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Growing mortgage and asset finance originations from brokers helped deliver a 22 per cent rise in Resimac’s originations in the financial year 2024.
Non-bank lending group Resimac Group Ltd (Resimac) has released its financial results for the full year ended 30 June 2024, revealing that its loan portfolio has started to recover following growth in both home loan and asset finance originations from brokers.
According to the results, released on Thursday (29 August), the group settled $4.3 billion in mortgages in FY24, up $600 million from the $3.7 billion in FY23.
Of this, $2.4 billion was for specialist loans while $1.9 billion was prime.
Unlike many other lenders, home loan arrears have been trending down at Resimac. Of its total loan book, 1.24 per cent of specialist home loans were in arrears by more than 90 days, down from 1.31 per cent in FY23, while prime arrears dropped from 0.57 per cent in FY23 to 0.45 per cent at the end of FY24.
Increase in broker flows
Resimac said that there had been a 28 per cent increase in active brokers submitting applications over the financial year.
Speaking to The Adviser, Resimac’s general manager of distribution Chris Paterson said that the growth was due to the fact that the lender was “committed to offering brokers product options that support their business growth and the ability to find solutions for a broad range of customers”.
“This is done through competitive rates and a credit policy that caters for various customer segments,” he said.
Resimac said it believed there was “positive momentum” showing for FY25, with Paterson telling The Adviser: “We’ll continue to focus on self-employed customers and investors as well as pivot into other solutions, such as SMSF, where we see opportunity for growth.”
Asset finance settlements up 60%
Asset finance was growing particularly rapidly at the group, with asset finance settlement volumes – which predominantly come from brokers and third-party wholesale originators – up 60 per cent, to $800 million in the year (excluding the acquisition of the Thorn portfolio).
Two-fifths of this was for secured business, 30 per cent for equipment, 25 per cent for auto, and 4 per cent was ‘other’.
The asset finance book is now over $1 billion (at $1.1 billion) – nearly double the $0.6 billion from FY23 – and has been growing steadily since Resimac Asset Finance was launched in FY22.
The month of June was a record month for asset finance settlements and application volumes were up 37 per cent in the year.
Paterson said that RAF’s “diverse product range” was supporting growth through auto and equipment, commercial, and secured business loans.
“Brokers and customers understandably expect products that suit their needs and our goal is to satisfy these needs,” he said.
“We regularly consider and review product opportunities and will continue to do this where we see growth potential. This may come through credit parameter enhancements, products for different asset classes or a combination of both.”
The lender also suggested that it was looking to build RAF through both organic growth and potential acquisitions.
Resimac loan book continues to shrink
Despite the 16 per cent rise in home loan settlements and the 60 per cent boost in asset finance settlements, Resimac’s loan book continues to shrink.
Indeed, its mortgage book shrank again in FY24, falling 2 per cent to $12.9 billion by the end of FY24.
This comes as it regains growth momentum from a competitive lending environment that saw the lender move last year to protect net interest margin as it chose not to compete with major bank lenders offering cashbacks and low rates.
Resimac said that while it had a “challenging” first quarter of FY24 amid a “fiercely competitive” market, home loan volumes had recovered. Indeed, discharges have slowed and it had eight consecutive months of assets under management growth between November 2023 and June 2024, with “strong momentum” in asset origination volumes so far in FY25.
Over the year, Resimac also made the decision to exit the New Zealand market, after “a few years of limited loan origination and profitability”.
Given the business was not meeting the group’s return-on-capital threshold – and the New Zealand economic outlook and increased regulatory environment are creating challenges – it has transitioned the portfolio into run-off.
It said capital would be “redeployed” in growth opportunities that meet Resimac’s return-on-capital hurdles.
Broker tech upgrades expected
Looking forward, the lender said it aims to continue its digital transformation journey. This includes a “continued focus on removing friction within the originations and credit approval stages, focusing on speed, ease and consistency”, such as rolling out instant credit decision on its auto product in FY25, enhancing its asset finance origination platform to give brokers “a better experience” and provide a faster assessment experience and automated document generation for home loans.
Paterson said: “Brokers and customers expect efficient decisions and consistency in loan assessment and processes. This comes from utilising technology as well as a complimentary human approach to decisions and processes throughout the loan lifecycle. This efficiency comes through automation, reduced touch points through procedure improvements as well as continuing to review and challenge how we approach this in line with responsible lending obligations.”
Susan Hansen, the interim CEO of Resimac, said: “Resimac has progressed on its strategic objectives in an economically challenging environment. The stabilisation of the home loans portfolio and the significant growth of the asset finance segment suggest improved performance in FY25.
“The group remains dedicated to being Australia’s preferred non-bank lender through a broker and customer-centric growth strategy.
“Our active broker numbers have increased by 28 per cent compared to FY23, reflecting our commitment to improving broker partnerships. Despite a challenging macroeconomic environment, the focus our people, together with technology have on customer support and service excellence continues to drive our growth.”
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