Broker channel ‘critically important to us’: Judo Bank

Announced on Tuesday (21 February), Judo chief executive and co-founder Joseph Healy described its recent achievements as “yet another black belt result” which he said was a result of “running our own race" and that its "strategy has not changed.”

He confirmed that the bank remains on track to achieve its financial year 2023 guidance and key business metrics at scale.

“The result again demonstrates the strength of our unique, pure-play, specialist business model,” he said.

“This result shows the sustainable competitive advantage we have in SME business banking,” he added.

Judo Bank reported profit before tax of $53.2 million (up from $12.6 million); underlying Net Interest Margin (NIM) of 3.56 per cent (up 72bps); a Return on Equity (ROE) of 5.05 per cent (up from 1.21 per cent); and Gross Loans and Advances (GLA) of $7.5 billion (up 23 per cent).

Replying to The Adviser’s question as to what extent its 1,131 broker partners played a part in the result, Mr Healy responded that the third-party channel was: “absolutely important, critically important to us.”

“We, from the very beginning, said that we want to have our relationships with [the] broker community [as] strategic partners.

“We wanted to select a number of brokers, not to do business with everybody.

“We’ve got a very strong third-party team that is not included in the banker numbers; about 30-odd people in the third-party team managing our relationship, or providing our relationship, with brokers.

“We've got one of the best third-party executives in the market in George Obeid who heads our team,” he explained.

Gleaning market intelligence via brokers

In terms of marketplace information coming back to Judo Bank via the third-party channel and its accuracy and relevance, Mr Healy was adamant about its value.

“The broker channel is critically important not only in terms of reaching, sourcing new customers, but also as a source of market intelligence about what is what's happening in the market, what different banks are doing,” he highlighted.

“Just general market feedback."

Mr Healy confirmed that Judo Bank’s broker mix is about 74 per cent.

“Over time – and we were very clear on this from day one - our plan is to kind of grow to something [like] … 50/50 might be overly ambitious, but we want to grow some of our organic origination in certain sectors of the economy,” he explained.

“I can think of agri as a case in point - but we also make sure that we grow our broker flows and be seen by the broker market as a specialist bank that really understands SME banking; that's committed to bespoke customer solutions and exercising judgment - and doing that at a speed that is a fraction of the time that it takes some of the other banks to get to a decision,” Mr Healy said.

Home loans offer for SMEs

Judo Bank confirmed that its home loan products, which it writes as part of a broader relationship with the lender’s SME customers rather than a stand-alone product, accounted for 10 per cent of its business.

The bank outlined that home loans were a part of its book, but that it's very much an offering for the SME customer. 

[Related: 74% of new Judo loans sourced by brokers]