La Trobe lives with higher arrears

New business levels at specialist lender La Trobe Financial are skipping along, with levels approaching those experienced prior to the 2008 financial crisis.

Chris Andrews, head of funds management at La Trobe, told an investor briefing yesterday that originations were A$660 million during the December 2014 quarter.

"These levels are really strong; at the upper end - not as strong as pre-GFC, so right at the upper end."

Andrews said there was "no compromise on credit quality," to produce these flows.

On the other hand, La Trobe has reported a worsening in arrears on its home loans. These were at 4.9 per cent over the year to June 2014, up from 3.6 per cent in 2013 and as low as 2.1 per cent in 2011.

Andrews elaborated on this trend in an email: "Whilst there is always some volatility in arrears movements the five year arrears trend for La Trobe Financial's Fund has been downwards.
 
"The five-year summary [arrears data] is based on our statutory accounts and includes the arrears generated by closed and fully funded portfolios that we acquire from time to time.  

"These are portfolios of investors and loans, fully matched, that are acquired as contained and segregated sub-pools, with all credit risk fully contained.  The existing (and, indeed) future investors in our fund are in no way exposed to those loans.  

"In recent years, we have acquired a few such portfolios with arrears higher than those experienced by our fund and they are responsible for [the reported increase].

"Removing just the most recent of those acquisitions would decrease the figure you are reading from 4.6 per cent to 1.8 per cent - a truer (but still overstated) reflection of the underlying fund arrears performance," Andrew said.