Australian business lending set to rebound, says Judo CEO

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By Alice Uribe

SYDNEY – Business lending in Australia is expected to rebound and peak in 2022, even as organizations face staff shortages and increased labor costs in an inflationary environment, according to Judo Capital Holdings Ltd.

Joseph Healy, chief executive of Judo, a listed Australian bank specializing in small and medium-sized businesses, said that while business lending had been “subdued” over the past decade, there was likely to be an uptick.

“We remain confident in the outlook for business credit growth to reach what would be a 14-year high. We had forecast it at 8.7% for 2022,” he told the Wall Street Journal.

Data from the Australian Prudential Regulation Authority for January shows that loans to non-financial businesses rose by A$4.6 billion ($3.4 billion), or 0.5%.

“Despite deteriorating business conditions in January due to staffing shortages and supply chain issues, business confidence has risen due to the expected easing of restrictions, expectations of the rapid increase easing Covid-19 cases and an optimistic economic outlook,” the Australian regulator said. noted.

Inflationary pressures are now quite significant for businesses, especially in terms of labor costs, which Healy said could pass through to consumers. But even so, companies are still looking to invest.

“We’re seeing a pretty nice rebound, if you will, from the subdued environment that was a hallmark of Covid,” Mr Healy said.

“Looking at our pipeline of work, it reflects that sentiment that companies are considering investing.”

The SME lender has a large-scale lending portfolio of A$15-20 billion, or a market share of around 3%, which Mr Healy said he was confident of achieving.

Judo provided an update to its loan portfolio as of February 28 on Monday, which showed the closing balance of gross loans and advances was A$5.17 billion. That figure was up from A$4.96 billion at the end of January.

“We are pleased with our growth in February, which, like January, is a seasonally quieter month for loan activity,” Chris Bayliss, Judo’s deputy chief executive, said in a regulatory filing.

“Our current loan balance combined with our approximately A$1.0 billion pipeline reinforces our confidence that we will deliver our prospectus guidance for GLA of $6.0 billion by June 30.”

In a presentation last month accompanying its fiscal first-half results, Judo said system credit growth for 2022 was forecast at 7.3%. Business credit growth is expected to peak at 8.7% in 2022 before slowing to 6.2% in 2023 and 4.9% in 2024.

Judo received its banking license in 2019 and competes with Commonwealth Bank of Australia and National Australia Bank Ltd. for business loans.

Write to Alice Uribe at alice.uribe@wsj.com


Corrections & Amplifications

This item was corrected at 02:51 GMT to indicate that the Managing Director of Judo Capital Holdings Ltd. is Joseph Healy. The original version misspelled her surname as Healey on several references.

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