The non-bank lender managed record settlements in home loans during the six months to December, but competitive pressures in the sector are expected to linger.
Resimac has published its results for the first half of the 2022 financial year, revealing a 6 per cent lift in net profit after tax (NPAT) year-on-year, to $53.5 million.
The result had been driven by record settlements and growth across both the home loans and asset finance businesses.
Resimac’s home loan book came to $14.6 billion, up 13 per cent year-on-year. There had been a record $3.5 billion in settlements under the segment, 63 per cent more year-on-year.
Scott McWilliam, group chief executive for Resimac stated the growth in home loans had been underpinned by its specialist segment powering ahead, despite competitive pressures and “aggressive pricing strategies” from the big four banks and regional lenders.
Loans under the specialist segment were up by 45 per cent, to $5 billion. Settlements for the specialist products had almost tripled, up by 190 per cent to $2.1 billion.
Meanwhile elevated run-off, price competition and the trend of consumers shifting to fixed-rate products saw Resimac’s prime loan book slip by 7 per cent, to $9.3 billion.
Mr McWilliam noted there had been a “heavy refinance market” in the last 12-18 months. The landscape has begun to shift, but competition is expected to remain intense.
“Certain sectors that may have an advantage in an easing cycle or a low rate cycle, especially those that are able to offer very cheap fixed rates. I think that advantage is starting to reduce,” he told The Adviser.
“But you know, I don’t expect competition in the space to pull back. I think it’s different parts of the market, maybe variable rates will be seen as more attractive going forward, as we enter into a tightening cycle.”
Resimac chief financial officer Jason Azzopardi echoed the CEO, commenting that as customers may move out of fixed-rate products, there may be an opportunity for the lender’s prime variable offerings.
“We feel that with fixed rates moving out, we’re going to be able to take advantage in that variable space, like we have previously… before this really competitive 12-month period we just encountered,” Mr Azzopardi told The Adviser.
Resimac’s net interest margin (NIM) had declined by 14 basis points (bps) from the previous half, and 20 bps year-on-year, to 191 bps.
Although funding costs had dropped by 9 basis points, the group’s home loan pricing had also fallen by 22 bps.
But Mr McWilliam said Resimac has seen opportunities for all segments as fixed-rate home loan pricing increases and its market share grows in the asset finance.
Resimac’s asset finance division saw its loan book triple year-on-year during the half, to $300 million. There were $200 million in settlements under the segment.
“Technology continues to help level the playing field, and as a deeply customer-focused organisation, it’s an area we’re consistently investing in to drive operational efficiencies and elevate the digital experience for our customers and brokers,” Mr McWilliam said.
Resimac recently confirmed that it would roll out a new digital loan origination system to Australia, after completing its launch in New Zealand.
Mr McWilliam stated the group has remained focused on the broker channel with its investments in technology. Brokers now account for around 85 per cent of Resimac’s overall loan book.
“At the end of the day, the non-bank proposition and especially the Resimac proposition, where we focused on is the broker experience: turnaround times, dealing with us, removing any sort of friction from the process unnecessarily,” he told The Adviser.
“It’s where we’ll continue to focus as an organisation and taking insights and feedback from the broker community as we build out on our broker experience.”
The company has also invested in a new loan origination system for its asset finance business, which is expected to go live in the first quarter of FY23.
The New Zealand business had also grown its assets by 20 per cent, to $800 million, with specialist and direct settlements up by 117 per cent and 68 per cent respectively.
[Related: Broker flows to majors drop to record low]