Resimac strengthens its funding base

John Kavanagh Mortgages

Mortgage specialist Resimac continued its move to be a principally funded lender, with a number of developments in the funding program in the 2018/19 financial year.

It established new warehouse funding lines with UOB in Singapore, MUFG and Deutsche Bank.

It completed its inaugural 144a issuance under the Bastille non-conforming program in the United States. In all, it completed four public RMBS deals worth A$2.6 billion and it made private bond placements worth $600 million.

Total mortgage settlements across the group’s combined distribution channels were $4.1 billion – down 7 per cent on the previous year.

Settlements of principally funded lending were $3.6 billion (down 1 per cent), while settlements of non-principally funded lending were $500 million (down 36 per cent).

Resimac chief executive Scott McWilliam said these figures reflect the shift in focus to growing the principally funded portfolio.

The value of principally funded loans and advances increased by 19 per cent to $10.2 billion, while the non-principally funded portfolio was down 7 per cent to $3.2 billion. Total assets were worth $13.4 billion.

Net profit increased by 86 per cent to $47.2 million. Net interest income was up 15 per cent to $117 million.

After adjusting for one-offs, including a gain of $13 million on the sale of Paywise and $5.8 million for “de-recognition” of an investment in Finsure, the company reported a normalised net profit of $31.1 million, which was 19 per cent up on the previous corresponding period.

The loan impairment expense rose from $1.6 million in 2017/18 to $2.9 million in the year to June. The company said this was due to impairments in an acquired legacy book.

Arrears (90 days or more past due) on the prime book were eight basis points per cent at June 30 and on the specialist (non-prime) book were 185 bps.

The cost to income ratio fell 510 basis points to 56.6 per cent.

In other developments, in July Resimac acquired 15 per cent of fintech Positive Group, which specialises in “asset finance solutions” for consumers and small businesses. It has an option to acquire a further 10 per cent.

The company said the investment would help it diversify its business and improve customer experience using digital technology.