Judo Capital Holdings Limited · ASX:JDO
Judo Capital — H1 2025 Earnings Presentation
36 slides from Judo Capital's earnings presentation, Feb 18, 2025
Slide 1: Boldly backing business. 2025 Half Year Result
Boldly backing NT Mackay business. QLD Rockhampton WA Toowoomba Sunshine Coast Brisbane Gold Coast SA Tamworth Northern Rivers NSW Coffs Harbour Perth Dubbo Newcastle 2025 Half Year Result. Bunbury Adelaide Mildura Orange Parramatta Sydney Canberra VIC Bendigo Albury 18 February 2025 Ballarat Melbou
Slide 2: CEO Update
CEO Update. Chris Bayliss Chief Executive Officer 2 1H25 Result Presentation
Slide 3: Service profit chain
Service profit chain. Empowered employees and happy customers to drive ROE improvements to at-scale target 71 +51 34% 19% 5.1% JEDI Employee Lending NPS2 3-year CAGR 3-year CAGR ROE Engagement1 GLA productivity growth3 Targeting ROE in the low-to-mid teens at-scale; operating leverage to emerge in 2
Slide 4: 1H25 result highlights
1H25 result highlights. 33% underlying PBT growth vs 2H24 driven by strong operational performance Metric Key points 1H25 Results Strong lending growth of 18% annualised, over 2x sector growth1, underpinned by GLA $11.6bn unique customer value proposition (CVP) and expansion into new regions • Avera
Slide 5: Our lending franchise continues to perform
Our lending franchise continues to perform. Growth in lending with sustained market leading NPS and lending margins Quarterly GLAs ($bn) 26 159 11.3 11.6 10.7 9.4 9.7 9.8 8.9 8.0 Locations Bankers Jun-24: 21 Jun-24: 144 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 Sep-24 Dec-24 Quarterly lending margin
Slide 6: Strong lending momentum
Strong lending momentum. Growth driven by Judo’s unique CVP and regional expansion Gross originations ($m) 2,295 2,087 • Gross originations for 1H25 increased to $2.3bn (1H24: $1.8bn) 2,028 1,771 • Judo’s unique CVP of speed, judgement and relationship-led banking continues to resonate with SMEs • R
Slide 7: Proactive portfolio management
Proactive portfolio management. Delivering improved cost of risk and NIM outcomes Quarterly run-off (%) 26% 25% • Small average portfolio sizes means continued close 22% 22% engagement with customers 21% 19% 9% 19% 13% • Proactive portfolio management contributed to higher run 17% 6% off, however al
Slide 8: Stable credit quality
Stable credit quality. Relationship-led model working through all parts of the economic cycle 90+ DPD and Impaired Assets (% of GLA) • 90+DPD and Impaired Assets have remained stable, 2.63% 2.31% 2.34% 2.30% at levels below at-scale thesis 1.73% • Proactive portfolio management contributed to 1.41%
Slide 9: CFO Update
CFO Update. Andrew Leslie Chief Financial Officer 9 1H25 Result Presentation
Slide 10: 1H25 result
1H25 result. Profit & Loss Statement ($m) 1H25 2H242 Change Income 200.9 196.7 2% Operating Expenses (115.4) (110.7) 4% Profit Before Impairment 85.5 86.0 (1%) Impairment Expense (28.8) (43.3) (33%) Profit Before Tax 56.7 42.7 33% Non-recurring Costs1 - (5.8) n.m. Statutory Profit Before Tax 56.7 36
Slide 11: NIM bridge
NIM bridge. Residual TFF drag in 1H25; other drivers largely positive 2H24 to 1H25 NIM waterfall (%) 2.85% (0.18%) 2.81% 0.08% (0.01%) 0.06% (0.03%) 0.04% Unwind of benefit Higher margins Higher yields on Hedged cost of Warehouse received from on new lending Minimal impact liquid assets TDs was elev
Slide 12: 2H25 NIM drivers
2H25 NIM drivers. 2H25 tailwinds from lending margins, funding mix and liquidity Quarterly NIM trajectory (%) NIM drivers 2H25 Liquidity Benefit from ongoing liquidity optimisation Jun-25 exit NIM at 3% Benefit from improving blended lending margins 3.07% Lending Blended lending margin to stabilise
Slide 13: Deposit margins improving as expected
Deposit margins improving as expected. TD competition has eased, while swap curve volatility has reflected cash rate uncertainty Branchless bank 1-year TD vs. swap rate (%) (daily) • As expected, headline TD rates fell across the sector in 1H25 following the repayment of the TFF 5.5% • Swap curve wa
Slide 14: Continued progress to at-scale funding stack
Continued progress to at-scale funding stack. Direct retail TD franchise continues to strengthen; wholesale funding optimisation ongoing Judo’s funding stack 11% 11% 11% ~10% ~10% • TDs now 66% of total funding; targeting ~70% by Jun-25 18% ~20% ~15% 25% 23% • Direct retail TD franchise continues to
Slide 15: Operating expenses
Operating expenses. 80.0% Underlying 150 operating expenses ($m) and CTI (%)1 1H25 drivers 70.0% 57.4% • Increase in employee costs: 56.3% 60.0% 130 115.4 – Wage inflation and higher super guarantee charge, 110.7 50.0% partly offset by lower average FTE 110 21.5 40.0% 24.1 – Employees moving to syst
Slide 16: Impairment expense and provisioning
Impairment expense and provisioning. Impairment expense ($m) Prudent provisioning ($m) 100 0.99% 1.05% 1.02% 1.50% 87bps 200 1.00% 149.1 159.6 80 0.50% 130.5 6.0 150 4.2 0.00% 57bps 60 7.1 51bps -0.50% 100 113.0 -1.00% 108.8 40 88.7 -1.50% 50 -2.00% 20 43.3 40.6 -2.50% 34.7 36.1 26.8 28.8 0 -3.00% 1
Slide 17: Capital
Capital. Judo remains well capitalised 2H24 to 1H25 CET1 waterfall • Strong Dec-24 CET1 ratio at 13.8% 14.7% (1.2%) 0.2% 13.8% • Organic capital generation to continue with improving (0.1%) (0.2%) 0.4% profitability • No plans to issue additional core equity to achieve target at-scale loan book Jun-
Slide 18: Key 2H25 performance drivers
Key 2H25 performance drivers. Disciplined management of key performance drivers Drivers 2H25 considerations Lending growth Gross originations Strong gross originations to continue; new regions ramping up Run-off Run-off expected to moderate over 2H25 Warehouse lending Continue to incubate with first
Slide 19: Conclusion and Outlook
Conclusion and Outlook. Chris Bayliss Chief Executive Officer 19 1H25 Result Presentation
Slide 20: A clear, simple strategy
A clear, simple strategy. Simplicity is a key element of our vision of being a world-class SME business bank Judo’s core lending competitive advantages Relationship-led Judgement Speed Core SME lending franchise Strategic enablers Scale our advantage Excel in execution Empower our people High employ
Slide 21: Unlocking growth and ROE opportunities
Unlocking growth and ROE opportunities. Focusing on SMEs’ needs and building upon our core competitive advantages Adjacent SME Adjacent SME New regions ROE levers segments lending products Continue regional Prudently expanding SME Evaluate adjacent SME Operating leverage expansion strategy securitis
Slide 22: Conditions for SMEs are stabilising
Conditions for SMEs are stabilising. Economic conditions are generally more stable Annual growth in non-financial business credit (%)1 • Business conditions are varied, with some sectors facing continued challenges. Overall, however, businesses are 15 adjusting to higher rates and credit demand is s
Slide 23: FY25 guidance
FY25 guidance. On track to achieve guidance, with improved NIM outlook Metric Detail FY25 Target Metrics at-scale Strong lending growth to continue, supported by investments in GLA $12.7bn - $13.0bn $15bn - $20bn new regions and segments Gradual improvement of NIM in 2H25 Upper end of 2.80% - NIM •
Slide 24: Operating leverage clearly emerges in 2H25
Operating leverage clearly emerges in 2H25. Revenue to grow, whilst costs have stabilised Loan book ($bn) FY25 guidance2 Underlying PBT1 ($m) 10.7 11.6 9.7 FY25 guidance2 67.4 1H24 2H24 1H25 2H25 NIM (%) 56.7 3.02 TFF refinancing impact FY25 guidance2 2.85 2.81 42.7 1H24 2H24 1H25 2H25 Underlying op
Slide 25: 12 months of successful execution
12 months of successful execution. 5 years as an ADI and larger balance sheet gives us greater optionality Driving the core Setting Judo up to scale • Continued execution of clear, simple strategy • Strengthened executive team • Achieving a balance between growth, • Aligned organisational structure
Slide 26: Questions
Questions. 1H25 Result Presentation 26
Slide 27: Appendix
Appendix. 1H25 Result Presentation 27
Slide 28: Key FY25 considerations
Key FY25 considerations. Metrics Key considerations for FY25 Lending to accelerate supported by recruitment of an additional 20 bankers in 10 new locations by Jun-25 GLA • FY25 target: $12.7bn - $13.0bn • Run-off expected to moderate over 2H25 • Lending growth to be largely funded through deposit gr
Slide 29: Loan book characteristics
Loan book characteristics. Judo’s loan book over time ($bn) 6% 11.6 41% 10.7 9.7 8.9 7.5 6.1 59% 4.8 94% 3.5 2.6 1.8 Floating Fixed Interest Only Principal & Interest Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 Dec-22 Jun-23 Dec-23 Jun-24 Dec-24 Business loans Equipment loans Home loans Line of credit Lendin
Slide 30: TD margins in-line with long-term assumption
TD margins in-line with long-term assumption; short- term volatility impacted by swap rate movements. Spread from 1-year TD to 1-year swap rate1 (%) Dec-22 qtr spreads Dec-24 qtr spreads 2 Majors: -9bps Majors: 9bps Regionals: -8bps Regionals: 32bps Branchless: 28bps Branchless: 72bps 1.5 Judo: 44bp
Slide 31: Credit quality key metrics
Credit quality key metrics. Customer groups Gross Loans and % of Gross Loans and % of Fully / Partially % 90+DPD and 90+DPD and Sectors Advances ($M) Advances Secured Impaired Impaired Jun-24 Dec-24 Jun-24 Dec-24 Jun-24 Dec-24 Jun-24 Dec-24 Jun-24 Dec-24 Manufacturing 754 755 7% 6% 84% 82% 8.91% 8.7
Slide 32: Key asset quality ratios over time
Key asset quality ratios over time. Non-performing loans / GLA (%) 2.93% 2.72% 2.90% 2.85% 0.01% 0.36% 0.02% 0.51% 0.60% 0.39% 2.02% 0.97% 0.29% 1.65% 1.21% 1.31% 1.23% 0.22% 0.99% 90+ DPD and 0.85% impaired assets 1.60% 1.10% 1.03% 1.07% 0.74% 0.56% Sep-23 Dec-23 Mar-24 Jun-24 Sep-24 Dec-24 Loans 9
Slide 33: Judo's hedging profile
Judo’s hedging profile. Lower interest rate risk through hedging. Reduced NIM volatility with ITOC Judo’s hedging profile as at Dec-24 Judo’s ITOC portfolio 15,000 4.6% 4.4% 10,000 4.2% 5,000 4.0% 3.8% $m - 3.6% -5,000 3.4% 3.2% -10,000 3.0% Nov-23 Mar-24 Nov-24 Aug-23 May-24 Dec-23 Aug-24 Dec-24 Ju
Slide 34: Glossary
Glossary. $ Dollar amounts, in Australian dollars unless stated otherwise NCDs Negotiable certificates of deposit AAA pipeline Loans in application, approved and accepted status, but not yet settled NII Net interest income ADI Authorised deposit-taking institution NIM Net interest income (NII) / ave
Slide 35: Thank you
Thank you. 1H25 Result Presentation 34
Slide 36: 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 18 February 2025. It is information given in summary form only and does not purport to be complete. It does
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