Judo Capital Holdings Limited · ASX:JDO
Judo Capital — Investor Day (May 2022)
40 slides from Judo Capital's investor day presentation, May 11, 2022
Slide 1: ASX Announcement: Judo 2022 Investor Day
ASX ANNOUNCEMENT 11 May 2022 JUDO 2022 INVESTOR DAY Judo Capital Holdings Ltd (Judo) (ASX:JDO) is today holding its inaugural investor day in Sydney. The investor presentation follows this announcement. Key points • Judo is on-track to achieve or exceed all its prospectus FY22 metrics • Judo remains
Slide 2: Judo's CEO and CFO comments
“As well as accessing fixed-rate funding from the RBA’s term funding facility, term deposits remain a very attractive source of funding. We are rewarding retail depositors with some of the most competitive term deposit rates in the market. At the same time, by utilising hedges, we are locking in our
Slide 3: 2022 Investor Day
2022 Investor Day. 11 May 2022 Boldly backing business.
Slide 4: Our purpose is to be the most trusted SME business bank in Australia
Our purpose is to be the most trusted SME business bank in Australia. Boldly backing business.
Slide 5: Key investor questions
Key investor questions. • Why does Judo exist and what is our competitive advantage? • How we are different to other fast growing banks? • How will we deliver key business metrics at scale? • What role does technology play in delivering our at-scale CTI? • What do rising interest rates mean for Judo
Slide 6: Agenda
Agenda. Topic Presenter Intro Joseph Healy Credit risk framework Frank Versace Judo value proposition Angelo Manos Banker panel Joseph Healy Technology Lisa Frazier Finance Chris Bayliss Conclusion Joseph Healy Q&A All 4
Slide 7: Experienced management team
Experienced management team. Diverse and credentialed business banking professionals with deep domain expertise Today’s presenters Frank Versace Angelo Manos Lisa Frazier Chris Bayliss Chief Risk Officer Chief Relationship Officer Chief Operating Officer Deputy CEO & CFO •20+ years experience •27+ y
Slide 8: Experienced management team
Experienced management team. Diverse and credentialed business banking professionals with deep domain expertise Yien Hong George Obeid Kevin Ramsdale Megan Collins General Counsel & Co-Sec Chief Third Party Officer Chief Marketing Officer Chief People & Culture Officer •20+ years experience •20+ yea
Slide 9: Why Judo exists
Why Judo exists. Drive by the industry Mortgage lending has to industrialise SME been prioritised over lending business lending Diminished SME Increase in unmet demand relationship proposition for SME funding and thus and service levels due to good businesses unable to deskilling & sales cultures ac
Slide 10: The industry will find it hard to change
The industry will find it hard to change. Competitors are rediscovering SME, but their industrialised models will be difficult to unwind Bankers have been replaced with sales teams with diminished credit assessment capability Remote credit assessment means customers rarely get to speak with decision
Slide 11: At the outset we had three clear must haves
At the outset we had three clear “must haves”. Clarity on the problem we were seeking to solve and our sustainable competitive advantage High calibre management with deep equity alignment to the business Path to profitability within three years, and view of capital needed to reach self-sustainabilit
Slide 12: The power of specialisation
The power of specialisation. Specialisation and focus yields better return than generalisation from the perspective on individual challenges and tasks, as this Event The The Specialist Olympic example demonstrates. Specialists Generalists Premium 100m 10.16 s 10.87 s 7% 110m Hurdle 13.64 s 14.34 s 5
Slide 13: Performance update
Performance update. Judo’s strong financial performance continues Prospectus Outlook vs FY22 Forecast Apr-22 YTD Prospectus • Business has strong momentum Lending portfolio ($bn) 6.00 5.56 ✓ • GLA on track to achieve $6.0 billion Relationship Bankers 98 110 ✓ • Relationship Bankers above Prospectus
Slide 14: Credit Risk Management
02 Credit Risk Management. Frank Versace, Chief Risk Officer 12
Slide 15: Judo is different to other fast growing banks
Judo is different to other fast growing banks. A unique risk management culture and framework that will deliver superior results Singular focus on the SME 1 2 Understand that every Market Transactional customer profile is unique Specialists in credit SME approach Credit Risk Deeper understanding 6 C
Slide 16: Recent and current examples of our risk framework in practice
Recent & current examples of our risk framework in Practice. Onset of Covid 19 Current Environment • Unprecedented business disruption • Inflation for the first time in decades • Divergent approaches from state • Supply chain issues due to conflict in Europe governments and residual impacts of the p
Slide 17: Lending Growth Strategy
03 Lending Growth Strategy. Angelo Manos, Chief Relationship Officer 15
Slide 18: Our banker value proposition has been designed to attract, retain and develop the best talent
Our banker value proposition has been designed to attract, retain and develop the best talent. Owners We recruit top Team Banker Mindset talent and incentives empowerment Bankers apply continue to invest the 4Cs to make in development to decisions based improve their on judgment decision making Trai
Slide 19: Our customer value proposition has been purposely defined for the SME market
Our customer value proposition has been purposely defined for the SME market. Relationship led Judgement lending Speed to Market Consistent personalised service Highly capable and Streamlined lending origination, with highly capable, empowered bankers and risk combined with effective empowered and e
Slide 20: Our growth strategy is focused on industries, geographies and channels
Our growth strategy is focused on industries, geographies and channels. Opening of two new specialisations – 1 Agriculture and Health NT QLD Continued Geographic expansion WA 2 into regional Hubs SA NSW ~1,000 hand-picked specialist 3 commercial brokers VIC Central offices 18 Regional offices
Slide 21: Banker Panel
04 Banker Panel. 19 judobank.
Slide 22: Technology
05 Technology. Lisa Frazier, Chief Operating Officer 20
Slide 23: In the digital economy, successful companies are good at all three elements
In the digital economy, successful companies are good at all three elements of digital business models but prioritise one to excel in. Product company Experience company Platform company What is consumed? How it is packaged? How it is delivered? Products offered including Experience includes custome
Slide 24: Judo's Technology Enablement Principles
Judo’s Technology Enablement Principles. Best-in-class technology, and the application of digital and data, will enable our relationship banking CVP for our people and our customers at scale 22
Slide 25: Judo is on track in executing strategy and fulfilling its mission
Judo is on track in executing strategy and fulfilling its mission of being the most trusted SME bank in Australia. Optimise the Bank Scale the Bank Stand up the Bank Scaling requires balancing delivery of banking basics to enable operations at scale with new capabilities to support continued growth
Slide 26: Achieving our metrics at scale will position Judo as a World Class SME Bank
Achieving our metrics at scale will position Judo as a World Class SME Bank. Lending Portfolio Customer & Banker NPS Cost-to-Income Ratio $15bn - $20bn Maintain Approaching 30% A Banker enablement B C Growth Optimize end-to-end lending 24
Slide 27: We will build our technology target state in three phases
We will build our technology target state in three phases. SAMPLE OF INITIATIVES Phase 1: Enable our teams Phase 2: Support our customers Phase 3: Deliver vision at scale Optimise our existing processes, Leverage new assets to engage our Deliver our Judo vision of an integrated, systems, and platfor
Slide 28: Our technology driven competitive advantage
Our technology driven competitive advantage. We are…. • Simpler, in our tech stack and operations which reduces operational risk and ongoing maintenance costs • Native, Cloud based – integration and expansion is easier • Utilise best in class SaaS providers, streamlined upgrades, easy to adopt innov
Slide 29: Finance
06 Finance. Chris Bayliss, Deputy CEO and CFO 27
Slide 30: Key business metrics at scale
Key business metrics at scale. Judo is on track to achieving its performance goals for its key business metrics at scale Lending Current lending represents <1% market share. Lending of $15 - $20 billion equal to $15 - $20 billion portfolio approximately ~3% market share1. NIM of >3% to be supported
Slide 31: Judo has significant positive leverage to rising rates
Judo has significant positive leverage to rising rates. • For every 50 bps increase in rates, NIM sees an immediate 25 bps benefit Assets: ~34% fixed • 91% of our loan portfolio is floating rate, priced off 1month BBSW (~66% of assets- liquid asset balance temporarily elevated due to TFF Funding: ~8
Slide 32: Conservative term deposit pricing assumptions
Conservative term deposit pricing assumptions. Judo operates in a different segment compared to the majors and regionals Long term margin for top priced branchless banks Term deposit margin by segment - 2015 - 2022 2 0.64% 1.8 0.60% 1.6 1.4 0.46% 1.2 0.40% 1 0.8 0.6 0.20% 0.14% 0.4 0.2 0 0.00% Major
Slide 33: Current term deposit pricing is accretive to NIM
Current term deposit pricing is accretive to NIM. Tenor 6 months 1 year 2 year All in Swap rate 1.76% 2.40% 3.03% Judo – Direct Retail TD rates 2.10% 2.70% 3.50% 2.51% Margin over swap 0.34% 0.30% 0.47% 0.35% Judo – Intermediated TD rates 2.15% 3.00% 3.65% 2.35% Margin over swap 0.39% 0.60% 0.62% 0.
Slide 34: Funding strategy
Funding strategy. Driving existing channels and leveraging investment grade credit rating to enter new markets and develop new products Customer Deposits Wholesale Funding Direct Retail Term Funding Facility Intermediated Mid Markets Warehouse Facilities Intermediated SMSF Senior Unsecured Debt Dire
Slide 35: Peak TFF NIM and at-scale NIM
Peak TFF NIM and at-scale NIM. Evolution of NIM to Peak TFF NIM and at-scale NIM Peak TFF NIM mid-3’s At Scale NIM >3% 1H22 Underlying NIM 2.73% Term deposit margins Warehouse pricing Ongoing diversification 33 Not to scale and chronology may change
Slide 36: Scale drives CTI
Scale drives CTI. Judo CTI to be driven towards 30% by revenue growth (scale) and cost discipline ~78% Approaching 30% • Revenue growth driven by considerable loan book growth and trajectory to at-scale NIM • Costs will necessarily increase as Judo Cost to income Revenue uplift* Cost increases* Cost
Slide 37: Conclusion
07 Conclusion. Joseph Healy, CEO 35
Slide 38: Judo's strong financial performance continues
Judo’s strong financial performance continues. Prospectus Outlook vs FY22 Forecast Apr-22 YTD Prospectus • Business has strong momentum Lending portfolio ($bn) 6.00 5.56 ✓ • GLA on track to achieve $6.0 billion Relationship Bankers 98 110 ✓ • Relationship Bankers above Prospectus Mar-22 YTD Outlook
Slide 39: Thank You
Thank You. Boldly backing business.
Slide 40: Important Information
Important Information. This presentation is provided by Judo Capital Holdings Limited ABN 71 612 862 727 and its controlled entities (variously, "Judo", “us”, “we” or “our”) and is current at 11 May 2022. It is information given in summary form only and does not purport to be complete. It does not c