Full Year 2024 Judo Capital Holdings Ltd Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Matthew Wilson - Jefferies - Analyst : Yeah, good morning, Terry Matthew Wilson, Jefferies, hopefully you can hear me okay? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 20, 2024 / 12:30AM, JDO.AX - Full Year 2024 Judo Capital Holdings Ltd Earnings Call Christopher James Bayliss - Judo Capital Holdings Ltd - Chief Executive Officer, Managing Director, Member of the Management Board We can Matt.

Question: Matthew Wilson - Jefferies - Analyst : Yeah, I'm at the CBA result last week. They bemoaned the negative spread on TDs. You've seen subsequent pricing moves by the majors. If we move back to a world of a positive TD spread, which was in place pre the GFC, how would that improve your NIM given that you continue to include sort of an 80 basis points negative spread in your NIM assumptions going forward or does it get competed away? Christopher James Bayliss - Judo Capital Holdings Ltd - Chief Executive Officer, Managing Director, Member of the Management Board No, I mean Matt, I mean, the maths is relatively simple as you said. I mean, we -- our margin is 80 basis points over swap and nearly $10 billion of deposits now. So that would be $80 million that would flow directly to the bottom line. I mean, we do think you'll also see that CBA last week, our premier TD rate is the one year rate. And you will have seen some downward movements on that last week, I think CBA dropped 40 basis points. That's not a direct comparison with where we compete. As you know, we compete in the branchless bank space. But we always said that we believe that once the term funding facility was repaid, we believe that the competition for TDs would moderate and that would manifest itself in lower margins. But yes, I mean, if we got to I think you like in the UK and I was there four weeks ago, and yes, I mean that they can understand that we pay over swap for our TDs. And as you said, the impact on NIM would be significant. I don't know, Andrew, what would it -- it would be a NIM of over 4% presumably.

Question: Matthew Wilson - Jefferies - Analyst : Excellent. And if I could just ask one more question. In your outlook comments, you talk to an economy that is transitioning from consumer led to business led, that's very positive from a structural perspective in this country for too long. We've lived on the back of a non-productive home loan. What gives you confidence that, that transition is actually taking place? And what parts

Question: Matthew Wilson - Jefferies - Analyst : Thank you.

Question: Jonathan Mott - Barrenjoey - Analyst : Thank you. Just a question on slide 19, if I could, which is the capital side. If we look through the CET1s have come down a lot in the half, a bit more than we're probably anticipating. If we roll forward with the credit growth as the next year, two years, you're probably going to get a bit tight on capital is your approach to $20 billion scale economics. Now the majors are running the CET1 ratio at around 12% maybe a bit around that number, that's where the market is kind of comfortable with it. How low do you think you can take that CET1 ratio while maintaining investor confidence? And second part, just around you talk about I'll ignore AT1 because it's not common equity, but term securitization, another risk weighted asset management tools, what are you thinking you could do to try and generate some additional capital. Christopher James Bayliss - Judo Capital Holdings Ltd - Chief Executive Officer, Managing Director, Member of the Management Board I mean, I'll take the first part, and I'll hand over to Andrew for the second part, John. I mean, John, obviously, we're been having these conversations for many, many years now, I mean, I remember pre the IPO talking about this topic and in terms of our original projections for the thesis of Judo and those AT metrics at scale and they haven't changed. I mean, I've consistently said that our thesis was to have a CET1 ratio that was somewhere between the regional banks and the major banks. So as you said, the major banks are about 12% and the regionals are sort of high 10s, 11%, that's reflecting the fact that the regional banks are largely home loan banks and of course, the major banks get the benefit of advanced accreditation. And but also we don't want to run our capital levels to skinny because we know we're still going to be a high growth business beyond the $20 billion book. And that still remains our thesis, that underpins those metrics at scale. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 20, 2024 / 12:30AM, JDO.AX - Full Year 2024 Judo Capital Holdings Ltd Earnings Call

Question: Jonathan Mott - Barrenjoey - Analyst : Thanks guys. Can I ask a second question on slide 12 where you show the front book lending margin, I think, Matt just asked about the deposit side. On the lending side also, it's a lot of moving parts, but you spent quite a lot of volatility on the front book margin. You can see 4.6% down to 4.3% in the June quarter than the exit margin at 4.5%. You mentioned there's a bit of mix in that. Can you give a bit more color on the driving factors around that that's leading that front book spread to move around so much? Christopher James Bayliss - Judo Capital Holdings Ltd - Chief Executive Officer, Managing Director, Member of the Management Board Yeah, absolutely, John. As you said, it is largely mix. And so our core business loans are roughly around about 4.8%. Asset Finance can be as high as 5% sometimes. It's pulled down by our home loans. So home loans can be in the sort of the 3%, mid 3s. In that particular case, you're absolutely right. In May actually what was pulling that average down to 4.3% was a higher concentration in the home loan, strangely in May, they were 15% of that month's originations with where it was generally about 10%. And I would stress, we don't do home loans as a standalone product. We only do them as part of a cross-collateralized package within SME. But I think what was particularly pleasing for me is that in June '24, we had the highest amount of originations ever for Judo, well over $0.5 billion of originations and they were done at 4.5%. And that particular month had the normal mix, if you would like in terms of products, and the pipeline as Andrew said, is now at 4.6%. We are definitely seeing competition using price as a strategy easing. And so we really are back to the average front book margins now pre term funding facility. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 20, 2024 / 12:30AM, JDO.AX - Full Year 2024 Judo Capital Holdings Ltd Earnings Call

Question: Richard Wiles - Morgan Stanley - Analyst : Good morning. So think about your metrics scale, it looks like you're on track to hit the line target, the bottom end of the line target in 2027. You've done a good job of managing margins recently, and you've expressed confidence to get the margin above 3%, it started 2026. But I'm sort of interested in the cost to income and the ROA targets. Particularly the ROA, Chris, you continue to express confidence in your low to mid-teens ROA target. Can you give us an idea of when you expect to reach that target, is it two or three years away, is it five years, is that a longer duration target? How should we be thinking about that?

Question: Richard Wiles - Morgan Stanley - Analyst : Okay. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 20, 2024 / 12:30AM, JDO.AX - Full Year 2024 Judo Capital Holdings Ltd Earnings Call

Question: Andrew Triggs - J. P. Morgan Securities Australia Ltd. - Analyst : Thank you and good morning. Our first question just around digging into the NIM walk from the 2.63% in '24 NIM because if you back towards 2.75% to 2.80% for first half of '25. Just interested in that component of liquidity that would boost that. So perhaps to us, for the June spot balances, what was trading in securities as a percentage of the loan book, noting that it was about 34% across the average of the half, but that obviously will go to 20% over time. So just interested on a spot basis, what did that look like in June?

Question: Andrew Triggs - J. P. Morgan Securities Australia Ltd. - Analyst : Thank you. And second question, just how do you expect the sort of additions to the NPL bucket to trend over the remainder of the year? So we've seen a kind of 20% decline in the additions to NPLs quarter on quarter, but how do you see things? And do you expect a lag to an improvement post the start of the RBA cutting cycle?

Question: Andrew Triggs - J. P. Morgan Securities Australia Ltd. - Analyst : Okay, thank you.

Question: Andrew Lyons - Goldman Sachs - Analyst : Thanks, and good morning. Chris, maybe a first question for you. You now have 144 bankers and expect us to add another 20 in FY25. From memory, at the time of your IPO, your metrics at scale was premised on about 200 bankers. Now despite this growth and the differentiation, you believe that your bankers bring the business. You're still originating about 75% of your loans through brokers, which is well ahead of the broader system and your target of 50% at scale. Can you perhaps just talk to how the penetration of broker lending business banking has played out in the market and for Judo, particularly versus your own expectation? Christopher James Bayliss - Judo Capital Holdings Ltd - Chief Executive Officer, Managing Director, Member of the Management Board Yeah, no, it's a great question, Andy. I mean, we are definitely seeing a structural shift, I think, in terms of the dominance of brokers in SME lending now. I mean, we think they probably represent 35% to 40% now of all flow. I think originally if you go back to the original thesis of Judo, we hope to sculpt that 75% number that you talk about down to sort of 50%, 50%, and I'm not sure that's achievable anymore. I think I mean -- I think I'd be very comfortable at 60%, 40% and I would add that from an economics perspective, we're relatively agnostic to that number because we get a huge productivity benefit from broker introduced loans. As we know, there's 19,000 brokers in this country. We only deal with about 1,300 of those, and they are sort of dedicated SME brokers that we spend a lot of time with. We spent a lot of time at their PD days. They know us well, they know our risk appetite well. And so because of that, we got a very, very high conversion rate. So we got about an 80% conversion rate, whereas obviously, if we're originating direct with a billboard on the side of a tram, we would be getting a much, much lower conversion rates, which is obviously what the big banks get. The push into regional and an agri in particular, I think will help us there. Relationship banking is even more about the actual individual banker, their background, their experience, their networks. And we do find that as we go as we expand into the regions, we get a higher direct just through the strength of those relationships and also in agri lending as well. So this is a big drive for us as you know. We're going to open another 10 regional locations this year, and I'm hoping that will have some impact on that 75%. But it is it is a structural shift. I mean the brokers are just are growing and growing. It has flattened a little bit in the last 12 months, it may be reaching a point of saturation, I don't know, but it is something that we're very focused on. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 20, 2024 / 12:30AM, JDO.AX - Full Year 2024 Judo Capital Holdings Ltd Earnings Call

Question: Andrew Lyons - Goldman Sachs - Analyst : Great. Thanks, Chris. And maybe Andrew, just a second question for you. I just note towards the back of the pack you've introduced ITOC which appears to be hedged at the three year duration. Can you perhaps just provide a bit more detail around the strategy and just confirm that you've applied that to the entire capital base?

Question: Andrew Lyons - Goldman Sachs - Analyst : Great, thank you.

Question: Victor German - Macquarie Securities Limited - Analyst : Thank you very much. I was just hoping to follow-up on the NIM question. Obviously quite a lot of volatility, particularly in the month of June. I'm assuming with all the repayments happening. Maybe just sort of the 2.63%, is that effectively a June margin or is it essentially an exit margin or is it possible that exit margin was a bit higher than that once you remove all the volatility?

Question: Victor German - Macquarie Securities Limited - Analyst : Okay, now that's helpful. And I think, Andrew, kind of alluded to that you probably will be running down liquids. If you can maybe give us any sort of color on what impact that would have on average interest earning assets because you've given us guidance of delays? Would it be fair to assume that average interest earning assets will grow less than GLAs as a result of that liquids rundown? Maybe any sort of color on that would be helpful.

Question: Victor German - Macquarie Securities Limited - Analyst : Right. So you basically -- and it within that 2.63% margin, there was effectively 25% of liquids, which will reduce to 23% over the course of the half?

Question: Victor German - Macquarie Securities Limited - Analyst : Got it. Thank you. And then just maybe on lending margins, I mean kind of already been discussed on the call that it looks like deposit spreads are coming in. There was an article, I think, in the AFR timely talking about this today, which presumably should be a tailwind for your funding costs. Usually banks tend to compete on one side of the balance sheet and if the competition is lessening on the deposit side, we tend to compete a bit more aggressively on the lending side. How do you think those trends on the positive trends on the funding side will transpire to lending margin? Christopher James Bayliss - Judo Capital Holdings Ltd - Chief Executive Officer, Managing Director, Member of the Management Board I'll take that. I think what we're seeing is which is what we sort of predicted that we would see a couple of years ago, it's really the impact of the term funding facility, now that that's being repaid. We're not seeing the price lever being used as a sort of a competitive strategy is it were. And so yeah, I mean, we -- I mean, you'll know from the history of Judo that our -- this time last year, our gross margins were down at sort of the low 4s. But at that point, we had extraordinarily cheap funding from the term funding facility. And I think that's true of our competitors as well. And so I think we're just seeing a normalization now back to SME margins that were sort of pre-COVID. And as I said, as Andrew said, the pipeline, which is a huge pipeline, $1.8 billion, that's at 4.6%. So we're comfortable with the guidance we're giving on that.

Question: Nathan Lead - Morgans - Analyst : Hey Chris and Andrew, thank you for your presentations. Just three quick ones from me if you don't mind. So first, Chris, I've heard you describe your sort of target NIM as being a sort of comes together is 450 basis points from your lending margin, a blended cost of funding of about 130 basis points liquids drag. So that brings us to 320, obviously, you're exiting FY25 at 300 basis points. Do you still think 320 basis points is reasonable? And if so, what sort of drives that -- closes the gap between those two numbers? Christopher James Bayliss - Judo Capital Holdings Ltd - Chief Executive Officer, Managing Director, Member of the Management Board Well, I mean the two other things that are obviously a component of NIM when you're modeling it will be brokerage and establishment fees. They generally offset each other. So just for the sake of completeness when I'm sort of giving a macro the easy maths to our NIM. But on the 3.2%, I mean, it's you have a difference between 4.5% margin and a 4.6% margin. The difference between an 80 basis point assumption for deposits and up 75 basis point. The return we're getting on our liquids. Our liquids as Andrew said, is 23% in July. I mean that is on a continued downward trajectory, that is not the end thesis. So when we talk about metrics of scale, we're obviously continuing to sculpt down the amount of liquidity that we're holding as we continue to mature as a bank, and hopefully also switch from an MLH bank to an LCR bank as well.

Question: Nathan Lead - Morgans - Analyst : All right. Second question is just about they are the gross loan growth. Obviously you're guiding for $2 billion to $2.3 billion. Is that kind of where you see kind of steady state going forward now? Or do you sort of see yourself accelerating back into that sort of mid to high $2 billion type run rate over time? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 20, 2024 / 12:30AM, JDO.AX - Full Year 2024 Judo Capital Holdings Ltd Earnings Call Christopher James Bayliss - Judo Capital Holdings Ltd - Chief Executive Officer, Managing Director, Member of the Management Board Look, I think it's a great question. I think obviously, we've sculpted back to John's earlier question around capital. We've sculpted our capital carefully as well. So if the market gave us the opportunity to do another $1 billion this year, we wouldn't take it out because of the way that we're managing capital. I think that the entry into a warehouse business, I think that could see that lending book accelerate quite significantly because it is a very, very low RWAs as well. So we could do that and manage capital at the same time. But yeah, I mean, I think growth between sort of $2 billion and $3 billion is probably our sweet spot at the moment. And then we continue to invest in about 20 bankers per annum, which feels about right for us. We don't want to get -- go more aggressive than that because we'll start compromising on the quality of those A players and betting down from a cultural perspective. So I think, yes, I think sort of $2 billion next year and somewhere between $2 billion, $2 billion and $3 billion in FY26, FY27 would be a fair assumption.

Question: Nathan Lead - Morgans - Analyst : That's great. Thank you. Christopher James Bayliss - Judo Capital Holdings Ltd - Chief Executive Officer, Managing Director, Member of the Management Board Thanks Nathan. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 20, 2024 / 12:30AM, JDO.AX - Full Year 2024 Judo Capital Holdings Ltd Earnings Call

Question: Brendan Sproules - Citi Investment Research - Analyst : Good morning. Thanks for taking my questions. I just a question around your outlook, particularly around asset quality. I'll refer you to slide 17, it's 72 basis points of the loan book average GLA this year for impairment, but it looks to me if you keep that dollar amount the same, the basis point drops to sort of in the mid to high 50s. I was wondering how do we sort of close the circle on that, given that you've obviously got much stronger lending growth this year, but also you continue to expect the portfolio to season. So I imagine the specific provision, which was a major contributor in growth last year, will continue to rise.

Question: Brendan Sproules - Citi Investment Research - Analyst : Thank you. That's helpful. And just a second question on some of your deposit spreads. I know the benchmark yield curve's been moving around quite a bit late.

Question: Brendan Sproules - Citi Investment Research - Analyst : But when we get into a rate cut environment, which I think most economists have maybe early in 2025 calendar year. Does history show that the spread actually widens on TDs in a rate cut environment, given that deposit rates tend to lag as they did on the way up, on the way down? And is that a risk, I guess, to your second half margin guidance that you provided here today? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 20, 2024 / 12:30AM, JDO.AX - Full Year 2024 Judo Capital Holdings Ltd Earnings Call

Question: Brendan Sproules - Citi Investment Research - Analyst : Yeah, perfect. Thank you.

Question: Azib Khan - E&P - Analyst : Thank you very much. Chris, you've had a couple of questions on capital. I just want to piece it together and make sure I'm understanding this okay. It sounds like, Chris, on one hand, you're saying there's enough common equity to take you to an AT scale 1 (inaudible) But then on the other hand, in response to Nathan Lead question, it sounded like you said you don't want to ramp up your loan growth too much because you're hopefully need to manage your capital position. But if you can get your AT scale loan books earlier, why isn't that something you would adjust? Christopher James Bayliss - Judo Capital Holdings Ltd - Chief Executive Officer, Managing Director, Member of the Management Board Because as if we've made assumptions around our regulatory settings. So as you can imagine, when we got our ADI license we didn't start with a capital ratio from (inaudible) that was aligned to the major banks that 11.5% that I'm talking about. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 20, 2024 / 12:30AM, JDO.AX - Full Year 2024 Judo Capital Holdings Ltd Earnings Call So we started with a high level of capital as you'd expect. We've had our banking license for five years now, and I can't talk about what are our potential regulatory settings are on capital. But obviously, we've -- I mean, we've always sculpted to a downward trajectory. For getting that sculpting right is essentially the answer to your question.

Question: Azib Khan - E&P - Analyst : Thank you for that. Also to Chris, you've mentioned that you're look at funding SMA warehouses because it's quite capital efficient. Can you achieve a margin of 450 basis points over swap on that sort of lending or will that be a lower margin? Christopher James Bayliss - Judo Capital Holdings Ltd - Chief Executive Officer, Managing Director, Member of the Management Board Look, I think, I mean, it will be deal specific, Azib. But generally I mean, we're happy to continue giving a guidance of 4.5%, and we've been factoring that into our growth assumptions. So yeah, I mean, again, it will be averages of averages. Some of them will be lower. What I will say is that there's generally a direct correlation with that type of lending between the margin and the risk weighted assets and so ROE. And so I mean some of these lends can be sort of 30%, 30% plus ROE. So if there is a little bit of trading off of margin to achieve that, then we would obviously take that. But at the moment, in terms of the balance of how we think we will be originating loans, particularly over the next 12 to 24 months, we're comfortable with that average margin of 4.5%.

Question: Azib Khan - E&P - Analyst : Thank you.

Question: Brian Johnson - MST Financial - Analyst : Thank you very much and congratulations on the results, but very good disclosure. I have two questions, if I may. The first one is your competitors just in the last few weeks seemed to be talking about Westpac sharply changing some of its pricing metrics. And I appreciate that you've got this at a point in time, but could you just run us through the pricing metrics that you're seeing on both the deposits and the lending side from competitors even just over the last few weeks? Christopher James Bayliss - Judo Capital Holdings Ltd - Chief Executive Officer, Managing Director, Member of the Management Board I think, Brian, certainly on the lending side, as I said, there's no doubt about it. The big banks are falling back in love with SMEs, and they will always use the pricing lever as a way of getting short term traction. What we're seeing is them playing the bookends, as I said in my presentation. So very competitive sort of on that above $10 million fully secured type lending and also at the sort of the lower -- sort of below $1 million. And certainly on Westpac, you know we see that the lower end. Our sweet spot is between $2 million and $10 million where it is very much relationship banking. And we've always said that price should not be a determinant as why a customer wants to bank with us. And we're able to get better economics as a result of that. But absolutely, I mean, we see pockets of it as well. One of the -- I think one of the biggest challenges that banks have is consistency, particularly it's interesting when I'm asked who might -- who our major competitors, my first question and the responses is which states are we talking about? Because it's different in different states, depending on the individuals that are there. And that is one of the challenges that when you run these huge organizations and the amount of scale that you've got. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 20, 2024 / 12:30AM, JDO.AX - Full Year 2024 Judo Capital Holdings Ltd Earnings Call On the deposit side, it's -- we compete with the branchless banks, and we understand that. We understand that despite everything I just said on the lending side, price, it is a commoditized product, TDs, it is all about -- it's generally all about price. And for us, our brand has matured tremendously over the last five years as an ADI. We don't have to be number one anymore because we have an established customer base of nearly 50,000 customers. Our rollover rates are around 70%, and we can get very, very strong rollover rates now when we're number three, number four in the price comparison sites. And that's largely because if (inaudible) is number one is someone that the customers never heard of, then do they really want to do the whole on boarding KYC, AML checks all over again. And so as we get more established brand and a bigger and bigger customer base and higher and hold those 70% rollover rates, we think we'll be able to generate even better returns from that side of the balance sheet.

Question: Brian Johnson - MST Financial - Analyst : The second question, if I may, just if we go to kind of think about all the slides, but if we zoom in on slide 31, your loan book is still heavily concentrated to property operators, which I see is all secured, which is great. But we can see that the 90 days past due gapping up quite sharply year on year and I suspect it's probably down half-on-half, but it is certainly up quite a bit. But also we've got this weird dynamic at the moment where a lot of asset values in the property market probably haven't been marked to market. Could you just run us through what you've done to ensure that the value of the underlying collateral, how much have you stressed those commercial real estate, presumably that's sitting behind those property operators. Can you just run us through what you've done to check the veracity of the valuations, given that we know at a systemic level, a lot of this stuff hasn't been marked to market, the property values. Christopher James Bayliss - Judo Capital Holdings Ltd - Chief Executive Officer, Managing Director, Member of the Management Board Yeah. I mean first of all, I mean, just the headline comment, I wanted to stress Brian, that we are still played by the law of large numbers. So of that 2.31% over 90 days, 50% of that number or actually 47% of that number is actually just five customers. And so, you know, as you can imagine, depending on which segment -- sector you then throw one of those five numbers into and it creates, you know, it does create some of those sort of outlier stats that you're referring to. I mean, part of our business model is really, as I said, it is old school relationship banking. We do an annual review at the very least on every customer. But the ones that we're more concerned about, we would do our quarterly reviews. We've got covenants in there. We would have -- it will be our covenants and we would -- we revalue assets as part of our credit origination process as you'd expect. But also we would have expect our bankers that are in market, we would expect them to have their finger on the pulse. If there's something that's happened in terms of an asset devaluation, we would expect them to pick that up. But I'm not sure -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 20, 2024 / 12:30AM, JDO.AX - Full Year 2024 Judo Capital Holdings Ltd Earnings Call

Question: Brian Johnson - MST Financial - Analyst : Can I just push my luck with one other question just on credit underwriting generally. Could you walk us through -- so we've got three or four major banks that have got products that basically interrogate SMEs accounting platforms which I suspect is a much better credit underwriting standards than the normally we would get. Could you just walk us through, I know that you tend to use people more than machines. But can you just talk us through what access your clients are getting using AI, using data to basically be confident that you're picking up any problems in the cash flow of the business (inaudible) Christopher James Bayliss - Judo Capital Holdings Ltd - Chief Executive Officer, Managing Director, Member of the Management Board Yeah, look, I think Brian, as you said, you're taking an API to an accounting platform, it's not as -- I think, from a credit underwriting perspective, I mean, it's got a lot of challenges, not least. When you're accessing an accounting platform, you are not accessing nicely produced monthly management figures with the profit and loss and balance sheet. You're generally of accessing debits and credits. It's fine if it's one customer and one borrowing entity. You put 10 customers in a Group, holding company, subsidiary, affiliated businesses, you have trading businesses, property holding companies, et cetera, it gets far more complicated. And so for us, yes, I mean, it is old school, but we rely on skilled bankers actually using the actual accounts produced by the accountant will be consolidated appropriately to make our credit assessment. Now we are looking going forward as to how we can obviously use AI and direct feeds to accounting platforms for to make sort of covenant monitoring easier and make any renewals easier. But I think in terms of upfront credit assessment, certainly for the types of lending we do, then I think I'm not convinced that the productivity benefits would outline the additional risk that you're taking by not particularly with such complex groups. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 20, 2024 / 12:30AM, JDO.AX - Full Year 2024 Judo Capital Holdings Ltd Earnings Call