaffirmed its FY26 profit before tax guidance of $180 million to $190 million, with gross loans and advances expected to reach between $14.4 billion and $14.7 billion. The bank anticipates further improvements in operating efficiency and stable asset quality, although it noted a modest increase in customers 90 days past due, driven by a small number of exposures across sectors.
Despite macroeconomic headwinds such as inflationary pressures and labour shortages, Judo remains confident in the resilience of the SME sector and its ability to continue delivering above-system growth through its relationship-focused model and expanding product suite.
Bottom Line?
Judo’s strong half-year performance sets the stage for sustained growth, but investors will watch closely how the bank manages credit quality and funding costs in a competitive environment.
Questions in the middle?
- How will Judo manage the modest rise in past due loans amid evolving economic conditions?
- What impact will the new deposit products have on funding costs and customer acquisition?
- Can Judo sustain above-system loan growth while improving operating leverage in the second half?