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Resimac chairman calls for level playing field

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    Resimac Chairman Warren J. McLeland announced the company’s results and called for a level playing field at the non-bank lender’s annual general meeting.

    In Fiscal 2020, the group generated $56 million in profit after tax. The company’s normalized profit after tax (NPAT) was $55.7 million, a 79% increase over its NPAT of $31.1 million in FY 2019. The profit increase was underpinned by a 60% spike in net interest income to $188.6 million, driven by a combination of growth in assets under management across all products and channels and higher margins across the portfolio.

    Despite the increase in profits, McLeland called for the government to even the playing field between banks and their non-bank competitors. He acknowledged that the Australian government provided “extensive support” to the non-bank segment during the COVID-19-related economic meltdown.

    “This is in stark contrast to the [Global Financial Crisis] in the years 2007 to 2010, when the focus from the government was on the banking sector, with the non-banks being left to survive as best they could,” McLeland said.

    McLeland said that by the end of the GFC, non-banks’ share of the residential housing market had dropped by 85%.

    “However, in 2020 – which was arguably more significant in economic decline – our segment experienced double-digit growth,” he said. “With increasing competition from the major banks in the second half of the year, conversely, our segment growth rate slipped back to a single digit.”

    The Reserve Bank of Australia recently announced an extension of its government bond purchasing plans, which is likely to be extended to a large quantitative easing programme, McLeland said.

    “While Resimac will be a beneficiary from these policies, a distinct uneven playing field has emerged between the pricing of financial support received by the major banks over the non-banks,” he said. “Given the scale of the non-bank sector’s contribution to the Australian residential home lending market, we consider this grossly unfair and disproportionate.”

    Original Article