Released January loan book numbers and are up to 4.96 billion. An increase of 0.11 billion from December, I imagine Dec/Jan are probably two of the slowest months to write new buisness loans. To mete their target of 6 billion by end of Fy22 they will need to average 0.21 billion/month for the rest of the year. Good growth from a low base currently.

The first new bank to list on the asx in 25 years, they listed in November last year called Judo bank. It is an interesting business that looks to be getting back to what bankers used to be focused on. Their strategy is focused on SME business loans and building the relationship between the banker and the business. Each banker currently services around 20 clients compared to 80-100 for the big four.

key points-

• only focused on business loans no exposure to the housing market apart from when it is linked to the business loan
• they take term deposits (11500 customers currently)
• the big four have neglected/abused this market
• their NPS score is 85 vs minus 7-10 for the best big bank in this SME segment
• customer service and flexibility is more important to the SME market than getting the lowest rate interest rate.
• November loan book at 4.67 billion, up from 3.52 at the end of June 21, target of 6 billion by end of FY22
• focus on growing loan book and reinvesting earnings, no dividend will be paid for many years.
• New loans sourced direct (23%) and through a select network of brokers (900 brokers) but aim to increase direct source loans to 50% over the next five years. Brokers get 10% commission.
• Loans generally secured against property.
• focus on lending to quality operators rather than quantity, they say they won’t lend to dodgy dudes.
• Total addressable SME business loan market is 605 billion, they are aiming for a 3-5% share over the medium/longer term
• arrears are low- only 2 customers overdue by more than 90 days, reflects their focus on quality loans

An interesting opportunity in the banking space, I am not really that interested in owning the big four but this one has piqued my interest in the focus on quality and being the best bank in their sector, they still have some growing to do and I will be watching their loan book and half year numbers. I have not bought yet and still thinking about how to value this business but could be a complimentary addition to the portfolio.