Judo Bank seen sustaining strong earnings despite higher credit losses

Higher specific provisions have led to weaker asset quality.

Australia’s Judo Bank will continue to deliver strong earnings thanks to higher margins and above-system loan growth, said S&P Global Ratings.

The lender—which focuses on small and midsize enterprises—saw strong profit growth for fiscal 2026 (ended 30 June), which rose 34% year-on-year (YoY) to A$168.1m.

“We expect Judo Bank's lower margins on its new deposit products and strong deposit rollover will continue to support its net interest margin (NIM),” S&P said.

However, its asset quality has weakened, primarily due to higher specific provisions, S&P said. Annual credit losses reached 88 basis points (bps), up from 66 bps in fiscal 2025, and above S&P’s long-term estimate of about 50bps.

“We do not believe this reflects a structural deterioration in Judo's asset quality,” S&P said, adding that it is still within an acceptable range for a non-nonfinancial corporate lending company.

Loan growth is 18% for fiscal 2026, more than twice of the overall banking system, the credit rating company said. S&P described Judo Bank’s deposit growth as strong at 24%.