Stock of the day: Judo Capital Holdings
Judo Bank sees 20% growth in loans, reports $110 million pre-tax profit, and reaffirms 2025 financial year profit growth target despite economic headwinds.
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This video was created on 20 August for IG audiences by ausbiz
Stock of the day: Judo Capital (ASX:JDO)
Steady growth amid economic challenges
Judo Capital, focused on small businesses, reported an underlying profit before tax of $110 million, reflecting a 2% rise in line with expectations. Gross loans and advances increased by 20% to $10.7 billion, reaching the top end of guidance. Profit after tax was $70 million, despite a slight earnings decline. The bank announced a dividend and reaffirmed its FY25 profit growth target of 15%.
However, Judo noted challenges in the small business sector due to a slowing economy. Despite these headwinds, Judo's share price rose by 10% today, reflecting market approval.
Market reaction and outlook
Analysts have consistently viewed Judo Capital as a standout in the banking sector for its ability to grow in a market dominated by the big four banks. Despite an increase in non-performing loans to 2.3%, this figure remains below the bank’s 3.3% cyclical assumptions, showcasing prudent risk management.
Strategic positioning against traditional banks
Judo Capital’s focus on the small to medium enterprise (SME) market has positioned it well against traditional banks, which have largely exited this segment in favour of mortgage lending. This strategy has allowed Judo to carve out a niche, capitalising on opportunities where larger banks have shown less interest.
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