Resimac posts growth in mortgages despite ‘aggressive’ competition
Non-bank lenders posted record home loan settlements in the six months to December, but competitive pressures in the sector are expected to persist.
Resimac released its results for the first half of fiscal 2022, showing a 6 percent year-over-year increase in net income after tax (NPAT) to $53.5 million.
Earnings were driven by record billings and growth in both the home loan and wealth financing businesses.
Resimac’s home loan book was $14.6 billion, up 13 percent year over year. There was a record $3.5 billion in settlements in this segment, up 63 percent year-on-year.
Scott McWilliam, Resimac’s group chief executive, said growth in home loans has been supported by the advancing specialty segment, despite competitive pressures and “aggressive pricing strategies” by the big four banks and regional lenders.
Loans in the specialist segment rose 45 percent to $5 billion. Billings for specialty products had nearly tripled, rising 190 percent to $2.1 billion.
Meanwhile, increased execution, price competition and the trend of consumers switching to fixed income products caused Resimac’s prime loan book to decline 7 percent to $9.3 billion.
Mr McWilliam noted that there has been a “heavy refinancing market” over the last 12-18 months. The landscape has started to change, but competition is expected to remain intense.
“Certain sectors that could have an advantage in an easing cycle or a low interest rate cycle, particularly those that can offer very cheap fixed rates. I think that advantage is starting to diminish,” he told The Adviser.
“But you know, I don’t expect the competition to retreat in this space. I think it’s different parts of the market, maybe floating rates will be seen as more attractive going forward as we enter a tightening cycle.”
Jason Azzopardi, Resimac’s chief financial officer, echoed the CEO’s comment that there could be an opportunity for the lender’s premium variable offering if customers could exit fixed income products.
“We believe that with fixed rates moving out, we can take advantage of this variable space like we did before…before this really competitive 12-month period that we’ve just witnessed,” Mr Azzopardi told The Adviser.
Resimac’s net interest margin (NIM) was down 14 basis points (bps) year-on-year and 20 basis points year-on-year to 191 bps.
Although funding costs were down 9 basis points, the group’s home loan prices were also down 22 basis points.
However, Mr McWilliam said Resimac has seen opportunities across all segments as fixed rate home loan prices rise and its market share in asset finance grows.
Resimac’s asset finance division saw its loan portfolio triple year over year to $300 million for the half year. There was $200 million in settlements under the segment.
“Technology continues to help level the playing field and as a deeply customer-centric company, we consistently invest in this area to increase operational efficiencies and improve the digital experience for our customers and agents,” said Mr. McWilliam.
Resimac recently confirmed that it will launch a new digital lending system in Australia after completing its launch in New Zealand.
Mr McWilliam said the group has continued to focus on the brokerage channel with its investments in technology. Brokers now make up around 85 percent of Resimac’s total loan portfolio.
“At the end of the day, the non-bank offering and particularly the Resimac offering that we’ve focused on is the broker experience: turnaround times, dealing with us, removing any unnecessary friction from the process,” he told The Adviser.
“This is where we will continue to focus as an organization, gathering insights and feedback from the broker community as we build our broker experience.”
The company has also invested in a new lending system for its asset finance business, which is expected to go live in Q1 FY23.
The New Zealand company had also increased its assets by 20 percent to $800 million, with specialized and direct settlements up 117 percent and 68 percent, respectively.
[Related: Broker flows to majors drop to record low]
Sarah Simpkins is the News Editor for Mortgage Business and The Adviser.
Previously, she reported on banking, financial services and wealth management for InvestorDaily and ifa.