Judo Bank Reaffirms FY26 Profit Guidance with Strong Q3 Lending Growth

Robust Lending Growth Supports Profit Outlook

Judo Bank (ASX:JDO) has maintained momentum in its third quarter of FY26, with gross loans and advances climbing to $13.8 billion as of 31 March, up from $13.4 billion at the end of December 2025. This growth was driven by strong originations and a notable improvement in attrition rates, which halved from 33% annualised in Q2 to 15% in Q3, reflecting lower external refinances and discretionary paydowns. The bank’s relationship-led SME lending strategy continues to underpin this expansion, reinforcing its position in a competitive market.

Net interest margins (NIM) also edged higher to approximately 3.15% in Q3, up from 3.03% in the first half of the year, aligning with Judo’s guidance for the second half of FY26. Lending margins remained steady at 4.2%, supported by a healthy pipeline of AAA-rated applications averaging 4.3% over the 1-month BBSW benchmark. Deposits grew to $11.5 billion, with the cost of deposits benefiting from lower-cost term deposits and new at-call savings products launched in recent months, now exceeding $1.1 billion in combined balances.

Asset Quality Stable Despite Economic Uncertainty

Despite ongoing geopolitical and economic volatility, Judo’s asset quality metrics have remained stable. The proportion of loans 90 days past due or impaired slightly improved to 2.65% of gross loans and advances from 2.66% at the end of 2025. A detailed customer-by-customer review found most borrowers in good financial health, with no significant change in risk profiles.

However, acknowledging the heightened uncertainty, Judo prudently increased its collective provision coverage by 5 basis points to 94 basis points of GLA, with a particular overlay for sectors sensitive to fuel prices and economic shifts, including agriculture, construction, retail, manufacturing, and transport. This adjustment brings the expected cost of risk for FY26 to between 70 and 75 basis points of average GLA, above the bank’s long-term target of 50 basis points.

Guidance Reaffirmed with Focus on Operating Leverage

Judo reaffirmed its FY26 profit before tax guidance of $180 million to $190 million, anticipating delivery towards the lower end due to the increased provisions. The bank expects continued strong lending growth, targeting gross loans and advances between $14.4 billion and $14.7 billion by year-end, supported by ongoing investments in growth initiatives and deeper penetration into regional and agribusiness lending.

Operating expenses remain disciplined, with a cost-to-income ratio forecast to improve below 50% in the second half of FY26, reflecting operating leverage from productivity gains and product enhancements. The bank’s capital position remains robust, with a Common Equity Tier 1 ratio steady at 12.6%, balancing profit generation against lending growth.

This update follows Judo’s earlier half-year results where the bank reported a 26% half-on-half profit increase and upgraded its net interest margin guidance for the second half, highlighting sustained momentum in its SME lending franchise and capital strength.