La Trobe’s RMBS engine grows while cumulative losses remain low

La Trobe Financial’s securitisation machine is getting larger without, on the figures disclosed, producing a commensurate deterioration in credit performance. The manager’s FY2026 annual report for 12 residential mortgage-backed securities trusts says the program has issued $20.1 billion of securities across 23 transactions since March 2014, while cumulative losses have amounted to just 0.03% of original issuance.

RMBS Platform Reaches $20.1 Billion

The scale-up continued during the year. La Trobe Financial reported group assets under management of $24.9 billion at 30 June 2026, up from $20.8 billion a year earlier, while the trust portfolio included newer, larger pools such as LFCMT 2026-1 with $917.3 million of loans receivable and LFCMT 2026-2 with $852.9 million. A subsequent $1.25 billion transaction, LFCMT 2026-3, was completed after year-end and is therefore not included in the 30 June balance sheets.

The newer pools are also less seasoned and carry somewhat higher leverage than the older vintages. LFCMT 2026-2 had a weighted average loan-to-value ratio of 67.7% and weighted average seasoning of 2.1 years, compared with 66.6% and 5.4 years respectively for LFCMT 2023-1. Its maximum current LVR was 82.5%, although the report’s portfolio tables show that individual loans across some older trusts exceeded 100% on the current measure.

Credit Allowances Rise in Newer Trusts

The headline loss ratio is supported by a more granular but less uniform picture. At 30 June, credit loss allowances stood at $1.98 million for LFCMT 2025-1, $1.45 million for LFCMT 2026-1 and $1.21 million for LFCMT 2026-2. The report records a $1.98 million credit-loss charge for LFCMT 2025-1 and charges of $1.45 million and $1.21 million for the two 2026 trusts, while several older pools recorded releases or comparatively modest charges.

That pattern is not, by itself, evidence of a change in portfolio quality: the trusts have different launch dates, seasoning and loan balances. It does show where the accounting burden is currently concentrated. The manager uses expected-credit-loss models incorporating arrears, borrower characteristics, property prices and unemployment assumptions, alongside a probability-weighted economic overlay that assigns 60% to its most probable scenario and 20% each to less favourable and more favourable outcomes.

Called Trusts Move Through Wind-Up

The annual report also carries a procedural consequence with investment relevance. LFCMT 2021-2 was wound up in September 2025 and LFCMT 2022-1 in June 2026 after being called; LFCMT 2022-2 was called in May 2026 but had not yet been wound up at reporting date. Ernst & Young issued an unmodified audit opinion, while adding an emphasis of matter because the called trusts were prepared on a liquidation basis where applicable.

Funding remains the other moving part. La Trobe said it intends to maintain two to three RMBS issues a year and has access to warehouse facilities with nine domestic and international financiers. The accounts disclose liquidity draws for LFCMT 2025-1 and LFCMT 2026-1 during FY2026, alongside undrawn liquidity limits of $9.2 million and $14.6 million respectively. Those figures do not indicate a reported breach, but they are a useful reminder that rapid origination growth brings funding and liquidity demands with it.