Citi cuts profit view on Judo Capital, sees bumpy deposit market conditions ahead

Judo Capital Holdings

12/01/2023 05:21

** Citi lowers SME bank Judo Capital Holdings Ltd's  JDO.AX 
FY23 profit forecast due to faster-than-expected tightening in
retail deposit conditions
    ** Broker says retail deposit pricing will deteriorate
throughout 2023 ahead of repayment of term funding facility
extended by the Reserve Bank of Australia (RBA) till June 2021
    ** Higher funding costs along with elevated liquid asset
holdings prompts Citi to reduce its FY23 profit estimate to
A$61.5 mln ($42.51 mln)
    ** Cuts FY24 profit expectations to A$88.7 mln with profit
thereafter up ~3% on slightly faster loan growth
    ** RBA has announced a slew of rate hikes through 2022, and
bets on further hikes have risen after retail sales jumped in
November
    ** "While deposit market conditions are expected to be very
bumpy in CY23, we expect this won't impact Judo's ability to
meet their medium-term target at the time of listing" - Citi
    ** Still, Citi hikes PT on stock to A$1.90 from A$1.80 and
retains "buy" rating as stock lifted by strong lending growth
supported by above-average pricing
    ** JDO shares up as much as 2.8% to A$1.49, its highest
since June 15, 2022
    ** Stock declined nearly 38% in 2022 
($1 = 1.4468 Australian dollars)
 (Reporting by Savyata Mishra in Bengaluru)
 ((Savyata.Mishra@thomsonreuters.com))