RESIMAC GROUP LIMITED (RMC)
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27/02/2025

3

Neutral

$1.00

15.61%

Resimac Group has grown its book by 2% half on half but the growth has come at a cost, Macquarie notes, with net interest margins falling -5bps.

On a positive note, it appears tailwinds from funding are beginning to show and the broker expects this to turn around.

Yet, with Resimac's strategy for assets under management growth over margin optimisation, Macquarie anticipates much of the funding tailwinds will be passed onto borrowers in order to compete for new business, limiting any margin recovery.

While pre-provision earnings were consistent with consensus, headline cash earnings missed, driven by elevated impairment charges. 

Conditions have improved for non-bank lenders, the broker notes, but lending remains competitive. Target falls to $1.00 from $1.05, Neutral retained.

FORECAST
Macquarie forecasts a full year FY25 dividend of 7.00 cents and EPS of 7.80 cents.
Macquarie forecasts a full year FY26 dividend of 7.00 cents and EPS of 11.20 cents.

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05/03/2025

3

Neutral

$0.95

9.83%

Resimac Group's 1H25 headline profit showed a -10% year-on-year decline, primarily driven by higher-than-expected loan losses, with the BDD charge worsening by -$9m compared to the prior half, observes Jarden.

Despite the profit miss, much of the increase in loan losses was attributed to increased coverage levels and methodology changes rather than deteriorating credit quality, highlight the analysts.

The broker highlights solid core earnings growth of $6m half-on-half, while net book growth in mortgages was modest, with a 1% increase to $13.0bn.

While the net interest margin (NIM) fell by -5bps to 1.48%, management expects funding cost tailwinds in the second half.

Jarden lowers its FY25-27 EPS forecasts by -24%, -8%, and -5%, respectively, reflecting the higher loan loss provisions and margin pressures, partially offset by the Westpac ((WBC)) asset finance book consolidation.

Neutral maintained. Target decreased to 95c from 98c.

FORECAST
Jarden forecasts a full year FY25 dividend of 7.00 cents and EPS of 9.00 cents.
Jarden forecasts a full year FY26 dividend of 8.00 cents and EPS of 14.00 cents.