By Stuart Condie

SYDNEY--Australian business bank Judo Capital downgraded its annual guidance, blaming the impact of continuing global economic uncertainty on its lending decisions and customers.

Judo on Thursday said it expects gross loans and advances of between 12.4 billion Australian dollars and 12.6 billion Australian dollars, equivalent to between US$7.9 billion and US$8.1 billion, at the end of June.

In February, it had said it was on track to hit a target of between A$12.7 billion and A$13.0 billion.

"In response to heightened volatility in the operating environment, Judo is focused on achieving an appropriate balance between growth and economics," it said in a market filing.

Judo is already seeing the impact of economic uncertainty, with the proportion of loans more than 90 days overdue and impaired rising to 2.46% at the end of March from 2.30% three months earlier.

Judo shares were down 19% following the announcement, having been paused earlier in the session. The stock, which was added to Australia's S&P/ASX 200 benchmark index in June 2024 and traded as high as A$2.215 in February, was recently at A$1.44.

Judo said it still aims for a net interest margin for the 12 months through June at the upper end of its 2.90%-3.00% target range. It aims for an exit margin of 3.00% but acknowledged that a central bank rate cut widely expected later this month could derail that.

"The impact will be largely temporary as all of Judo's lending and deposit products will reprice over time," Judo said.

Judo said it expects its annual cost-to-income ratio to be lower than the 54.6% recorded in fiscal 2024. It aims for 15% growth in annual pretax profit, rising to 50% in fiscal 2026 on greater operating leverage.

Write to Stuart Condie at stuart.condie@wsj.com

(END) Dow Jones Newswires

May 01, 2025 01:54 ET (05:54 GMT)

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