Trending news
Judo Bank (ASX:JDO): Is Australia’s SME-Focused Challenger Bank Finally Getting the Recognition It Deserves?
Judo Bank (ASX:JDO) has had a turbulent journey since its IPO in late 2021. For much of its listed life, the stock has traded below issue price, weighed down by sector sentiment and concerns around rising interest rates. Yet, despite the market’s skepticism, Judo has consistently delivered on its promises and is gradually carving out a strong niche in the SME banking space.
So, is Judo Bank finally turning the corner? Let’s take a closer look.
Who is Judo Bank?
Judo Bank, operated under Judo Capital Holdings, is Australia’s first fully licensed challenger bank dedicated to Small and Medium-sized Enterprises (SMEs).
Founded in 2016 by former NAB bankers David Hornery and Joseph Healy, Judo Bank is different from the “neobanks” that targeted retail consumers. Instead, Judo combines digital efficiency with relationship bankers, offering SMEs a level of service often lacking at the big four banks.
IPO: Floated in November 2021 — first fully licensed bank IPO in Australia in 25 years.
Loan Book Growth: Reached $12.5bn in FY25, with guidance to grow to $14.2–14.7bn in FY26.
Customer Experience: Exceptional Net Promoter Score (NPS) of 77 (vs. big banks averaging near 0).
Why Investors Like Judo Bank
1. Focus on SMEs
Judo has positioned itself as a true SME partner, turning down nearly half of loan applicants but building long-term, resilient customer relationships. Its customers value fast decision-making and tailored solutions — often lacking in major banks.
2. Strong Growth Opportunity
With loan book expansion into agribusiness and healthcare, Judo is opening up new growth verticals. Each relationship banker serves just ~25 clients, ensuring personalized engagement and lower credit risk.
3. Financial Stability
Unlike failed neobanks Xinja and Volt, Judo is financially conservative:
CET1 ratio: 13.1% (well above APRA’s minimum 8%).
FY25 Profit Before Tax: $125.6m (+14% YoY).
ROE: 5.3% and improving.
The bank is both profitable and well-capitalized, positioning it for steady expansion.
Challenges Since Listing
Despite its progress, Judo’s share price has struggled:
Market sentiment has been weak for smaller banks in a high-rate environment.
Investors remain cautious due to perceptions around SME vulnerability.
Any guidance miss — even narrowly — tends to result in sharp selloffs.
For example, when Judo slightly missed FY25 loan book guidance ($12.5bn vs. $12.7bn minimum), shares were punished despite meeting profit and margin targets.
Looking Ahead to FY26
Judo’s FY26 guidance includes:
Loan book: $14.2–14.7bn
NIM: 3.0–3.1%
Pre-tax profit: $180–190m
Mid-term goals: $15–20bn loan book and low-to-mid teens ROE
Analysts currently value JDO at around $2.09 per share — a 19% potential upside from current levels.
Final Thoughts
Judo Bank remains a long-term growth story in Australia’s banking sector. Its differentiated SME focus, strong capital base, and growing loan book are positives. However, investors must be prepared for volatility, as the market has shown little patience for missed expectations.
For those willing to look beyond short-term price swings, Judo Bank could represent one of the most interesting financial stocks on the ASX.
⚠️ Disclaimer
This article is for informational purposes only and does not constitute financial advice. Always conduct your own research or consult with a professional financial advisor before making investment decisions.