Like its rival non-bank lender Liberty Financial on Monday, Resimac revealed a solid set of figures on the last day of the reporting season that initially won the hearts of investors, who then went all coy and negative.
Resimac revealed a 92% jump in profits to $107.6 million for the year to June as it, like Liberty, was boosted by demand for housing finance and the impact of the HomeBuilder subsidy in April.
Shareholders will see a benefit – the company will pay a final dividend of 4c a share, taking its payout for the full year to 6.4c a share, up from 3c last year (which was impacted by Covid-19 and the lockdowns in the final months of the year to June, 2020.
Revenue rose 3% to $485.5 million for the year with $456.6 million of revenue coming from the company’s Australian lending business and $28.8 million from its New Zealand arm.
Resimac said its home loan assets under management grew 11% to $13.8 billion in the year, with a record for loan settlements in the second half of $2.7 billion.
CEO Scott McWilliam was optimistic the strength in the housing market would continue as non-bank lenders benefit from low funding costs and a jump in demand for loans,
“These results reflect the momentum of our business, driven by growth across our prime and specialist portfolios in Australia and New Zealand, development of our broker and direct-to-consumer brands, strong investor demand for our bonds, and ongoing investments into our digital transformation,” Mr McWilliam said.
“Stable funding markets and lower cost of funds provide us with a runway to aggressively target further growth in FY22 and beyond, as we double-down on the development of our broker and direct-to-consumer brands in Australia and New Zealand,” said Mr McWilliam.
The July building approvals data yesterday showed a fall in new private and total approvals since their HomeBuilder-driven March peak, but private approvals remain high enough to keep building activity growing for the rest of this year.
This might be an early sign that demand for housing finance might slow next year, but RBA private lending credit showed owner occupied housing finance grew an annual 7.7% in the month (and 0.9% from June) – both the highest growth rates in more than three years. That’s a bullish point at the moment.
But the outlook is being driven at the moment by Covid Delta and Mr McWilliam conceded that point in his outlook on Tuesday, saying “the economic uncertainty from lockdowns is expected to continue for the first half of FY22, Mr McWilliam said he remained optimistic the economy would recover relatively quickly after vaccinations reached the target rollout, and that the strength in the Australian property market would carry forward.”
“To continue our growth, we must meet the needs of current and prospective customers, which remains a key focus. Support for brokers and customers impacted by COVID-19 and other adverse events is ongoing. Our investment in digital transformation will transform the digital customer experience and deliver a platform for sustainable and scalable growth. The upgrade has commenced with a staged rollout and is expected to complete in early 2022,” he added.
The shares were up 1.25% at $2.43.
