Judo Bank: Trading update: Further surprises on credit test faith in the model, but arguably priced in at ~0.5x book value

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Judo Bank: Trading update: Further surprises on credit test faith in the model, but arguably priced in at ~0.5x book value

being ROE - 27E 9.3% 8.0% -1.3pp

well secured. The exposures are in different sectors (construction services,

manufacturing, financial planning). Our disappointment relates to: (1) the Half Yearly Forecasts (FYE Jun)

three exposures called out deteriorated quickly (in a matter of weeks), with one Adj. EPS (A$)

going straight into voluntary insolvency, rather than first through arrears; and 2025A 2026E 2027E

H1 0.03 0.05A 0.06

(2) JDO completed a file review prior to its 3Q26 trading update (released 24 H2 0.04 0.05 0.06

April 2026) and topped up collective provisions. At this stage, we see limited FY 0.08 0.09 0.12

read-through to the major banks (JDO-specific factors), except to say that the

macro environment remains difficult and fluid. Style Exposure

• FY26 PPOP on track for a small beat vs. our previous forecasts. 2H26 NIM

is now expected to be above 3.2%, and guidance implies PPOP ~2% ahead of

our prior forecast, supported by favourable deposit spreads. The loan pipeline

appears healthy, as do front-book lending spreads.

• FY27E downgrade driven by macro conditions. While JDO provided

limited disclosure on FY27E earnings drivers (PBT of $210m-220m, or ~30%

yoy growth), we assume that most of the miss vs. consensus again relates to the

impairment expense outlook. JDO said the guidance “takes into account the

uncertain macroeconomic and geopolitical environment.” We assume this

translates into slower loan growth, as well.

• Still proving up the model. While 2025 saw concerns about loan book run-off/

subdued growth and early 2026 saw concerns about whether JDO had enough