Bruised, inevitably, by a downturn in asset quality, Judo Bank is facing up to a credibility problem with the capital market.
A contorted trading update yesterday saw the shares of Judo Holdings smashed by 30 cents, or 17 per cent, to $1.48 yesterday. In February, Judo traded as high as $2.05.
Cost of risk in the March 2025 quarter “was impacted by an increase in specific provisioning for a small number of exposures in vulnerable sectors” Judo said.
As at 31 March, 90 days past due and impaired loans were 2.46% of gross loans, compared with 2.30% in December 2024.
90 day arrears were 2.63% two years ago.
Sectors mostly contributing to this blowout in arrears and bad debts were manufacturing, services, construction and discretionary retail.
Gross loans and advances at 31 March were $11.7 billion.
“Net [lending] growth for the third quarter was subdued, reflecting normal seasonality, as well as higher run-off primarily due to the residual impacts of proactive portfolio management undertaken during the first half of 2025” the bank said.
“Runoff has remain elevated as we look to manage the existing book to maintain NIM” Andrew Leslie, the CFO, told an analysts briefing.
Judo said growth in lending “is expected to be lower than guidance provided at the first half result, given market uncertainty impacting customers [combined with] the slower initial ramp up of warehouse lending, and balancing growth and economics.”
Judo may be a specialist SME bank, but the deterioration in its asset quality will be a pointer to sector-wide trends that will be evident in the big bank reporting season over the next two weeks.