Risks

·       Compliance and regulatory risks - banking industry is highly regulated

·       Competition - Australian banking system is dominated by the 4 major banks

·       Customer default and portfolio performance

·       Access to and cost of, funding

·       Information technology, cybersecurity and data risks

·       Reliance on outsourced service providers

·       Retention of key management or employees

·       Reputation risk

Judo is a recent IPO, it is Australia’s only bank dedicated exclusively to lending to Small and Medium Enterprises (SMEs). It was co-foundered by current CEO Joseph Healy and Chris Bayliss (Deputy CEO and CFO) and commended operations in March 2018. It IPO November 2021.

Judo currently has a loan book of approx $5 billion of which $4 Billion has been accumulated throughout the Covid-19 pandemic. Judo has set a medium to long term target of growing its loan book to $15 -$20 Billion which will represent approxmatelty 3 percent market share. Judo targets high quality SMEs with leading generally with following criteria:

·      with annual turnover of up to $100 million

·      located within a 200-kilometre radius of Australia’s capital cities and major regional centres

·      with aggregated group loan exposures between $250,000 and up to $25 million

·      with operations across a variety of industries (currently excluding agriculture)

Judo generates revenue through receiving gross interest on lending products, establishment and facility fees, interest generated on holding liquid assets and other operating income. Its targeting net interest margins of >3%. The Australian business lending market is dominated by the major banks accounting for 69% of all business leading while the combination of Macquarie Bank, ING Bank and the Regional Banks accounts for approximately 8% of all business lending.