Judo Bank (ASX:JDO) shares drop in May update

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Judo Capital Holdings [ASX:JDO] shared their monthly loan book update for the month of May this morning.

The shares fell 2.15% in the afternoon, sitting at $1.82 at the time of writing.

The bank is down 14.5% year-to-date, although the bank has staged something of a resurgence, up 14% last month.

That said, the broader market fell on Tuesday following a hawkish decision by the Reserve Bank to raise the cash rate by 0.5%.

Source: Marketindex.com

Judo May Loan Book

JDO’s announced its closing balance for gross loans and advances (GLA) of $5.74 billion for the month of May, which is $180 million higher than the GLA figure for April, which was 5.56 billions of dollars.

Judo reported that, compared to its June 2021 closing GLA total of $3.2 billion, the May 2022 total was up 63.1%.

Judo Deputy CEO and CFO Chris Bayliss told the audience that the self-proclaimed challenger bank ‘achieved loan growth of $180 million for the month of May‘ and that he ‘had more than $20 million in new loans settled on June 1, which were due to settle on May 31‘.

Judo is required to provide monthly statements until June 30, the closing date of its prospectus forecasting period.

In February, the SME bank shared its half-year results.

1H22 gross lending increased 37.8% to $4.85 billion.

Net interest income increased 48.5% to $73.5 million.

However, Judo reported a statutory net loss of $16.1 million, down from a modest net profit of $1.9 million in 2H21.

How does the JDO stock price move as inflation rises?

Regarding the immediate future of judo, Chris Bayliss said:

We remain confident in achieving our prospectus guidance for GLA of $6.0 billion by June 30, 2022, supported by our current loan balance and strong pipeline of approximately $1.1 billion..’

The company shared last month that rising inflation will boost business.

This thesis was shared by Kate Howitt, portfolio manager of Fidelity Australian Opportunities Fund.

She also argued that Judo’s focus on the small and medium-sized enterprise (SME) sector is sound, as it stays away from the highly competitive mortgage industry.

Howitt believes Judo provides direct leverage for higher rates, as its funding costs are anchored by the RBA’s fixed-rate term funding facility.

Now, if you are interested in fintech and want to learn more, I suggest you read our latest fintech report for 2022.

It profiles three promising fintechs, including one with a healthy balance sheet looking to shake up the stuffy banking sector.

Cheers,

Kiryll Prakapenka,
For silver morning

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