Focus on self-employed, near prime reaps rewards
Specialist home loans are paying off handsomely for non-bank lender Resimac Group Ltd, which announced an enormous 190% boost in that customer segment for the first half of 2022.
Resimac’s net profit after tax rose 6% to $53.5 million compared to 1H21, with specialist lending proving particularly strong, along with assets under management growth across home loans and asset finance. The lender settled a record $3.5 billion worth of home loans in 1H22.
CEO Scott McWilliam (pictured) said he was very pleased with the results, considering the period it covered.
“There was a lot of disruption in the market, but at the same time, from a mortgage market perspective, it was a very competitive time and environment,” McWilliam said.
“It’s pleasing where we wrote that business, growing our presence in the specialist space was a strategic priority and that’s delivered further value to the broker channel.”
Resimac experienced this growth while at the same time implementing its core banking project, and this was a testament to its entire staff, McWilliam said.
“Our digital transformation via our core banking project is nearing completion, providing us with a powerful platform for sustainable and scalable growth,” he said.
“The full rollout in NZ is already finished and go-live for our Australian customers is on track for the second half of the calendar year.”
Resimac has also invested in a new loan origination system for its asset finance division, which is expected to go live in the first quarter of FY23.
McWilliam said growth had been spurred by Resimac’s market-leading specialist products, which cater for an under-served segment that includes self-employed borrowers and those who’ve experienced temporary financial setbacks.
“These products - particularly our near prime solutions - continue to resonate with our brokers and customers looking for flexible and cost-effective financial solutions,” he said.
Resimac had made a strategic decision 12 months ago to focus on specialist lending, given where the market was heading.
“It was a very attractive fixed-rate market which is more favourable to the banks and we concentrated on markets where the major banks may not be playing,” McWilliam said.
“We have always operated in the specialist space but we targeted a part of that market to test the depth of the market as well, which was a bit of an unknown.”
During COVID, Resimac had a particular focus on small businesses and alt doc customers, many of whom were looking for better interest rates and debt consolidation.
“It’s all clean credit, but a different income type, and we were pleased with that feedback that that market is quite a deep market and one we’ll continue to service with our brokers going forward, ” said McWilliam.
Resimac chief financial officer Jason Azzopardi said the lender, like its broker partners, had more of a solutions-based approach than the big banks.
“We’re willing to look at people who have a number of small businesses or a bit more complex structure than some customers do. We don’t put them in the ‘too-hard’ basket,” Azzopardi said.
Asset finance is also a segment in which Resimac has enjoyed rapid growth.
McWilliam said its asset finance division, launched in early 2021, has now reached asset finance settlements of almost $200 million.
“It’s a new part of the market for us, but an important part of Resimac’s future story as we continue to leverage off our broker distribution and also our funding.
“We’re focused on consumer, auto, commercial auto and equipment finance, insurance premium financing as well as bridging finance.
“We see an important opportunity for Resimac to play in the growth of that sector, as a number of brands have walked away in the last couple of years. It’s a logical add-on to our existing infrastructure.”
Prime products also presented opportunity for growth, in particular standard variable rate prime products, as fixed rate home loan prices rose.
‘Historically, prime has represented more than 50% of our origination,” McWilliam said. “We see an opportunity to grow our prime presence through the broker network as we have previously, but we also see other opportunities for other channels to grow prime.”
Resimac New Zealand has boosted its assets under management by 20% as it strives to become the leading non-bank in New Zealand. Its specialist and direct settlements rose by 117% and 68% respectively compared to 1H21.
