Judo Capital Earnings: Return to Stronger Growth Reaffirmed

Judo Capital’s fiscal 2024 pretax profit nudged up 2%, meeting guidance on all key metrics. The result featured strong loan growth, a slowdown in operating expense growth, modest bad debts, and weaker margins. The moderation of net interest margins to 2.94% from 3.34% in fiscal 2023, was driven by higher funding costs as the low-cost Term Funding Facility matured and was replaced by higher-cost term deposits. NIM is expected to fall further in first-half fiscal 2025, but will begin to recover to our medium-term forecast of 3.1% as the bank benefits from a greater focus on higher-margin lending and pricing competition for term deposits moderates. The bad debt expense/average loan ratio was pleasingly flat.