Resimac settlements soar above system

Non-bank lender Resimac has released its results for the first half of the 2020 financial year (HY20), posting a statutory net profit after tax (NPAT) of $27.2 million, up 44 per cent from $18.9 million in the previous corresponding period.

The growth was largely driven by strong above-system home loan settlement growth, with volumes rising 22 per cent, from $1.9 billion in HY19 to $2.4 billion.

As a result of its settlement growth, Resimac’s net interest income rose by 53 per cent to $84.3 million.

The growth in settlements was reported across both Resimac’s prime and specialist segments, of which uptake increased by 17 per cent to $1.7 billion and 39 per cent to $700 million, respectively.

This was slightly offset by a decline in white label home loan approvals, from approximately $300 million in HY19 to $100 million.

Overall, Resimac’s mortgage book grew 20 per cent, from $9.4 billion to $11.3 billion, with prime home loan products making up just under 70 per cent of its total portfolio.

As at 31 December 2019, owner-occupiers made up 59 per cent of Resimac’s mortgage book, while the share of borrowers with principal and interest (P&I) terms totalled 63 per cent.

Speaking to Mortgage Business, Resimac CEO Scott McWilliam attributed the lender’s strong home-lending performance to the bank’s service proposition to brokers and the growing shift in demand from borrowers away from established lenders.

“I think it’s [because] of our strategy in the broker channel over the last 12-18 months, and that is very much an over-service strategy,” he said.

“We spend a lot of time with the broker network from an education perspective in terms of the benefits of our product.”

“We’re also benefiting from a flow away from some of the more established brands. As you’ll see, strong growth is coming from a number of non-ADIs.”

Mr McWilliam added that he expects strong home-lending growth to continue throughout the second half.

The chief executive said Resimac would continue to develop its wholesale network, noting that the lender would consider establishing new partnerships “where it makes sense”.

Other headline results

The lender’s underlying earnings were also helped by a sharp improvement in its cost to income ratio, down 15.7 percentage points to 42.1 per cent.,

The non-bank’s return on equity also improved, up 8.4 percentage points to 26 per cent.

When including non-mortgage assets, Resimac’s total loan book grew 11 per cent to $14.2 billion.

[Related: Heartland earnings bolstered by reverse mortgage growth]