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).
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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).
