Resimac Share Price — Record Home Loan Settlements in 1H22 (ASX:RMC)

The Resimac Group Ltd [ASX:RMC] reported record home loan settlements for the July–October period of $2.5 billion.

The record home loan settlements grew 72% on the prior comparative period.

Resimac expects 1H22 home loan settlements of about $3.3 billion.

RMC share pice is up as much as 5.8% in early trade.

ASX RMC - Resimac Share Price ChartSource: Tradingview.com

RMC’s 1H22 update

Resimac, the non-bank lender, today released its unaudited 1H22 trading update.

RMC registered a record number of home loan settlements for the period of July–October, worth $2.5 billion.

Resimac’s home loan portfolio now stands at $14.5 billion, representing annualised growth of 15%.

The lender also managed to launch a brand campaign for its homeloans.com.au site in September to coincide with lockdowns ending.

RMC said October applications were 70% higher than the 1Q22 monthly average.

A new loan origination system going live in New Zealand — and planned to roll out in Australia next month — is expected to facilitate RMC’s target of $8 billion home loan settlements in FY24.

Resimac forecasts 1H22 normalised NPAT ‘to be in line with or higher than 1H21.’

Resimac CEO Scott McWilliam said in the latest annual general meeting the fintech’s recent performance upheld a ‘track record of exceptional performance’.

McWilliam concluded:

Stable funding markets and lower cost of funds provide us with a runway to aggressively target future growth in FY22 and beyond.’

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Resimac outlook: inflation, interest rates, and credit growth 

But it was Resimac’s Chairman Warren McLeland who made the more interesting address.

In a more cautious prediction, McLeland said the fintech remains ‘confident in our assessment of Resimac’s continuing growth albeit at a slower rate during the next two years, than experienced in F20 and FY21.

McLeland’s thoughts bear quoting at length because they touch on much currently in hot debate:

House price growth in FY 21 and the first few months of FY 22 has been nothing short of extraordinary. This has quickly resulted in reducing housing affordability across all capital cities and increasingly regional areas.

We expect further macro prudential decisions from Regulators aimed at limiting and capping specific categories of lending and/or conditions of assessing loan servicing criteria for borrowers. The ultimate aim is to weaken the growth in lending and introduce a measure of mitigating future housing price increase to more realistic and sustainable levels.

Overall, we remain convinced that consumer expenditure will expand surprisingly quickly thereby from first quarter FY23 producing a return to business and investor confidence. International borders are already opening, and business and tourism is commencing reinvigoration.

In summary, we expect the Australian economy in the period to 2026 will be characterized by relatively low levels of unemployment, low levels of interest rates and only moderately higher annual inflation and at least a return to the higher rates of real GDP growth we experienced pre COVID.

Even with such demanding conditions, we remain confident in our assessment of Resimac’s continuing growth albeit at a slower rate during the next two years, than experienced in F20 and FY21.

Rising inflation, worries about debt, and house prices will all make for a very interesting financial landscape in the months ahead…especially with the emergence of fintechs disrupting traditional banks.

If you are interested in reading more about these upstart fintechs, I suggest checking out this report.

Regards,

Kiryll Prakapenka,

For Money Morning

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Kiryll Prakapenka is an investing autodidact who is passionate about conducting in-depth research on investments. Kiryll brings sound analytical skills to his work, courtesy of his Philosophy degree from The University of Melbourne. A student of legendary investors and their strategies, Kiryll likes to synthesise macroeconomic narratives with a keen understanding of the fundamentals behind companies.


Money Morning Australia