Company Reports

Judo's fiscal 2026 net profit after tax increased 29%, driven by 18% loan growth, net interest margin expanding 20 basis points, and good cost control. Pretax profit was at the top of management's recently downgraded guidance, despite a 56% jump in loan impairments. Shares rose over 15% on Aug. 18.

Judo Capital began as a nonbank lender in 2016, using seed capital and debt facilities to establish itself as a lender to Australian small and midsize businesses. It received a banking deposit license in 2019. Among its competitors are the big four Australian banks, which collectively have around 70% share of total business loans. Judo has less than 1% share of the total Australian business loan market, but we estimate roughly 2% of the SMB market.

Judo Capital began as a nonbank lender in 2016, using seed capital and debt facilities to establish itself as a lender to Australian small and midsize businesses. It received a banking deposit license in 2019. Among its competitors are the big four Australian banks, which collectively have around 70% share of total business loans. Judo has less than 1% share of the total Australian business loan market, but we estimate roughly 2% of the SMB market.

The market was startled by Judo's trading update, with shares crashing 40%. While the bank points to most underlying metrics being on track or better, higher credit stress drives a 10% downgrade to fiscal 2026 pretax profit guidance. Fiscal 2027 guidance implies growth of 30%, but also disappointed.

Loan growth and net interest margin improvement in the fiscal third quarter had Judo Capital on track to meet full-year guidance, only to be derailed by an increase in loan impairment provisions. Pretax profit is now expected to be at the low end of the AUD 180 million-AUD 190 million guidance.

Judo Capital began as a nonbank lender in 2016, using seed capital and debt facilities to establish itself as a lender to Australian small and midsize businesses. It received a banking deposit license in 2019. Among its competitors are the big four Australian banks, which collectively have around 70% share of total business loans. Judo has less than 1% share of the total Australian business loan market, but we estimate roughly 2% of the SMB market.

Judo Capital began as a nonbank lender in 2016, using seed capital and debt facilities to establish itself as a lender to Australian small and midsize businesses. Judo received a banking deposit license in 2019. Among its competitors are the big four Australian banks, which collectively have around 70% share of total business loans. Judo has less than 1% share of the total Australian business loan market, but we estimate roughly 2% of the SMB market.

Judo's first-half fiscal 2026 NPAT jumped 32% on second half 2025, driven by 7% loan growth, stable net interest margins, and lower loan impairment expenses. Fiscal 2026 pretax profit guidance is unchanged at AUD 180 million-AUD 190 million, implying full-year growth of up to 51%.

Judo shares rose 6% on the day of its first-quarter 2026 operational update. The loan book grew to nearly AUD 13 billion, tracking an annualized growth rate of 16%—consistent with fiscal 2025. Arrears improved slightly, with 90-day past due loans falling to 2.37%, from 2.43% in June.

Judo Capital began as a nonbank lender in 2016, using seed capital and debt facilities to establish itself as a lender to Australian small and midsize businesses. Judo received a banking deposit license in 2019. Among its competitors are the big four Australian banks, which collectively have around 70% share of total business loans. Judo has less than 1% share of the total Australian business loan market, but we estimate roughly 2% of the SMB market.

Judo Capital began as a nonbank lender in 2016, using seed capital and debt facilities to establish itself as a lender to Australian small and midsize businesses. Judo received a banking deposit license in 2019. Among its competitors are the big four Australian banks, which collectively have around 70% share of total business loans. Judo has less than 1% share of the total Australian business loan market, but we estimate roughly 2% of the SMB market.

Judo's fiscal 2025 profit increased 24%, driven by strong 16% loan growth and disciplined cost management. Net interest margins were broadly flat at 2.93% but did strengthen in the second half.

Bank share prices performed well in the three months to June 30, 2025. Credit growth has continued to trend higher, while credit stress has been low. Australian banks reported flat to modestly softer net interest margins in the March quarter.

Judo's shares plunged after providing its third-quarter 2025 update. Fiscal 2025 pretax profit growth of 15% is maintained, but loan growth has been slower and bad debt expenses modestly higher than initially expected. Management also announced a fiscal 2026 pretax profit growth target of 50%.

Judo Capital began as a nonbank lender in 2016, using seed capital and debt facilities to establish itself as a lender to Australian small and midsize businesses. Judo received a banking deposit license in 2019. Among its competitors are the big four Australian banks, which collectively have around 70% share of total business loans. Judo has less than 1% share of the total Australian business loan market, but we estimate roughly 2% of the SMB market.

Australian nonmajor banks were not immune to the market selloff following President Donald Trump's tariffs, with a potential hit to gross domestic product growth clouding the earnings outlook. In fiscal 2025, credit growth is ticking up on population and wages growth, and credit stress has been low.

Franking for Australian banks we cover was showing as not available on our research reports between Jan. 23 and March 13, 2025, due to a recent change in our process for extracting data from our valuation models. This has been corrected.

Judo Capital began as a nonbank lender in 2016, using seed capital and debt facilities to establish itself as a lender to Australian small and midsize businesses. Judo received a banking deposit license in 2019. Among its competitors are the big four Australian banks, which collectively have around 70% share of total business loans. Judo has less than 1% share of the total Australian business loan market, but we estimate roughly 2% of the SMB market.

Judo's first-half fiscal 2025 pretax profit jumped 33% on the second half of 2024, thanks entirely to lower impairment expenses. Despite 9% loan growth, softer net interest margins kept revenue growth modest at 2%, trailing 4% growth in operating expenses. Profit before impairments fell 1%.

Credit growth is ticking up on population and wages growth, and households and businesses appear more optimistic about the economic outlook as rate hikes appear less likely.