Judo Capital Holdings – 2025 Half Year Results Summary
Website: Judo Bank
Overall Tone
Judo Capital Holdings delivered solid financial results for the six months ending 31 December 2024, demonstrating continued growth in its SME lending franchise. While statutory profits declined year-over-year due to higher costs and loan impairments, underlying profit before tax increased by 33% due to loan book expansion and prudent cost management. The company remains well-capitalized with strong liquidity and improving efficiency metrics.
Financial Results Summary
| Metric | Dec-24 | Jun-24 | Dec-23 | HoH Change | YoY Change |
|---|---|---|---|---|---|
| Revenue (Statutory Operating Income) | $201M | – | $201M | 0% | 0% |
| Net Interest Income | $193.0M | $190.8M | $195.2M | +1% | -1% |
| Statutory Net Profit After Tax | $40.9M | $24.0M | $45.9M | +70% | -11% |
| Adjusted EBITDA | Not disclosed | – | – | – | – |
| Operating Cash Flow | $(74.3)M | $370.2M | $271.9M | – | – |
| Adjusted Earnings Before Tax (EBT) | $56.7M | $42.7M | $67.4M | +33% | -16% |
| Normalised EPS | 3.7c | 2.2c | 4.1c | +68% | -10% |
| Net Tangible Assets Per Share | $1.39 | $1.36 | – | +2.2% | – |
Positive Surprises & Potential Concerns
- Positive: Strong loan book growth (+9% HoH to $11.6B), well above system growth, supported by regional expansion and recruitment of relationship bankers.
- Positive: Credit impairment expenses decreased significantly (-33% HoH), reflecting better risk management and portfolio performance.
- Concern: Net Interest Margin (NIM) declined by 4bps to 2.81%, primarily due to the impact of refinancing the Term Funding Facility (TFF).
- Concern: Cost-to-Income Ratio (CTI) increased to 57.4% (up from 56.3% in Jun-24), driven by higher employee benefits expenses and IT costs.
Outlook Commentary
- The business lending market remains strong, particularly for SMEs, but some sectors face challenges due to higher interest rates and economic uncertainty.
- Judo expects to demonstrate clear operating leverage from 2H25, with an improving NIM and controlled expenses.
- Growth is expected to continue, supported by regional expansion and ongoing investment in customer relationships.
Guidance Statements
- Loan Book (GLA): Expected to grow to $12.7B – $13.0B by FY25.
- Net Interest Margin (NIM): Gradual improvement expected in 2H25, targeting 3% by June 2025.
- Cost-to-Income Ratio (CTI): Expected to remain broadly stable, with an improvement in 2H25.
- Profitability (PBT/ROE): Targeting 15% growth in PBT compared to FY24, with a low- to mid-teens ROE.
Result vs. Market Expectations
- Judo’s profit beat expectations due to lower-than-expected impairment expenses and stronger loan growth.
- The decline in NIM and the increase in CTI were concerns but were largely expected by analysts.
- No dividends were declared, which was in line with the company’s strategy of reinvesting profits into growth.
Market Positioning
- Leading up to the results, Judo’s share price showed strength, reflecting investor confidence in its loan book growth and risk management.
- The stock was trading closer to its 52-week high, indicating positive sentiment despite NIM pressures.
- The company remains well-capitalized with strong liquidity, positioning it for further growth in the SME banking sector.
Disclaimer: This information is provided purely for educational purposes. It takes no account of an individual’s personal financial circumstances and hence can in no way constitute financial advice. The above data may be subject to errors or inconsistencies for which the author takes no liability. It is imperative that all investors do their own research or if they need advice, seek it from a qualified financial adviser.
Quick Take: H1FY25 ASX:JDO