Judo Capital Holdings Limited (JDO) - – Credit where credit’s due

Judo Capital provides banking products and services forsmall and medium businesses in Australia. The company was incorporated in 2016and is based in Melbourne, Australia.

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Judo Bank provided a positive trading update at its recent Annual General Meeting (AGM), confirming it is on track to meet its Fiscal Year 2025(FY25) guidance, with clear operating leverage expected from the second half ofFY25. The market is not expected to adjust earnings based on these statements, but it is reassuring that operating conditions remain positive and that asset quality is stable.

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The CEO reported positive trading conditions for the fiscal year to date, with good lending momentum. The loan book stood at $11.3 billion in September, with a healthy pipeline of $1.2 billion. New lending spreads are in the mid-400s, and term deposit competition has eased as expected. Overall deposit margins and funding mix are trending in line with expectations, and the bank is on track to achieve a Net Interest Margin (NIM) of 3% by the end ofFY25.

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We believe Judo has strong share price potential over the next few years, despite a sharp rally since its FY24 results announcement in August.

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