Street View: Judo's credit risks are concerning, but appear to be isolated

Judo Capital Holdings

25/06/2026 20:36

June 25 (Reuters) - ** Australia's Judo Capital Holdings JDO.AX on Thursday cut its 2026 profit before tax outlook to between A$163 million  ($112.75 million) and A$169 million, down from A$180 million to A$190 million, citing increased provisions linked to deteriorating exposures to a "small number of customers"
** Before this, the lender had raised expected credit loss provisions in April for sectors exposed to fuel prices and slower growth
** Shares fell over 40% on Thursday, taking YTD losses to ~47%

ANALYSTS CUT PROFIT FORECASTS, BUT SAY CREDIT RISKS ISOLATED FOR NOW
  ** Morningstar cuts FY26/FY27 profit forecasts by 9%/13%; Jefferies lowers FY26/FY27 EPS by 9%/18%; Citi trims EPS by 8%–14% across FY26-27E
** Citi says expected losses in the three customer loans Judo flagged on Thursday look to be idiosyncratic events; Morningstar says issues appear to be isolated rather than systemic
** However, Morningstar flags the possibility the company may be taking on customers that other banks won't finance, with Citi similarly pointing to investors' questions around the nature and size of the risk being taken
** Jefferies says the underlying trends are stable, citing steady front book and blended lending margins in April and May
** Jefferies keeps 'buy' rating,' saying new FY27 guidance still represents a ~30% pre-provision operating profit CAGR from FY25
** Citi retains "buy" on valuation and growth outlook


($1 = 1.4457 Australian dollars)

 (Reporting by Shruti Agarwal in Bengaluru)
 ((Shruti.Agarwal@thomsonreuters.com;))