Judo Bank chief executive Joseph Healy is confident business loan growth and credit quality will hold up in second half of the financial year, with a “soft landing” the most likely outcome from rising interest rates. Judo is forecasting that the cash rate will end up somewhere between 3.5 and 4 per cent. “That is in line with the long-term average. What is different this time is how fast it is moving but otherwise these are normal settings,” Healy said. The specialist business bank produced strong results for the December 2022 half. Gross loans and advances grew to A$7.5 billion – an increase of 54 per cent over the previous corresponding period and 23 per cent over the June half last year. Net interest income was up 122 per cent to $163 million, compared with the previous corresponding period. The net interest margin rose from 1.9 per cent to 3.23 per cent. Impairments more than doubled to $22.3 million. Much of this reflected growth in the loan book but the impairment expense to average gross loans and expenses rose from 46 basis points in the December half 2021 to 66 bps in the latest half. The proportion of loans in arrears (90 days or more past due) as a proportion of gross loans and acceptances rose from zero to 17 bps. Impaired assets were stable at 20 bps. Healy said there were no write-offs in the half and he does not expect any in the current half. Net profit of $36 million was up from $700,000 in the December half 2021 and $8.4 million in the June half last year. On the funding side, customer term deposits grew 62 per cent to $5.3 billion. The blended cost of deposits rose 128 bps to 2.45 per cent in the direct channel, and 157 bps to 2.55 per cent in intermediated channels. The bank has $3.4 billion of wholesale funding, including $2.3 billion of Reserve Bank term funding facility loans. The TFF funding is repayable by June 2024. On the outlook, Healy said the bank has around $1.4 billion of lending in its pipeline. “There is no doubt that business conditions and confidence are not strong. Businesses are sitting on their hands to some extent. “Business is cautious and the velocity of loan growth has slowed. But while system growth for SME lending is slowing our proposition is still attracting business.”