Resimac Group Limited (RMC) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Resimac full year results call. [Operator Instructions] I would now like to hand the conference over to your speakers today, Mr. Scott McWilliam and Mr. Jason Azzopardi. Please go ahead, gentlemen. Thank you.

Thank you very much. Good morning, everyone. It's my pleasure to welcome you to Resimac's results investor conference call for the Year ended June 30, 2020. I'm Scott McWilliam, CEO of Resimac, and with me is Jason Azzopardi, our CFO. I'll be speaking to the investor presentation, which has been lodged with the ASX. In today's presentation, we'll take you through our FY '20 performance, a summary about COVID-19 on our portfolio as well as strategic priorities. In the interest of time, we will not talk to every slide but the main performance highlights and business activities to allow sufficient time at the end of the call. The call moderator will provide instructions for you to ask questions at the end of the presentation. We obviously welcome any questions that you have. Can I please ask everyone to turn to Slide 3. Jason will start with the performance highlights, underlining our strong performance compared with FY '19.

Thank you, Scott. In FY '20, the group generated $56 million of profit after tax. Note to provide the market with a true underlying recurring profit of the business, we normalize our profit, where we receive one-off income items unlikely to be repeated in future periods. Noting our FY '19 profit included one-off revenue items related to our divested investments in Finsure and Paywise. Therefore, in FY '20, our normalized NPAT was $55.7 million, a 79% increase compared to our normalized NPAT of $31.1 million in FY '19. This profit increase is underpinned by a 60% increase in net interest income to $188.6 million, driven by a combination of AUM growth across all products and channels and higher margins across the portfolio. We will expand on our growth in both AUM and margins as we proceed through the call. The higher net interest income, combined with our continued cost discipline, resulted in a significantly lower cost-to-income ratio of 37.9% for the year, down from 56.6% in FY '19. Despite lower system growth in FY '20, the group settled $4.7 billion during the period, representing a year-on-year growth of 30%. As a result, the group was able to grow its home loan assets under management by 21% during a period when system growth was only 3%, effectively growing 7x system. The strong performance is a direct result of meeting the needs of our [ growth ] for partners and consumers through consistent and also timely credit decisions, digital automation of our processes and also a broad and competitive product range. I'm also pleased to report that the Board has declared a fully franked final dividend of $0.018 per share, resulting in a total dividend of $0.03 per share for the full financial year. Could I now ask you to move on to Slide 5, where I'd like to cover the movements in our other P&L items compared to FY '19. If I could draw your attention to the table at the bottom of Slide 5. On the net fee and commission expense line and the operating expense line, you will notice references to footnotes on the FY '19 numbers. FY '19 numbers include revenue and expenses related to our fully owned subsidiary Paywise, which we divested in April 2019. As a result, comparing these 2 lines year-on-year is not comparing like-for-like. The commentary in footnotes, although detailed, provide the necessary context of the year-on-year movement in these 2 lines. Finally, we increased our collective provision significantly in second half '20, providing the group with significant provisions to potential future economic loss that may arise from COVID-19. We will discuss this further in detail shortly. Moving on to Slide 7, please. We have provided detailed analysis of our group net interest margin. The RBA easing bias continued in the second half of FY '20 with 2, 25 basis points rate cuts in March, bringing the total to 5, 25 basis point cuts over a 9-month period since June '19. Furthermore, the second half '20 average BBSW traded 2 basis points below the cash rate, providing the group with margin tailwinds. Despite market volatility and a fierce competitive environment for new business, I'm pleased to advise we continue to demonstrate prudent margin management. Our average NIM increased 37 basis points compared to FY '19. The 3 main drivers behind this increase were: our funding book is 100% tied to 1-month BBSW. The average BBSW on our funding book decreased from 183 bps in FY '19 to 73.0 bps in FY '20, reflecting the lower cash rate during the period. Our cost of funds being the margin we pay above BBSW on our RMBS and warehouse facilities remain flat as we continue to diversify our banking and investor base, which Scott will expand on shortly. These 2 factors were partly offset by home loan pricing decreasing 73 basis points, driven by the pass-through of RBA rate cuts to customers and organic yield runoff as new loans are originated at lower rates than our back book run-off. Please turn to Slide 8, where Scott will continue.

Thanks, Jason. Despite the disruption of global funding and credit markets as a result of COVID-19 in the second half, the group has successfully extended and increased its warehouse funding and capital lines during the first few months of the dislocation, complementing the support of our banking partners with the overwhelming support from our domestic and offshore investors. The group issued 2, $1 billion RMBS transactions in the first half, only to follow up with a $500 million prime deal in June '20 and a $1 billion nonconforming deal in July '20. I'm also pleased to say all transactions in FY '20 pre and during COVID were oversubscribed. The success of our funding program during the year and into the future is underpinned by our longstanding and diversified panel of bank warehouse facilities, our multi-jurisdictional investor and distribution platform and the performance of our portfolio over many years. Can I now ask everybody to turn to Slide 11? Like all lenders, our customers are not immune to the impact of COVID-19 and the result of restrictions and lockdown. 10% of our customers applied for and were immediately granted payment deferrals. The vast majority of payment deferrals were for a 6-month period expiring in September and October this year. Pleasingly, 23% of our customers as at 31 July '20, and despite having payment deferral arrangements out to September and October, had recommenced full or part payment. Furthermore, we expect the number of payment deferrals to significantly reduce at the end of the initial 6-month deferral period. That said, some customers will require our support beyond the current 6-month arrangement. We will assist our customers who are seeking further support beyond their original deferral term, undertaking full assessment of their financial position to gauge the further assistance required on a case-by-case basis. In light of the situation, we have added an additional overlay to our collective provision of $16.4 million, taking our total collective provision from $10.8 million at 30 June '19 to $30.6 million at 30 June '20. We're happy to take specific questions in relation to the deferred loan book or the COVID-19 overlay at the end of the presentation. Can I now ask everybody to turn to Page 17, where I'll talk through 17 to 21. As reported at December -- at 31 December, the group is undertaking a significant overhaul of its digital and customer experience applications as well as implementing a new core system. The purpose is to continue to remain relevant to our audiences today and into the future. Using automation, digitization and AI, our aim is to create a simple and easy-to-use technology-based solution to deliver seamless digital experience to our business partners and our customers. We have partnered with some of the most respected and proven digital solution and system providers to create a flexible, scalable and secure platform and user experience. I'm pleased to report that after completely rebuilding our online application and user experience, we have rebranded and effectively relaunched our direct-to-consumer online channel. Next month, we will kick off our homeloans.com.au marketing campaign, involving both traditional and digital advertising. Homeloans.com.au is a descriptive term and now the brand of our direct online channel. It's a valuable lease generating asset, both to paid and organic traffic. We believe the online direct-to-consumer channel is only likely to grow as more consumers are researching and transacting online. Lastly, on Slide 21, I'm pleased to say IA Group, our asset finance investment, has performed better than expected during this environment. The performance of the book, underpinned by strong credit disciplines and processes, creates a strong foundation to significantly grow AUM over the coming years. That concludes the presentation. I'll now hand back the call to the moderator to facilitate any questions.

[Operator Instructions] Your first question is from the line of Damien Williamson from Bell Potter.

Yes. Well done on a great result. In terms of your funding, you mentioned you haven't tapped in the reserve bank facility wasn't tapped into. Can you outline what that exactly means on that reserve bank facility? And what support can they provide to the RMBS?

Yes, sure. Look, firstly, the ASM and I think the government with this particular credit disruption has moved far more swiftly and definitely recognized the importance of the nonbank sector providing credit to the consumer market. So we're pleased to see that, that support is there and continues to be there. We just have not needed the [ AFM ] to support our transaction. They have been there for 2 transactions that we've done since March. But we haven't needed them because we've had overwhelming support from real money investors, both domestically and offshore.

Okay. And just as another follow-up question. In terms of your lending growth, it's absolutely outstanding, 21% year-on-year. There doesn't seem to be any slowdown in the June half. You've done another $1 billion in the last 6 months.

Yes.

And particularly given that in the current environment that the banks have been offering some very competitive fixed rate mortgages, can you just outline you're seeing that continued momentum going into the 6-month period?

Yes, sure. You're right. It's a fiercely competitive market out there, and the banks are doing whatever they can to even just to hold their books. Look, the environment going forward is a very competitive one. We've got a very broad product range, so we don't just compete head on with the banks with everything that we do. We play in the prime space, and we obviously play in a significant way in the non-prime space. But that said, I think in the year ahead, especially during periods where certain states are locked down, there will be some loans, but we are seeing a significant amount of refinance activity in the market today.

Yes. And just finally, in terms of your impairment charge, I think it's around 30 basis points of loans. Do you think that that's -- you've captured most of the fallout from what may happen over the next few months? Because historically, for mortgage books, that's quite a -- that you provide a decent amount of coverage given the historic losses out of mortgages. You sort of see that that's providing a nice buffer for what may eventuate?

Yes, Damien. It's Jason. We do believe that what we provision for as -- for what we know today is certainly adequate for any potential future loss that may eventuate. I mean the great unknown for all lenders currently is clearly how customers are going to behave at the end of the 6-month payment deferral period. There is some data in the market, obviously, with Westpac recently, which I'm sure you're across, which has shown a significant decrease. We have had a very small amount of 3-month payment deferrals across our portfolio. So we've got some evidence of how that's behaved, and that's been somewhat positive. But to answer your question, we, today, at 30th of June, the provision we have, we believe to be adequate for any potential future loss. And we have been, if you look in the accounts, when you get the time, obviously, they haven't been up for that long. But in the year-end accounts on Note 23 of large amount of detail spelled out the methodology that we have undertaken to come up with our COVID overlay. It's very transparent. So once you've had a look at that, hopefully, that will answer the question around conservatism. But I'm obviously happy to discuss that in more detail in the coming days.

Okay. That's all for me. But I'd just say well done in a market where all the mortgage providers are under a bit of pressure. So great result, again, guys. Well done.

[Operator Instructions] Your next question is from the line of [ Michael Kemp ] from [ Value ].

Fantastic result in the circumstances. It's amazing how the market gets lit down by a great result. But to get the short term, I was more focusing on whether you think your settlements will go down in this coming period? Do you have a sense of what the volume will be? Or is that just too hard a question to ask?

Look, all questions are hard. Look, it is difficult. Obviously, there's a lot of uncertainty, especially in the short term. We've been pleased with just the applications that we're seeing in obviously a softer market. But we're confident that we'll continue to grow the book in future years.

Yes. I think to expand on that is, clearly, it is difficult for us to forecast 12 months of settlements in what's happening today. And Scott's just mentioned, it has held up reasonably well thus far. But it's not -- what we have shown in the past in periods of broader macro stress in FY '19 that we've still been able to, one, maintain our book and still grow it; but two, the other way we look at it is managing our margins, and obviously, our history of doing that. So we're looking at both levers and how we manage that through this period, and we'll be continuing to focus on that.

And just following up on that, the cost-to-income ratio took a spectacular decline. What do you think that can get to if you do increase the investment in digitization and with your new home loans? Does it go a long way to [indiscernible]?

I was asked that question when we're at 60%. I think I was asked at 50%, and I may have been asked at 40%. So look, our investment in technology is in a really important contribution to our ability to find that right cost base for our organization. And as Jason touched on, it's a big part of also new management. But technology will help us find that scalability that we need to go forward. What we found today, broadly, also I'm going to say, only now in a slight way supported by technology, but it's been broadly just a strong cost discipline in part of the business as well as just finding process improvements, looking to improve the experience for brokers and customers. So the cost-to-income ratio has very much been driven by a growth in the revenue line whilst holding costs flat, and technology will help us to improve that number going forward, and that's something the business will aim to do.

Great. And one question on franking. Jason, do you have a very big -- what's your franking balance? I don't have a chance to check the accounts for that, but is it gone up from last year?

Yes. The franking balance has gone up with the tax payable, and it will go up significantly again when we've got a large tax payment due on the 1st of December. The franking account balance will be in Note 3 of the accounts. You just caught me on the hop there in terms of what the actual number is, but what it is it's adequate to continue to pay fully franked dividends at the current levels and even if they increase in the future.

Great. I'll look at that up then. And is there any commentary or around the sort of payout ratio policy? I mean it seems to me you've only paid out 22%, $0.03 on $0.136 of EPS. Is there really any reason why that's so low?

Look, we've always called out that we see ourselves as a growth stock and not a yield stock. We obviously deeply understand the cost imposition on shareholders of not paying out a dividend. But what we think we've found is to think we've found a nice balance, especially in this environment, where capital preservation is extremely important, especially as we're looking to continue to grow the book, which requires hosted capital, but obviously finding a fully franked ratio at current levels.

[Operator Instructions] Your next question is from the line of Andrew Tan from Bell Potter.

Just a question about your NIM, I guess, a strong NIM for the year, 190 bps. So how do we look at that going forward? Like the BBSW still is a lot lower than the cash rate. Yes. So how do we look at the NIM going forward?

Well, the 3 levers of the NIM are clearly articulated on the bar chart on 7. So maybe I'll just talk through each of those components and what the view is. Home loan pricing, you would expect to continue to be a drag on NIM for a couple of reasons. One, if any pass-through that we've made to customers in FY '20 for part year will have a full impact on FY '21. Secondly, as was touched on earlier, it's a fiercely competitive environment for new originations currently. And like all lenders in the market, we are not immune to the, what we call, organic runoff that the yield drag of that new business coming on at lower margin than old business. So home loan pricing will continue, whilst we continue to grow the book at such significant levels, will be a drag on NIM. Funding cost is something our highly credited treasury team continue to focus on. I think we've obviously got an attractive rate for our funding cost in that where we're raising R&D asset generally 4-year terms. So whilst we may have a peak of a slight increase in RMBS pricing in the new deals that have come on, what's rolling off 4 years ago still may even be at higher margins. So it doesn't impact. It's over a 4-year period where you will see -- you would need constant increase in funding costs. So we've continued to maintain our margin on funding costs over the last 12 months, and we'll be hoping to continue that. BBSW is the topical one at the moment. And you can see there for FY '20, the average for BBSW was 3 basis points above cash. Currently for this financial year, it's traded at 16 basis points below cash. So clearly, that's going to be a tailwind on margin if that was to be maintained. It has been very, very constant the last few weeks with QE, et cetera. So obviously, I'm not going to forecast where we see BBSW today. But at current levels, you could see what the margin tailwind will be there.

Okay. And another question about, I guess, settlements kind of post 30 June. Have you found, I guess, the trend in July and August?

Yes. So as Scott just mentioned previously, we have been feeling pretty -- it's encouraging around settlements for July and August thus far. We are cautious in being too bullish about settlements at this stage because it is fiercely competitive, and pricing is being cut in the prime space. But I think one of our benefits that we've told you guys continually is, clearly, our breadth of product range is to our benefit when prime is so competitive. There's a near prime and specialist pace which still require servicing. And to be frank, some competitors have been -- haven't had the funding base that we have, and we've been able to take opportunities in those areas. So there's a number of levers we have. We have the direct channel rebrand as well, which is obviously just launched. So we are -- whilst it remains competitive, we have a few channels and product types that we're focused on and we're just going to continue to keep doing the same Resimac thing as we've done and focus on the right products and the right service to brokers, and we're hopeful that it will hold up.

Okay. Okay. And just lastly for me. I guess your partnership with Athena looks -- so what kind of contribution has that made to your, I guess, settlement growth over the year?

0.

0. So Athena is just an external party of which one we're a shareholder of. The rationale for that particular transaction was probably more best [indiscernible]. So we helped Athena with day 1 funding and Athena has helped us, especially on the direct side of our business beyond loan application, on the design side. So their numbers are not in our numbers. Theirs are a totally separate business to us.

So just to clarify that on the numbers as well, the settlement number of $4.7 billion does not include anything for Athena. The AUM number does not include as stated in the investor presentation, doesn't include Athena. You'll see a slight difference in the accounts to the loans and advances to the investor preso in that the accounts are higher, and that is a small amount, under $100 million related to Athena in that they haven't been transferred out of our warehouse. So under accounting standard purposes, it has to be in the accounts, but the investor preso is [ quiet ] in Resimac number.

Your next question is from the line of Tony Mitchell from Ord Minnett.

Well done on the result. Can I ask you why you haven't given us a profit outlook this year?

Look, I think the main reason is just the uncertainty in the short term. And as Jason has outlined, I think we've outlined a couple of questions. There's some uncertainty in terms of kind of forecast around the opportunities in the market. But obviously, there's some pretty clear tailwinds as well that's driving profitability. So we thought this is not the period to be providing guidance just with that uncertainty in the short term.

Yes. I think just adding to that is, obviously, I just talked about BBSW. It's trading 16 basis points below cash, which is obviously not something that we've seen before. We are allowed to prepare forecasts, forecasting BBSW to remain, say, below cash flow the remainder of this half. Now it may well do. But I guess we are sort of reluctant to do that. And with the hardship deferrals coming off, although we do believe we're adequately provisioned, we would really like to see and get more data on how those customers perform in the next -- in the coming months. And I think those 2 large factors were why we were reluctant to do that.

Well, just on that, do you think you're lining the provisions you've done now sufficient for the short term?

Yes. So I'm confident that we have been conservative in our assumptions around potential impact to the book. And just at a high level, as I said within Note 23 that we have stressed our underlying security values conservatively by 10% to 20%, and we have assumed a conservative number in terms of potential defaults that may arise in a stress situation to come up with those overlay. So as we sit here today, we certainly believe that the overlay is sufficient to cover any future expected loss and it would need to -- the outlook would need to change materially for us to increase that.

And what about the likelihood of further acquisitions in the near term?

Sorry, say it again?

The possibility of further acquisitions?

Look, we're always kind of, let's say, acquisitive, but in some ways, opportunistic. So IA, as we called out, was strategically important for us because it allows us to leverage off our distribution network and our funding program. We remain open as an organization to any opportunity to either vertically or horizontally diversify this business as long as we remain within, let's call it, the 2 walls of secure and securitized lending.

Yes. And what's the cost of the upgrading the IT?

So it will be -- we're looking to spend up to $10 million over an 18-month period. The capitalization profile of that is to be determined. We wouldn't expect that all to hit the P&L in FY '21. But we, as I said, I haven't determined. I haven't done the technical accounting on the assessment of what -- how much will be capitalized. But that's the dollar amount that we expect to spend.

So what is important...

Sorry, go ahead.

No, I was just going to say, look, what's important in relation to that investment, and that investment is pretty small when you compare it to other organizations that are looking to further digitalize their business and also upgrade their core systems, especially moving towards more cloud-based and SaaS systems is that particular investment allows us to actually take advantage of what other investments we've made today, especially those this year. So a number of the applications that will roll out that's really driving that user experience is only amplified with us actually upgrading our core system. So that's why it's strategically important. It allows us to actually better leverage off the investments today as well as, obviously, being driven by a more modern cost system going forward.

Can I ask you, why would you capitalize it rather than expense it?

Well, we have -- if it's capital in nature, we were -- have a useful life, we will do that in line with the accounting standard requirements. But if it's -- so that's why, as I said, I haven't done the assessment of -- there's a large amount of money. So there will be different components of spending there. If it's contracted site work, we will write it off. If there is -- if it's under a software license that we are required to amortize over a period, we will. So we're not going to be -- as you can see from our normalized results, we don't get -- we don't normalize for expenses or anything like that. All we've ever done is take off one-off income items. We're not about to get -- they're going to stay a clean set of numbers, and they will stay like that.

Right. Okay. Okay. I think it's just worth noting that I think you've done a remarkable job in cutting your net interest margins because if you look at all the major banks, their performance in net interest margins has just been a steady decline over a number of years.

Yes. Look, obviously, what makes up net interest margins is different across organization. But we're a 100% capital markets funded business using BBSW our benchmark rate that underpins NIM. So -- but NIM management, and I think we're prudent in this through in at least the last 3 or 4 years is that even during times when BBSW was volatile, and it's on the wrong side of the cash rate, we've been able to manage our NIM in a very sustainable and long-term fashion.

Yes. And I think we've been pretty vocal in the past about talking about our breadth of products. 70% is prime, the 30% is -- appeals to a wider customer base, and the margins on those are wider. And whilst we benefit from that margin uplift from that pricing, we're also managing our loan impairment expense exceptionally well, which is a testament to our credit policy and risk appetite that we have in the business.

Yes. Just one final one. I hope this is not off the mark, but would you have a contemplate looking at somebody like Judo Finance or any of these other players? Are they similar to what you do? Are they different?

Judo SME, isn't it?

Yes, yes, yes. But are there any other...?

Look I think, as I said earlier, we're very much focused on secured lending and secured lending that is securitizable. So there's a lot of plays, and there's a lot of targets under those plays that's sitting inside those 2 walls.

And I think the IA slide at the back will give some context into one, what we've already done. That's our diversification into asset finance. It's got some dot points on there of the growth we'd like to see in FY '21.

Your next question is from the line of Weimin Xie from MX Capital.

Very good results. A lot of questions. The first one on the impairment. Can you share with us the assumptions on unemployment rate and the house price change for your overlay?

Yes, sure. So the overlay is done on effectively 2 bases. So we've -- as I said, it's in the financial accounts on Note 23, where we -- and it's specifically on Page 98, but I will just talk through it briefly is what we've done is we've segmented our properties by state and by 3 valuation bands. And the 3 valuation bands is because CoreLogic data tells us that more expensive properties decrease in a period of stress -- decrease more in a period of stress. So what we've done is based on the property value, on a property-by-property basis, state by state, we have stressed the underlying security value by either 10%, 15% or 20% depending on the property value. And then once we've stressed those underlying security values, we took an assumption that for the purposes of the overlay only that 1 in 3 customers, if 1 in 3 customers defaulted, what would that provision number look like, and that's where the overlay has come from.

So there's no expected assumption on unemployment rate?

There is. So in our collective provision model, we also have a macroeconomic model, but you have to think the unemployment rate comes through in the assumption of default. So our probability default has embedded into it an unemployment rate. So we have used, in our assumptions, the treasury guidelines of where they believe that unemployment rate will be and GDP rates. We're not taking a Resimac macroeconomic view outside of what the government are leasing. And it's broadly in line with...

So 9%, 10% unemployment rate, I mean, is that the number? Is it?

Say that again?

Is this about, what, 10% unemployment rate?

Yes. Yes. Yes. It's 10%. That's right.

Okay. And the second half increase in the provision, is that one-off in the sense that FY '21, you're going to go back to the historical impairment rates?

So just to clarify, I think you said the growth in the second half collective provision, is that a one-off? Is that correct?

Yes. That’s what I said because there's about $14 million higher in the first half?

Yes. So that is attributable to the COVID overlay that we've taken in the second half, which I just discussed -- and that as per the answers to the other questions, we believe that we are adequately provisioned for any potential future impacts of COVID as we sit here today. And we won't be anticipating that, that will -- that, that number will hit the P&L again in 1 half '21.

But why do I have to increase actual provisioning rate of a higher base now given the -- an impairment rate, everything else, [ should there be more incentive ]?

So the macroeconomic overlay that's embedded -- the macroeconomic model that's embedded in our collective provision model, the drivers in that will stay relatively constant. So we expect, as we sit here today, that the increasing collective provision will be in line with AUM growth.

So that's a ratio and I say, historically, you grew 5 bps for the prime, I believe so we should say 7 now just for the uncertainty?

Yes. Look, it's a -- the collective provision is done on the AASB 9, which is an expected credit loss model, and it does use the last 4 years' historical write-offs and arrears rates on a loan-by-loan basis. But we are -- to answer your question specifically, we -- if you think even pre-COVID, the coverage that we have from a basis points perspective, we wouldn't be expecting to decrease going forward.

Okay. Okay. You mentioned your RMBS 4 years in terms and you are rolling that off. How is the margin of the program that you are rolling off compare to the most recent margin that you are doing?

Yes. Look, that's -- so thus far, they've been at similar margins, and that's why you'll see our funding cost for the year NIM has remained flat. I don't have to hand what the most recent -- what the RMBS is coming off to the end of their term, we'll roll off that. And it's obviously unknown what we're going to price new RMBS at. It's very much what market terms are available at that current time. But as I said, we are looking to keep our RMBS margins and warehouse margins flat year-on-year, and that's what we aim to do every year.

Yes. Okay. How about the access to mechanized balance in terms of the margin and also the amount of capital you need to put in as a support?

Sorry, I just missed that question. Could you repeat that, please?

The mechanized portion of the vehicle, the access to that in motion, the cost and whether you need to put in more capital support?

Okay. Yes, that is funding.

So the answer is no. We have not to that need to put more capital to underpin any of our term deals or RMBS deals, nor have we on the warehouse side. That said, we're, obviously, working with our [ mid standards ] for opportunities to reposition their positions in the capital stack. When thinking about pricing in the market, especially our term deals, we've been pleasantly pleased with the competitive tension and competition for our -- for more subordinated notes. So don't note further down on the capital stack. There's definitely more competition there, which is no great surprise as the market really is just trying to find yields today. So we're pleased that the mid support is very strong.

Okay. And last question, can you see any impact from the government support, either the shopkeeper or the super [ redrawable ] on your repayment rate? And also, in terms of the churn of the balance rate of your book?

In terms of how the refinance rate slowed up because people -- or the large number...

It seems like [indiscernible] if you're allowed to take [indiscernible] out the super, some people might...

Oh, the super?

Yes. And also the prepayment rate or did they actually prepay the monthly payment earlier and so on?

So the answer is over -- since COVID started and pretty much for all of FY '20, our runoff rate, which includes discharges adding prepayments, has remained relatively constant.

So no discerning impact from a...

Right. Yes. We can't identify any impact from people withdrawing super and paying their mortgages.

There are no further questions at this point. I would like to hand the call back to your speakers for any closing. Please go ahead, gentlemen. Thank you.

Thank you for your time, everyone. Obviously, we're happy to take phone calls and meetings over the next week, if anyone would like to drill down further on the public numbers. But we'll conclude the call here and enjoy your day. Thank you.

Thank you very much. Ladies and gentlemen, that does conclude our meeting for today. Thank you for participating. You may all disconnect. Thank you.