New CEO says Judo ready for diversification

John Kavanagh

Judo Bank CEO Chris Bayliss

New Judo Bank chief executive Chris Bayliss made his first public appearance in the role yesterday, announcing a couple of senior appointments and providing a broad outline of his plans for the bank’s development.

The bank’s chief risk officer Frank Versace will take on the role of chief strategy and growth officer in July. He will be responsible for the execution of new growth strategies.

Stephen Mifsud, who has been the bank’s managing director relationships since 2018, has been promoted to executive general manager relationship banking. He will be responsible for the execution of the bank’s relationship strategy.

Speaking at a Macquarie investment conference, Bayliss, a co-founder of the bank, said that with a A$10 billion loan book Judo is now an established player in the business banking market and is ready to look for opportunities.

“As the bank has continued to scale, a range of new opportunities to meet SME customers’ needs is opening up, including lending to new segments, extending the current product set and growing into new regions.”

Bayliss said the bank has executed its technology investment program successfully. A new core banking platform, developed in partnership with Thought Machine, has entered pilot phase. Progress with its technology will allow the group to make changes to its operating model.

Judo defines its target market as businesses with turnover between $1 million and $100 million and funding requirements between $250,000 and $35 million.

Its average loan size is $2.4 million, with an average lending margin of 450 basis points over swap. All loans are secured.

Bayliss said that initially the bank had to convince the regulator and investors that it could reach profitability quickly. To do this it stuck to conservative underwriting policies, with practically zero tolerance for any large single name losses.

“We are now in a position to bring the bank we originally envisaged to life, with a diversified loan book that represents the SME economy. This includes simply growing into or original risk appetite, as well as new products and segments.”

He said the bank plans to recruit another 20 relationship bankers (it has 137 currently) and add eight regional locations to its current footprint of 20 locations.

Bayliss also provided a business update, saying SME demand for lending has picked up since the start of the year. The loan balance is $10.2 billion and the lending pipeline is at $1.7 billion, at an average margin of 4.4 per cent.

Arrears are at 2.63 per cent – up from 1.73 per cent in December.

Profit guidance for the year to June is for profit before tax, on an underlying basis, of $107 million to $112 million.