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Low RMBS pricing sets Resimac up

01 September 2021 6:28AM

After a difficult December half, when its mortgage settlements fell 9 per cent, Resimac bounced back in the June half with a 25 per cent increase in settlements.

Over the year to June settlements were up 3 per cent to A$4.8 billion and loan book grew 11 per cent to $13.8 billion.

Resimac released its 2020/21 results yesterday, reporting a 29 per cent increase in net interest income to $242.7 million and a 92 per cent increase in net profit to $107.6 million. The return on equity was 36.9 per cent.

The loan impairment expense fell from $22 million in 2019/20, which included a $16.4 million COVID overlay, to $2.7 million in the year to June.

Resimac chief financial officer Jason Azzopardi said competition intensified in the December half last year as lenders that had stepped back from the market at the onset of COVID moved back in.

In the June half Resimac returned to settlement growth with targeted campaigns.

Azzopardi said one of the highlights of the year was the reduction in the company’s cost of funds. Resimac issued $5.8 billion of residential mortgage-backed securities during the year and in the June half the margin on the senior notes fell to 70 basis points for prime issuance.

He said the reduction in RMBS pricing would flow through the current financial year and beyond.

The company’s net interest margin rose from 190 to 207 basis points.

Two significant developments during the year were the company’s ongoing investment in asset finance and the relaunch of the homeloans brand.

Last month, Resimac announced that it will acquire 15 per cent of equipment finance company Sonder Equipment Finance. The deal gives it access to Sonder’s commercial broker network. Sonder will offer Resimac and Sonder branded equipment finance products.

The Sonder deal is Resimac’s third investment in the asset finance market. In January, it exercised an option to acquire the 40 per cent of International Acceptance Group it did not already own.

IA Group is a Sydney-based finance company involved in asset finance, secured business loans, personal loans and car loans, with around $80 million of assets.

It also has a 15 per cent investment in Positive Group.

The homeloans brand was retired in 2016, when Resimac merged with homeloans. It was brought back this year as a direct-to-consumer online mortgage business.

Homeloans chief executive Scott McWilliam said consumers are increasingly comfortable with the online channel and he believes it is a good growth opportunity.

 

 

 

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