Judo Bank touches $1bn in deposits

Judo Bank has announced that it has achieved over $1 billion in term deposits, with over 95 per cent of the money raised going to fund loans for small and medium-sized enterprises (SMEs).

The Australian Prudential Regulation Authority (APRA) announced in April 2019 that it had granted Judo Bank a licence to operate as an authorised deposit-taking institution without restrictions under the Banking Act 1959.

The lender-turned-neobank offers loans to SME starting from $250,000, along with line of credit facilities, equipment loans and finance lease solutions. 

Joseph Healy, Judo Bank’s co-CEO, said the provision of loans directly to SMEs addresses a funding gap and a market failure created by the big banks.

“Twenty years ago, for every dollar the banks lent to home buyers, a dollar was also lent to small businesses,” Mr Healy said.

“Today the lending landscape is barely recognisable, with the banks adopting an unhealthy bias towards household lending. So, in 2020, for every dollar the big banks lend home buyers, they only lend 25 cents to SMEs, which has resulted in a $93-billion funding gap.”

Patrick Nolan, the bank’s head of deposits, said: “Given we were only granted a full banking licence about nine months ago, we are delighted at reaching this $1-billion mark in deposits despite very limited marketing.”

Mr Nolan said depositors were making the move because they wanted to support SMEs.

“The feedback we are getting from many of our customers is they want to contribute to the economy by helping Australian small businesses grow and create more jobs,” he said.

Earlier this week, Judo Bank announced its loan originations for SMEs had surpassed $1 billion. Mr Healy had stated that about 95 per cent of the funds being loaned to SMEs had come from term depositors in Judo.

[Related: SMEs urged to consider finance ahead of Chinese New Year]

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.