Westpac announced on Thursday that it will sell the remainder of its auto finance business to Australian non-bank lender Resimac, completing the bank's divestment of the unit following a partial sale in 2021.
In that year, Westpac sold its wholesale dealer loan book to a unit of American investment firm Cerberus Capital Management. At the time, Westpac stated that the sale simplified its operations.
The deal is expected to be valued between $1.4 billion and $1.6 billion Australian dollars and covers auto finance loans and lease receivables.
Westpac anticipates that the transaction will be completed in the first half of 2025 and does not expect it to have a material impact on its financial statements.
A common link in the announcements that has not been noted is that the initial sale of the loan book back in 2021 was likely the first asset divestment by then-new CEO Peter King. Thursday’s announcement is probably the last under his leadership, as he retires from the role on December 15.
In its statement, Resimac, which operates in Australia, New Zealand, and the Philippines, indicated that the deal supports the strategic growth objectives of its asset finance division and follows a series of business and portfolio acquisitions in recent years.
The company reported a nearly 50% decline in net profit for the year ending June 30, with performance impacted by squeezed margins and a drop in assets under management.
Resimac expects the deal to be completed in the first half of 2025 and does not anticipate it will have a material impact on its financial results for 2024-25.
In its annual results released in August, the company revealed that, despite a 21% rise in originations to $5.1 billion, statutory net profit fell 47% to just over $35 million, and 'normalized' net profit dropped 42% to $43.1 million. Assets under management rose 2% to $14 billion, but home loans fell 1.9% to $12.9 billion. The group's net interest margin tumbled 12 basis points to 1.56%.
However, Resimac saw a 76% jump in its asset finance business to $1.1 billion, a figure that will be further boosted by the Westpac deal this financial year. After that growth, the Westpac purchase begins to make more sense.
