Judo Bank, a small business lender valued at approximately AUD 1.16 billion, is once again the subject of market speculation regarding a potential sale, nearly two years after nearing a merger with Bendigo Bank. Reports suggest the bank may be engaged in informal discussions as it explores options to find a buyer.

The lender has faced a challenging period recently, with its share price currently trading at about half the level recorded during its initial public offering (IPO). This decline has raised concerns about the bank’s strategic direction, particularly its shift toward larger and potentially riskier loans. Originally, Judo focused on loans capped at AUD 20 million, but it now holds two loans exceeding AUD 100 million and nearly 20 loans above AUD 50 million.

Judo, which has close ties with investment bank Barrenjoey, is believed to be seeking a price potentially as high as 13 times its book value—substantially above its current market valuation, which may be a significant obstacle for prospective buyers. The bank’s book value per share recently stood at AUD 1.40, while its shares closed at AUD 1.02, reflecting market skepticism.

Financially, Judo reported a profit before tax of AUD 168.1 million and a net profit of AUD 111 million in the previous fiscal year. It has forecast profit before tax of between AUD 210 million and AUD 220 million for the current financial year, suggesting a potential increase of 25 to 30 percent despite recent setbacks. However, the bank’s profit was impacted by higher provisions in June, a development attributed internally to a challenging economic environment.

The broader lending market has been under pressure amid a softening housing sector, proposed tax reforms by the Australian government targeting negative gearing and capital gains, and rising interest rates. Judo disclosed in June that risk provisions were expected to reach AUD 116 million to AUD 122 million for 2026, indicating an increase in specific loan loss provisions.

Judo’s cost of risk rose to AUD 40.1 million in the first half of the current financial year, up from AUD 28.8 million in the first half of 2025, though it remains below the second half’s AUD 46.7 million. The bank primarily serves businesses that have been declined by Australia’s four major banks or those seeking more relationship-focused lending.

Market observers continue to view Bendigo Bank and ANZ as the most likely potential acquirers. Some analysts argue that Bendigo’s existing emphasis on mortgages—which typically carry lower capital costs than business loans—may influence its acquisition strategy. Others note that Judo’s focus on business lending could provide a valuable diversification benefit if the housing market experiences a correction.

Founded in 2016 by outgoing CEO Joseph Healy, Judo Bank listed publicly in 2021 with a market value of AUD 2.3 billion, approximately 1.7 times its book value. Analysts have estimated that merging with a larger institution could reduce Judo’s capital costs by 150 to 200 basis points, potentially enhancing its competitive position.