Non-bank lender Resimac has published its full-year results for the 2020 financial year (FY20), posting a normalised net profit after tax of $55.7 million, up 79 per cent from $31.5 million in FY19.
The result was underpinned by strong home lending growth, with settlements up 30 per cent year-on-year, from $3.6 billion to $4.7 billion.
Uptake of the non-bank’s prime mortgage products drove the year-on-year increase in settlements, representing over 70 per cent ($800 million) of new originations.
As a result, Resimac’s on-balance sheet mortgage portfolio grew 21 per cent, from $10.2 billion to $12.4 billion.
This was slightly offset by a contraction in Resimac’s white label mortgage book (down 23 per cent to $2.5 billion), reflecting the non-bank’s decision to discontinue its Resimac MoniPower and Resimac Accelerate products for new business from 1 January 2020.
Accordingly, Resimac’s combined home lending portfolio rose 11 per cent – roughly seven times above system – from $13.4 billion to $14.9 billion.
Speaking to Mortgage Business, Resimac CEO Scott McWilliam attributed the non-bank’s lending performance to a consistent credit approval process through the third-party channel.
“Our consistent and timely credit decisions are very important; we really focus on that as an organisation,” he said
“Throughout the year, we’ve continued to improve process, we’ve continued to digitally automate parts of the process that makes sense, with really the driver of improving the experience of brokers and obviously customers.”
Resimac chief financial officer Jason Azzopardi added that despite an influx of loan applications in recent months, the lender’s turnaround times have “rarely been out past one day”, which he said has “really resonated among brokers”.
This comes amid blowouts in processing times across the credit space, particularly among the big four banks, in the wake of a COVID-induced spike in refinancing activity.
Resimac also reported that approximately 10 per cent of its customers were granted payment deferrals in response to the economic fallout from the COVID-19 pandemic.
However, 23 per cent of all deferral customers have since resumed full or part repayments.
Of those remaining on repayment holidays, the average dynamic LVR is 74 per cent for both prime and specialist home loan products.
Approximately 5 per cent of prime customers have deferred repayments, compared with 19 per cent of specialist customers.
Prime active payment deferrals are 5 per cent of all Prime customer accounts ($508 million of loan balances), comparing favourably with other financial institutions.
Deferred loans secured without lender’s mortgage insurance (LMI) total approximately $108 million.
In anticipation of a deterioration in credit quality, Resimac has set aside $30.6 million in collective provisions, which include a COVID-19 overlay of $16.4 million.
Looking ahead, Mr McWilliam said Resimac is well placed to manage headwinds, but acknowledged that the non-bank would continue to face challenges.
“We’re confident but we’re cautious,” he said.
“We have a broad and engaged distribution network; we have a diversified and well supported funding platform; we have proven credit discipline.
“But we’re also mindful that the next 12 months is likely to be choppy.”