Judo Capital Holdings Ltd (ASX: JDO) shares are catching the eye on Friday.
In morning trade, the ASX 200 bank stock is up 12% to $1.56.
As a comparison, the S&P/ASX 200 Index (ASX: XJO) is up 0.75% at the time of writing.
Why is this ASX 200 bank stock jumping 12%?
Investors have been buying the small business lender’s shares after responding positively to the release of an announcement before the market open.
According to the release, the ASX 200 bank stock has successfully priced a $750 million capital-relief securitisation transaction backed by small and medium enterprise (SME) business loans.
It notes that the transaction attracted strong investor support, enabling Judo Capital to upsize the transaction from an initial launch amount of $500 million to $750 million.
Management advised that the notes are priced at a weighted average of 171 basis points over one-month BBSW. This represents an improvement of 102 basis points compared with Judo Capital’s inaugural transaction completed in September 2023 at 273 basis points over the one-month BBSW.
The company confirms that the transaction qualifies for regulatory capital relief. As a result, following completion of the transaction, Judo’s Common Equity Tier 1 (CET1) ratio (at 31 March) will increase to 13.2% on a pro forma basis. This is up from its reported CET1 ratio of 12.6%.
In addition, the transaction does not impact the reporting of loans in Judo Capital’s accounts. The underlying business loans will continue to be reported as gross loans and advances and generate interest income.
Return on equity boost
The ASX 200 bank stock revealed that the transaction is highly accretive to its return on equity (ROE).
Following the transaction, Judo Capital will generate a significant net interest margin on the underlying business loans without needing to hold capital for these assets.
Assuming a normalised level of capital, the transaction is estimated to deliver a 25 to 30 basis points pro-forma benefit to FY 2027 ROE.
Commenting on the transaction, Judo Capital’s CEO, Chris Bayliss, said:
We are very pleased with the strong support received for this transaction from a broad range of domestic and international investors. The transaction strengthens Judo’s CET1 position and increases our flexibility to support continued lending growth, while also improving ROE.
The transaction also demonstrates that we have multiple levers to actively manage capital, providing increased optionality, including the potential to consider capital management initiatives in due course.
The post Which ASX 200 bank stock is jumping 12% on big news? appeared first on The Motley Fool Australia.
Should you invest $1,000 in Judo Capital right now?
Before you buy Judo Capital shares, consider this:
Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Judo Capital wasn’t one of them.
The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
And right now, Scott thinks there are 5 stocks that may be better buys…
* Returns as of 20 Feb 2026
.custom-cta-button p {
margin-bottom: 0 !important;
}
More reading
- Judo upsizes $750m securitisation to boost capital and ROE
- Why this ASX bank stock could quietly outperform the big four in FY2027
- Here are the top 10 ASX 200 shares today
- 2 ASX shares highly recommended to buy: Experts
- Which Australian banks will benefit the most from rising interest rates?
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.