Westpac selling RAMS home loan portfolio to Pepper Money & co

Westpac will sell RAMS Financial Group for "a slight premium to the gross loan value of the portfolio", likely realising a loss on the sale after transaction costs. 

Westpac expects to realise loss on sale of RAMS home loan portfolio

The buyer has been revealed as a consortium made up of non-bank lender Pepper Money and investment firms KKR and PIMCO.

RAMS' $21.4 billion home loan portfolio is more than double the $9.5 billion in mortgages Pepper Money managed as of 30 June.

News of the sale comes nearly two years after Westpac first floated its RAMS subsidiary on the market, seemingly struggling to find buyers willing to take on the brand.

The bank closed RAMS to new applicants in mid-2024, shortly before the corporate watchdog sued the lender for misconduct in its home loan practices.

"This transaction will significantly streamline Westpac's mortgage operations, reduce run costs across the business, and provide further strategic flexibility," Westpac CEO Anthony Miller said.

The sale will likely go ahead in the second half of 2026, assuming it gains the approval of regulators including the ACCC and the Foreign Investment Review Board.

Existing RAMS customers don't need to do anything in response to today's news and will be supported through the transition in the coming months.

Westpac purchased the RAMS franchise distribution business for $140 million in 2007, in the midst of the Global Financial Crisis (GFC).

The brand was hit with a $20 million ASIC fine in late October after admitting to multiple compliance failures.

It was revealed that franchisees and staff had falsified pay slips, altered applicants' incomes and expenditures, and created fake sales contracts, among other breaches, between 2019 and 2023.

Meanwhile, a class action lawsuit has been brought by former RAMS franchisees who claim their contracts were unfairly terminated when Westpac wound down the brand.

After the sale, Westpac's main capital buffer - its common equity Tier 1 capital ratio - is expected to improve slightly, by around 0.2%.

Westpac profits slide amid mortgage growth

The announcement of the sale coincided with the release of Westpac's full-year financial results on Monday morning.

The big four bank revealed its underlying profit slipped 2%, coming in at $7 billion for the bank's financial year 2025, which ran to 30 September.

In that time, its Australian mortgage book grew 3%, reaching $519 billion worth of loans.

Simultaneously, the amount kept in offset accounts with the lender hit a high of $73 billion - marking year-on-year growth of $10 billion.

Westpac's new home loan lending stream also depicts a clear swing towards property investor lending.

Of new loans written during the six months to September, around 61% were to owner-occupiers while 39% were to property investors.

That's compared to 64% owner-occupier and 36% investor in the same period of 2024 and 69% owner-occupier and 31% investor for the respective months of 2023.

The trend reflects ABS data showing investor lending has rebounded to 2017 highs amid warnings from APRA about potential limits on new investor loans.

Westpac also realised a reduction in mortgage delinquencies, with 1.24% of its home loan portfolio behind in repayments by 30 days or more and 0.73% behind by 90 days or more.

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