Judo Bank’s lending book has surged in the first half of the financial year 2026, with broker-sourced SME volumes and rising originations helping lift profits.
The Melbourne-based SME specialist, which focuses on relationship-led business banking, grew its loan book by 7 per cent over the half to $13.4 billion by 31 December 2025, with nearly three-quarters of new lending now coming via intermediated channels.
In its 1H26 result, Judo reported gross loans and advances of $13.4 billion, up from $12.5 billion at 30 June 2025, representing 15 per cent growth versus the prior period and around three times system growth.
The bank said growth was broad-based across regions and supported by a lending mix still dominated by business credit and complemented by lines of credit, home loans, and warehouse lending.
Commenting on the half-year performance, Judo Bank CEO and managing director Chris Bayliss said the result showed the lender was delivering on its long-term plan.
“Today’s results demonstrates that Judo continues to successfully execute against its clear and simple strategy. We are on track to achieving our existing FY26 guidance for significant profit growth and realising the operating leverage in our business model,” he said.
Broker flows and SME momentum
Broker flows remained central to the bank’s growth story, with 72 per cent of loans in the half third‑party-originated, while 28 per cent were directly originated.
Judo’s customer base increased to 4,742, up from 4,621 six months earlier, while the number of accredited brokers rose to 1,682, from 1,563.
Quarterly gross originations reached $1.5 billion in the December quarter, up from $1.3 billion in September, which the bank described as a strong finish to the half and evidence of improving banker productivity and growth in its relationship banking team.
Judo said its SME lending franchise continued to grow above system, supported by a customer-led value proposition and continued expansion into warehouse lending.
Bayliss said the bank’s core focus on small and medium-sized businesses was continuing to underpin outperformance.
“A strong SME lending franchise, combined with our ability to stay nimble in a competitive market has seen our lending book continue to grow above system. This momentum is being further supported by emerging productivity gains and banker enablement as we continue to expand into regional and agribusiness lending,” he said.
Portfolio shape, arrears, and risk
Across the portfolio, 36 per cent of loans were principal and interest, while 64 per cent were interest‑only.
The bank noted that 95 per cent of the book was on floating rates and that 5 per cent was fixed.
Around 52 per cent of exposures were fully secured, 33 per cent partially secured, and 15 per cent balance sheet secured, reflecting a collateral-backed approach typical of SME banking.
Credit metrics softened modestly, but remained within what the bank described as manageable levels.
The ratio of loans 90 days past due and impaired assets rose to 2.66 per cent of gross loans and advances, up 23 basis points from 30 June 2025, which Judo said was driven by a small number of exposures across a range of sectors.
Despite the uptick in arrears, the bank reported that its SME franchise was still delivering “above-system growth with sustained market leading NPS and stable margin.”
Funding, deposits, and margin
Loan growth was underpinned by continued deposit expansion and diversified funding.
Deposits reached $10.9 billion by December 2025, up from $9.9 billion at June 2025, with the bank emphasising “strong deposit growth supporting lending momentum, balanced with wholesale flexibility.”
At period end, deposits made up 69 per cent of Judo’s funding stack.
Net interest margin for the half was 3.03 per cent, with Judo now expecting NIM to rise to around 3.15 per cent in the second half of FY26, above its prior 3.10 per cent forecast, citing improved term deposit pricing.
Profit before tax came in at about $86.6 million, up from $68.9 million in the second half of FY25, while profit after tax jumped 46 per cent year on year to $59.9 million.
Bayliss said optimising the funding base was a key part of the bank’s next phase.
“We are excited to soon be launching a second deposit product, which will increase customer choice, reduce reliance on term deposits and lower our overall funding costs,” he said.
[Related: Judo Bank loan book growth drives bumper full-year profits]
