Judo Capital Holdings Limited (ASX:JDO) (“Judo Bank” or “Judo”) today announced FY22 pro forma profit before tax of $15.6 million. The pro forma profit was more than double the original prospectus profit forecast of $7.4 million.
Judo Bank reported Gross Loans and Advances (GLA) of $6.1 billion, up 73%, and Net Interest Income (NII) of $169.8 million, up 101% on the prior year.
Underlying Net Interest Margin (NIM) of 2.79% is up 20 basis points.
Judo’s FY22 result demonstrates the strong progress Judo is making towards its metrics at scale as it continues to deliver on its vision of building a world-class SME business bank.
The result also signals the achievement of exceeding all FY22 prospectus forecasts, including exceeding the company’s GLA forecast of $6.0 billion and exceeding revenue and profit forecasts.
CEO Commentary
Judo’s CEO and co-founder, Joseph Healy said FY22 had been a transformational year for Judo, as the company exceeds forecasts and remains on track to achieve metrics at scale.
“This financial year has been a transformational year for our company.
“In our IPO Prospectus, we set out clear forecasts for FY22. We are pleased to announce that we have exceeded all these targets and delivered a strong full year result.
“Since becoming the first commercial bank to list on the Australian Stock Exchange (ASX) in over 30 years on 1 November 2021, Judo Bank has not faltered on its promise to the market and to its customers.
“We have continued to rapidly scale our operations, so more small and medium-sized businesses (SMEs) across the country have access to our unique relationship-led model and a bank that listens, learns and boldly backs their businesses.
“As part of this process, this year we established specialist segments to service SME customers in the areas of agribusiness and health, recruiting the right bankers to establish and build our offering in FY23.
“Over this period, we passed the critical milestone of reaching profitability – making Judo one of the first banks anywhere in the world to achieve this within five years of launch.
“We are proud of our success to date, but we are not complacent. We have the momentum and foundations in place, including the required core equity capital, management experience, discipline and focus to achieve key business metrics at scale and realise our vision of being a world-class SME business bank.
“We passionately believe that specialists outperform generalists. We continue to recruit high-quality relationship bankers who are attracted to our specialist model. This has resulted in strong lending growth and a customer obsessed team who are passionate about bringing back the craft of relationship banking.
“I’m very proud of the culture we have built at Judo. We believe this is one of our unique advantages. Our team is empowered at all levels of the organisation, to think and work as owners of this business.
“With an owners’ mindset we will continue to act boldly and quickly, forging ahead with growth plans, so more Australian SMEs can secure the lending they need and the service they deserve to support and grow their businesses.”
Commenting on the outlook, Mr Healy said that Judo Bank is well positioned to achieve its metrics at scale.
“In the context of the current macroeconomic environment, Judo’s outlook is positive.
“The traditional values of being close to your customer and applying sound credit judgement – the values that Judo is founded on – have never been more important than now.
“Our customer value proposition is proven, and we expect our strong lending growth to continue.
“Our asset quality remains strong, supported by robust risk management. Although Judo is a young company, our experienced management team and bankers have built Judo on a foundation of risk management. We have demonstrated over the course of the pandemic, that economic disruption and uncertainty plays to our strengths and reinforces the value of our model.
“Australian SMEs are a highly profitable yet under- served sector, and we are confident in our ability to meet our ambitious targets.
“Judo is driving lending growth through the delivery of its unique, customer-centric proposition for SMEs that other banks will find difficult to replicate.
“Our low ratio of customers to bankers means that we can work closely with our customers to navigate changes in the operating environment.
“Our focus on the 4 Cs of credit – character, capacity, capital and collateral – underpin the quality of our lending and the sustainability of our business.
“We have great momentum across the business and are making good progress in the delivery of our key priorities to grow, recruit and invest in technology.
“We are focused on achieving our key business metrics at scale. To build a scaled, sustainable bank, we are targeting a lending portfolio of between $15 billion and $20 billion, with a net interest margin that exceeds 3%, a cost-to-income ratio approaching 30%, and ROE in the low-to-mid-teens. We are well positioned to keep progressing towards and achieving these targets.
“It continues to be an exciting time for Judo.
“We are committed to delivering our guidance and growth strategy, making sure our people are well supported in their roles, and that Australian SMEs continue to receive the premium service that they know and expect from Judo Bank.”