CEO Joseph Healy admits he is frustrated with the weakness in the challenger bank’s share price, and hopes a more long-term focus can help arrest the slide.
The brainchild of a former National Australia Bank executive, Joseph Healy, Judo was solely focused on small business lending. It was an area, Healy said, that the country’s big banks had ignored for too long.Joseph Healy admitted he was frustrated with Judo’s share price and said he was taken off guard by the market’s reaction to the bank’s disclosures over its refinancing of the RBA’s term funding facility.Offered at $2.10 a share, it was the first bank float in 25 years and did well on debut.
He admits he is frustrated with the weakness in the share price, and hopes a more long-term focus can help arrest the slide. “We are going to talk to other large institutions who are familiar with the challenger banks and talk to them about the attractiveness of Judo,” Mr Healy said.– owns about 9 per cent of Judo. Singaporean sovereign wealth fund GIC owns 7 per cent, while fund management firms Fidelity and ECP both hold about 5 per cent each.
Judo is performing relatively well. While it is yet to deliver a return on equity above the cost of capital, the company has increased its cash tax profits to $74.3 million and reduced its cost to income ratio by over 20 per cent.The analyst consensus is still a buy. “We think if Judo can meet its target of low-to-mid teens ROE then at that stage it should trade at a price to book value at or above 1 times,” Morgans analyst Nathan Lead said.
Judo’s net interest margin in the 2023 financial year was 3.29 per cent, but it has not yet fully quantified the hit this will take from its refinancing activity.Mr Healy said he was taken off guard by the market’s reaction to the bank’s disclosures over its refinancing of the RBA’s term funding facility, believing Judo had always made clear that 2024 was a “transitional year”.“We have always said that we are transitioning, and we will get net interest margins back above 3 per cent.
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