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Non-bank lender Resimac Group (ASX: RMC) has bought Westpac’s (ASX: WBC) auto finance loans portfolio of up to $1.6 billion that will more than double the company’s existing asset finance operations.
The acquisition comes on the heels of strong growth in Resimac’s asset finance division in FY24 and builds on the company’s strategy to diversify its loans portfolio which is dominated by residential lending.
The deal will see Westpac exit auto finance completely after the banking group initially sold its motor vehicle dealer finance and novated leasing businesses in 2021 to Angle Finance, a portfolio company of Cerberus Capital Management.
The motor dealer finance business at the time held loans of about $1 billion, while its auto finance division had loans outstanding of about $10 billion which Westpac had planned to run down over time.
In March this year, Westpac reported that its auto loan portfolio had fallen to $1.2 billion following the run-off strategy.
The sale of the auto loan portfolio is expected to be completed in the first half 2025, with Westpac noting that the portfolio could be worth between $1.4 billion and $1.6 billion.
While the deal is not material to Westpac, Resimac says the acquisition supports the strategic growth objectives of its asset finance division and follows several acquisitions by the group in the field over recent years.
This includes the buyout of Sydney-based lender International Acceptance Group and its $80 million loan book in 2021, and the purchase of a $150 million commercial asset finance portfolio from Thorn Group (ASX: TGA) last year.
The company also took a majority stake in equipment finance business Sonder Equipment Finance in 2022.
Resimac currently has an asset finance portfolio of $1 billion, which is overshadowed by its home loan portfolio of almost $13 billion. The Westpac deal will boost the group’s asset finance loan book to at least $2.4 billion.
Resimac says the acquisition is not expected to have a material impact on its FY25 financial results.
On 29 August, the non-bank lender posted a statutory NPAT of $34.8 million in FY24, down 47 per cent from a year earlier.
While interim CEO Susan Hansen told shareholders at the time that Resimac had progressed its strategic objectives in an “economically challenging environment’, she noted that the stabilisation of the home loans portfolio and the “significant growth of the asset finance segment suggest improved performance in FY25”.
“The asset finance business underscores our diversification strategy and remains a priority,” Hansen said.
“It has shown remarkable growth, with assets under management increasing by 76 per cent in FY24 and originations rising by 60 per cent year-on-year to $800 million. The acquisition of Sonder has strengthened our distribution and product capabilities.”
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