Resimac Group Limited (Resimac, the Group, ASX: RMC) is a non-bank lender with assets under management of $14.2 billion, comprising $13 billion in residential mortgage loans and $1.2 billion of auto finance loans.
Appointment of New Chief Executive Officer
Resimac have announced the appointment of a new Chief Executive Officer. The appointment will take effect in the first half of calendar year 2025 following the expected completion of the migration of the Westpac Auto Loan Receivables Book in the months ahead.
The new Chief Executive Officer is Mr Pete Lirantzis who joined Resimac in February 2024 and is currently the Chief Strategy, Products and Operating Officer. Mr Lirantzis is experienced in digital transformation and modernisation across the finance sector. This background appears highly complementary to the Board’s current productivity boost and cost reduction program and the significant investment in new digital technology that commenced in FY22. Mr Lirantzis replaces Resimac’s interim CEO who was appointed in July 2024.
On-market Share Buy-back
On 11 December 2024 Resimac will commence an on-market share buy-back for up to 10 million ordinary shares over the 12 months to 10 December 2025. There is no minimum buy-back amount.
The Board have been explicit in announcing the buy-back by stating that the company’s current share price does not accurately reflect the underlying value of its assets. The Board went further and added that the share buy-back is an opportunity to add value to the remaining shares on issue.
The net effect of a share buy-back, all else being equal, is that earnings per share should grow faster than earnings, because earnings are shared amongst a lesser number of shares. The Resimac Board appear confident that the on-market share buy-back will underpin the Group’s share price during the 12 month buy-back period.
Positive FY25 and FY26 Outlook
The Resimac Board are optimistic about the Group’s medium-term future. The Chairman’s address delivered at the AGM on 19 November confirmed this when it was stated the business outlook for FY25 is one of modest improvement and modest growth, followed by accelerated growth in FY26.
Purchase of the remainder of Westpac’s auto financing business that was originally announced in October 2024 is expected to complete in the second half of FY25. This presents Resimac with the opportunity to enter new product lines such as novated leases and auto consumer finance. The expected value of the auto book at completion is $1.4 – $1.6 billion. The book is not expected to have a material impact on Resimac’s FY25 financial results. However, the transaction is consistent with the strategic growth objectives of Resimac’s asset-backed finance division and auto book earnings are expected to grow significantly over the next 3 years.
Capital investments in technology that commenced in FY22 are boosting employee productivity and customer service levels. Combined with the cost reduction program implemented in FY24 in response to slower trading conditions at that time, Resimac is now well positioned to benefit from higher mortgage origination volumes in the period ahead.
The Resimac share price is close to a 4-year low and so the share buy-back appears to be well-timed and is likely to prove to be a value-accretive decision over the coming 12 months.
The Group returned to actively promoting new business growth in its prime lending product from the end of 2023. This asset growth, together with recently implemented cost reduction and productivity boosting initiatives, should support the new CEO in driving earnings higher in the next couple of years.
