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ASX-listed financial services group Resimac Group Limited (Resimac) has released its full-year results for the financial year ended 30 June 2023, revealing an increase in the asset finance sector and a continued focus on this sector.
At its FY23 results presentation yesterday (29 August), Resimac stated that the business had displayed significant resilience throughout the “extremely challenging macro-economic environment” of the past year.
The lender stated its focus in FY24 would be to further its asset finance growth, with a target of settling $1 billion target in asset finance.
This would mean the lender would need to more than double its FY23 figure of $482 million, which was a 19 per cent increase on the previous year, something the lender said it “remains focused” on achieving.
Resimac’s chief executive Scott McWilliam stated: “Our growth aspirations for asset finance remain high, we’re targeting to double our asset finance settlements in FY24, underpinned by a wider broker reach and a significantly improved digital experience for our broker partners and customers.”
The non-bank is also looking to grow operational efficiency through targeting lower expenses and advancing the organisation’s digital transformation journey.
As part of its future focus, the lender said it planned on pivoting to an AUM (assets under management) growth strategy in FY24, with the ADI versus non-bank funding advantages to decrease as the RBA’s term funding facility (TFF) is repaid.
According to Resimac, the bank’s ability to access the TFF had enabled the big four bank to win back market share, allowing the big four in particular to target refinances with aggressive new business”.
Mr McWilliam stated: “We are expecting a less aggressive and more sustainable home loan pricing environment, supported by several banks recently removing or reducing their upfront cashback offers and increasing new business rates.
“These factors combined with increased system activity and fixed rate roll-offs should result in Prime AUM growth opportunities increasing in FY24.”
Home loan settlements fall 41%
Over FY21, Resimac’s home loan settlements dropped to $3.7 billion in FY23, down 41 per cent from FY22, with prime settlements down 56 per cent to 1.1 billion and specialist settlements loan falling 31 per cent to $2.6 billion.
Mr McWilliam stated: “The economic operating environment for home loans remains challenging, albeit improved since earlier this year. Housing credit growth remains lower compared to 12–18 months ago, driven by low supply, RBA peak rates and uncertainty dampening confidence.
“We expect the end of this tightening cycle to improve consumer confidence. Furthermore, cashbacks for home loan refinances have largely been removed, albeit a small number of lenders, including ANZ, continue to offer small cashbacks today.”
The results revealed the lender’s total home loan portfolio dropped 14 per cent to $13.1 billion by the end of FY23, with prime AUM having reduced 23 per cent to $7 billion and specialist AUM remaining broadly flat with a slight reduction of 5 per cent to $5.8 billion.
Jason Azzopardi, CFO at Resimac, said during the year the lender made a “strategic pivot to focus on specialist originations, where returns were higher than the prime segment where ADIs were admittedly writing new business below their cost of capital”.
He added: “We’ve managed to keep the specialist AUM broadly flat during the year despite a soft second half where system activities softened.”
Like many lenders, Resimac reported that arrears had started to increase from record-low pandemic levels.
Ninety-plus days arrears rose back to pre-COVID-19 levels, with arrears for specialist products increasing to 1.31 per cent (up from 0.38 per cent in June 2022) and the prime product arrears growing to 0.57 per cent, from 0.14 per cent in June 2022.
Mr McWilliam declared: “Although arrears were higher during the year we’re pleased to see credit losses remain low with only four loans without LMI at 31-plus days in arrears and a dynamic LVR of greater than 90 per cent.”
The non-bank also flagged that it remained confident Resimac’s portfolio could absorb any stress.
“Our cost management will continue to be a major focus for the business in FY24, I’m pleased to say that our investment in operational efficiency processes and core technologies over the last few years should help us to drive a lower operating expense in FY24,” the CEO said.