Judo Bank ‘more confident than ever’ as regional push drives lending growth

The parent company of business bank challenger Judo Bank grew its lending book by 16 per cent to $12.5 billion while deposits hit almost $10 billion by the end of June - up from $8.2 billion a year earlier.

Underlying profit before tax of $125.6 million was up 14 per cent, supported by the expanded loan book, an improved net interest margin and “prudent” cost management.

Bayliss says Judo Bank’s solid results for FY25 were accompanied by major operational milestones “that will allow us to continue to successfully execute our strategy in FY26 and beyond”.

“Judo’s growth has followed a deliberate three-phase strategy: to build the bank; then to scale the bank; and now, as we enter FY26, to optimise the bank,” he says.

“Over the past three years, we have re-platformed our core technology, re-engineered our data environment and built the full suite of systems required to operate at scale.

“Thanks to an enormous effort from the Judo team, this foundational work is complete. We are now set to deliver significant operating leverage from our investments in systems and people, alongside a genuine value proposition that is hard to replicate and is clearly resonating with our customers.”

Among the milestones reached during the year, Judo Bank opened 10 new locations, all of them in regional locations, taking its total footprint to 31 across Australia.

While Judo Bank reports that business conditions are improving, the bank also posted a $5.4 million lift in loan impairments to $75.5 million.

The company says 90-plus days past due and impaired assets represent 2.43 per cent of gross loans and advances, up “modestly” from 2.31 per cent at the end of FY24.

“We have shifted our focus to enhancing our core SME lending franchise, expanding our product suite and optimising funding, capital and costs,” says Bayliss.

“I'm very pleased with the momentum in our technology and operations teams, who are now working to increase the capacity of our relationship bankers and support the development of new products.”

The Judo Bank CEO says the introduction of new deposit products in FY26 will broaden the group’s offering, reduce reliance on term deposits and give the bank flexibility to lower its funding costs.

“We are well on our way to achieving our at-scale ROE (return on equity) in the low to mid-teens, and we remain confident in demonstrating meaningful progress towards this goal in FY26, as the inherent benefits of scale in our model, combined with a larger balance sheet, are expected to drive significant profit growth,” he says.

“Judo was founded with a bold vision – to build a world-class SME business bank from the ground up, one that delivers a sector leading return on equity and redefines what it means to serve Australian SMEs.

“Now, eight years on, I am more confident than ever in the strength and sustainability of our competitive advantage.”

Looking to the year ahead, Judo Bank points to early stages of recovery for the Australian economy following a consumer-led slowdown in FY24.

“Overall, activity has been supported by government spending and resilient employment levels,” says the company.

“Meanwhile, business conditions remain varied, with some businesses, particularly those reliant on consumer discretionary spending, continuing to experience pressure.

“However, business confidence has started to improve at the beginning of FY26 and demand for credit remains robust.”

Judo Bank sees SMEs potentially benefitting from growth in demand and consumption due to higher household incomes, while lower interest rates are expected to further boost business and consumer spending.

“However, there remains some degree of uncertainty stemming from global trade policy development,” says the company.

Shares in Judo Bank were up 8c to $1.83 at 12.06pm (AEST).