Judo sets sights on $2bn worth of new loans

Small business bank Judo is planning to boost its lending by another $2bn over the next year, co-CEO Joseph Healy says.

Judo co-chief executive Joseph Healy

Small business bank Judo is planning to boost its lending by another $2bn over the next year, and expand its Australian footprint, co-CEO Joseph Healy says.

Mr Healy was speaking on Thursday as Judo announced it had made more than $1bn in loans to small and medium-sized companies since getting its full banking licence in April last year.

“Our goal over the next 12 months is to take our lending up to well above $3bn,” he said.

A former head of business banking for National Australia Bank, Mr Healy said the bank was carving out a niche in the small and medium business-lending sector, fulfilling a need in the market as the big banks pulled back.

“The banks have shifted their attention away from SME lending largely towards residential mortgage lending over the last 10 years,” he said.

“SMEs are not getting the attention they deserve from the traditional banking sector. “We estimate that there is unmet demand for credit from the SME sector of $90bn at the moment.”

Mr Healy, who started Judo after a 30-year career working for major banks including NAB, ANZ and Citibank, said this trend had been accelerated in the wake of the Hayne banking royal commission, which had made the big banks even more conservative in their approach to lending.

Mr Healy said Judo had boosted its staff from 70 in June to more than 165, with plans to hire more experienced bankers as demand grows. Based in Melbourne, the bank has offices in Sydney and Brisbane with plans to open in Perth and Adelaide this year.

“We have made commitments (for growth in lending) with all the staff we are hiring and we will continue to add more staff as we go,” Mr Healy said. He said Judo’s lending was handled on a face-to-face basis by experienced bankers with a commitment to applicants that they would get an answer within five working days.

“We are not a fintech start-up,” he said. “Every borrower meets an experienced banker in a position to make an assessment of the creditworthiness of the business.”

Mr Healy said Judo had the advantage of not been encumbered by the legacy IT systems of the big banks as it had been “built from scratch”.

He said Judo’s average loan was about $2m, although it could make loans of as much as $15m.

Loans made to date covered a broad range of business sectors ranging from property to publicans in NSW and beauticians in Melbourne. The bank had also seen demand in the health and leisure sector, including health and fitness, tourism, some specialist manufacturing and agriculture.

Judo has raised $540m in private capital over the past 18 months. It also raises funding from online deposits and has established wholesale funding lines of $1.5bn.