Melbourne, Australia – Judo Bank, the Australian neobank specializing in small and medium-sized enterprise (SME) lending, is demonstrating continued financial strength, reporting a Common Equity Tier 1 (CET1) capital ratio of 12.6% as of December 31, 2025. This figure, a key measure of a bank’s liquidity and ability to withstand financial shocks, positions Judo Bank favorably within the Australian financial landscape. The bank’s performance underscores its success in focusing on the SME sector and its ability to attract both deposits and loan customers.
The bank’s loan book experienced a 7% growth in the six months leading up to December 31, reaching $13.4 billion, while total deposits climbed to $10.9 billion. This growth is coupled with a net interest margin (NIM) of 3.03% for the reporting period, significantly higher than that of major lenders like Westpac, which typically operate at a NIM of 2% or less. Judo Bank anticipates further expansion of its NIM to 3.15% in the second half of its financial year, exceeding its previous guidance of 3.1%.
Focus on SME Lending Drives Growth
Founded in 2016, Judo Bank has positioned itself as “Australia’s first SME specialist business bank.” This focused approach appears to be paying dividends, as evidenced by a 46% year-on-year increase in statutory net profit after tax (NPAT), reaching $59.9 million. The bank’s success is particularly notable when compared to National Australia Bank (NAB), the largest business bank in Australia with a 28% share of the SME lending market, which reported a NIM of 1.74% in its latest full-year results. Mortgage Professional Australia details these financial results.
Judo Bank’s strategy isn’t solely reliant on organic growth. The bank too actively cultivates relationships with brokers, increasing its accredited broker network from 1,563 in June 2025 to 1,682 at the end of the reporting period. This expansion of its distribution network is expected to further fuel loan originations.
CET1 Ratio: A Sign of Financial Health
The CET1 capital ratio is a crucial metric for assessing a bank’s financial stability. It represents the bank’s core equity capital as a percentage of its risk-weighted assets. A higher CET1 ratio indicates a greater capacity to absorb losses and continue operating during times of economic stress. Judo Bank’s current ratio of 12.6% is considered strong and demonstrates the bank’s prudent risk management practices.
According to Judo Bank CEO and Managing Director Chris Bayliss, “Today’s result 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 inherent in our business model.”
A Relatively New Player in the Australian Banking Sector
While Judo Bank has quickly established itself as a significant player in the SME lending market, it remains a relatively new entrant compared to the “large four” Australian banks. Founded in 2016 with seed investment from an Australian consortium of family offices led by businessman Geoff Lord, the bank raised over $140 million from investors in 2018, including Ironbridge Capital, Canadian pension fund manager OPTrust, and Myer Family Investments. Wikipedia provides a historical overview of the bank’s founding and early growth.
Judo Bank offers a range of financial products and services, including business loans, lines of credit, equipment loans, and bank guarantees. It also provides term deposit options to individuals, charities, universities, government bodies, self-managed super funds (SMSFs), and corporates. The bank’s deposit base is largely comprised of term deposits, with limited overlap between its SME lending and deposit customer base.
Looking Ahead
Judo Bank’s strong performance in the first half of its financial year positions it well for continued growth. The bank remains focused on its core strategy of serving the SME sector and maintaining a robust capital position. Investors and stakeholders will be closely watching Judo Bank’s progress as it continues to challenge the established players in the Australian banking industry. The next key update will be the release of Judo Bank’s full-year results, expected in the latter half of 2026.
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