Judo Bank is out of its weight class

Prior to Judo Bank listing on the ASX in 2021, its IPO prospectus said it would target high-quality small-to-medium enterprises with single-customer loan exposures from $250,000 to $20 million, and up to $25 million for existing clients. The prospectus described anything beyond that generally “outside of appetite.”

Five years on, and much value destruction later, the bank’s appetite has become voracious. There are 19 customer groups with credit exposure above $50 million. Six of those are over $100 million. 

Judo CEO Chris Bayliss appeared unbothered about that when he fronted analysts at last week’s full-year result call. That mix of $50 million-plus borrowers, he said, represented a small subset of a customer base nearing 5,000. Which is true, just as it is that those 19 customer groups also make up about 10 per cent of Judo’s loan book. 

Bayliss’s defence is that the behemoths on Judo’s books started small. “Very seldom,” he said, does the bank onboard a customer above $50 million; they start below that and the bank grows with them rather than lose them to a Big Five competitor.