Not to spook the horses, but I went back to the APRA data file...

Not to spook the horses, but I went back to the APRA data file for the last 5yrs and it gave me a distinctly more negative feeling towards JDO than I had previously. The total loanbook graph kind of hides the trend since the monthly change is a small percentage of the total loanbook. Looking at a graph of the monthly change makes the slowdown in momentum look quite stark:



Note: that's a graph of the loanbook growth, so while the trend is negative it still indicates growth except for Jan-24's negative data point.

That said, the trend appears to have been negative for a lot longer than simply the most recent Xmas/NY holiday period. Notably the negative trend in total loanbook growth effectively started in Apr-22, which was when the RBA started hiking:


JDO management have previously said that they see the loanbook as being 'mature' (presumably where new business effectively just replaces runoff) at $15-20B; but given the slowing growth trend, I'd say that the loanbook should probably be consider mature at more like $10-12B, at least in the current interest rate environment. Maybe if the RBA goes into a cutting cycle that might spur renewed loanbook growth, but then you also need to consider that the macro conditions in which the RBA starts cutting is likely to be a weakening economy in which most SMEs aren't borrowing new money.

If we were to consider the loanbook effectively mature right now, then profit would be stable at roughly the rate of 1H24, which was $67m...call it $140-150m/yr. Shares on issue are around 1.1B, so that would mean ~13-14c EPS...so currently trading on a PE around 10 relative to that estimated terminal growth point. What kind of PE does the market put a mature JDO on once it's a low-growth stable div paying bank similar to the big4? Maybe 12? So there's still upside but it feels like a fair bit less than I would previously have thought.

I'm inclined to reduce my position as I think the recent SP climb seems in direct contrast to the loanbook growth trend and I suspect the market hasn't realised that due to the lag from monthly data to ASX reporting cycle. I'll likely wait to see what the APRA numbers at the end of this month look like to see whether the slowed-momentum theory is supported or if we get a significant bounce in new business.

Acknowledging that this is something of a pessimistic take, I wonder if @hiho had similar thoughts?