Judo Bank has anointed Chris Bayliss as its next chief executive after company co-founder Joseph Healy revealed he will retire from the top executive role next month. Healy, who has led the company since its foundation almost eight years ago, will hand the executive reins to Bayliss on 18 March, but will remain at the company until the end of June to support the transition. Bayliss has a banking career spanning 40 years that has included senior roles at Standard Chartered Bank and NAB, and has been deputy CEO at Judo since July 2021. The bank on Tuesday reported a 27 per cent rise in after-tax first half profit to A$45.9 million, despite higher variable costs and margin contraction. Judo is continuing to expand its business loan book at more than three times the industry average and it was the sheer weight of asset expansion that boosted interest income to offset a 32 basis point decline in the net interest margin. The bank increased its gross loans and approvals by 9 per cent or $800 million to $9.7 billion during the half.  “We are managing this bank dynamically, balancing margins, growth and risk given the prevailing economic environment,” Healy said. “Size and specialisation are our key advantages, which we will continue to leverage to achieve optimal risk reward economics.” Judo is expecting further margin erosion in the current half as it moves to refinance cheap funding secured through the Reserve Bank’s Term Funding Facility during the Covid crisis. Around $2.2 billion of TFF liabilities need to be refinanced by the end of June. This is expected to peel more than 27 basis points off the net interest margin, which stood at 3.02 per cent at the end of December. While the impact of the funding reset will be offset partly by other factors, the company has forecast a fall in NIM to around 2.7 per cent in June. Healy and Bayliss yesterday reaffirmed previous guidance on business growth and costs in the second half. Judo is aiming to write up to $1 billion of business loans in the current six month period, however the bank has flagged significantly higher provisioning and bad debt charges following a steep rise in 90 day arrears in the December half. The value of  loans that were impaired or past due by 90 days or more, more than doubled during the half to $302 million. Second half profit is expected to fall, mainly due to the cost impacts of the massive TFF refinancing program. In the last six months, Judo has carefully skewed growth of its loan book to borrowers in the agribusiness, health and professional services sectors. At the same it has reduced its relative exposures to property and construction companies and the retail trade sector. Bayliss said the bank was targeting high growth in agribusiness lending in the next twelve months as the number of relationship bankers deployed to regional areas was increased. The market reaction to the interim earnings announcement was more positive than has been the case for other banks that have reported results or trading updates this month.  

Judo