Judo (ASX:JDO) share price lifts on bullish guidance

The bank is forecasting strong business credit growth.

| More on:
a small child in a judo outfit with a green belt strikes a martial arts pose with his hand thrust forward and a cute smile on his face.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Judo share price lifts amid wider ASX selloff
  • Net interest margins exceed guidance
  • Full year profits expected to modestly exceed forecasts

The Judo Capital Holdings Ltd (ASX: JDO) share price is bucking the wider market selloff today and is currently up 0.4%.

Judo shares closed yesterday at $1.98 and are currently trading for $1.99.

The bank, focused on lending to Small and Medium Enterprises (SMEs), is a newcomer to the ASX, listing on 1 November 2021.

Below we look at its financial results for the half year ending 31 December (1H FY22).

Judo share price up amid bullish guidance

  • Pro forma profit before tax of $3 million, up from a loss of $700,000 in 1H FY21
  • Gross loans and advances increased 37.8% year-on-year to $4.85 billion
  • Net interest income of $73.5 million up 48.5% from the prior corresponding period
  • Underlying net interest margin of 2.73%, up from 2.65% in 1H FY21

What else happened during the half year?

While Judo's pro forma profits for the half year handily beat the losses posted during 1H FY21, the bank reported a statutory net loss of $16.1 million. That compares to a statutory net profit of $1.9 million in the prior corresponding period.

Judo attributed that loss to one-off costs associated with its initial public offering (IPO).

The bank's underlying net interest margin of 2.73% came in above prospectus guidance of 2.69%.

Term deposits remained a key funding source during the half year, and the bank received an investment grade credit rating from S&P. It said this rating enabled it to access new forms of wholesale funding and "a broader universe of term deposit investors".

As at 31 December, Judo had drawn $2.9 billion from the RBA's Term Funding Facility. This is expected to continue to be beneficial to its fundings costs for the full 2022 financial year. Judo said it's "well positioned" to refinance the drawing before it expires in June 2024.

What did management say?

Commenting on the results, Judo's CEO, Joseph Healy said:

Judo has delivered a strong first half result underpinned by growth in our loan book together with an improvement in underlying margins…

We are confident that we have the right strategy in place with a clear aim of expanding the reach of our banking services so that more SMEs across Australia have access to a relationship bank that listens, understands, and boldly backs business.

What's next?

Looking ahead Healy said, "We are expecting 2022 to deliver the strongest business credit growth in 14 years."

He added that Judo is targeting a lending portfolio of $15 billion to $20 billion, with net interest margins of more than 3%. Judo is also targeting a return on equity in the "mid-teens" and a cost-to-income ratio in the range of 30%.

The company said it "is confident of achieving its prospectus FY22 GLA forecast of $6 billion and of modestly exceeding revenue and profit forecasts".

Judo share price snapshot

The Judo share price has struggled in the new year, down 8.1%. That compares to a year-to-date loss of 6.3% posted by the All Ordinaries Index (ASX: XAO).

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Judo Capital Holdings Limited. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Earnings Results

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Earnings Results

ASX 200 stock jumps 10% on strong FY24 results

How did this KFC restaurant operator perform in FY 2024?

Read more »

A male investor wearing a white shirt and blue suit jacket sits at his desk looking at his laptop with his hands to his chin, waiting in anticipation.
Consumer Staples & Discretionary Shares

Guess which ASX 200 stock just slashed its final dividend by 23%

This retailer had a tough time during the 12 months. Here's how it performed.

Read more »

Man jumps for joy in front of a background of a rising stocks graphic.
Earnings Results

Catapult shines: 20% sales growth propels ASX tech stock to new 52-week high

A strong annual result from this tech player has caught investor attention.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Earnings Results

Xero share price leaps 8% on staggering earnings upheaval

A major turnaround in profitability is sending investors into a frenzy over Xero shares today.

Read more »

a construction worker sits pensively at his desk with his arm propping up his chin as he looks at his laptop computer while wearing a hard hat and visibility vest in a bunker style construction shed.
Materials Shares

Which ASX 200 stock just plunged 12% despite record full-year earnings?

It looks like an impressive report card but UBS doesn't like the FY25 guidance.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Earnings Results

ASX 200 tech stock lifts off on another record-setting half-year profit

Investors are bidding up the ASX 200 tech company following its half-year results.

Read more »

increasing rural asx share price represented by happy looking sheep
Earnings Results

Why is this ASX All Ords stock staying strong as profits crash 76%

How is this company's share price marching higher after mowing down more than three-quarters of its profits compared to a…

Read more »

Two men sit side by side on a couch with video game controls in their hands and expressive looks on their faces as they react to the action in front of them in a home setting.
Earnings Results

Guess which ASX 200 stock is surging 11% on an 'outstanding' result

This ASX gaming giant just posted a 17% jump in profits, and its shareholders are basking in the glory.

Read more »