PNB Housing Finance conducted a conference call on 24 July 2023 to discuss its financial results for the quarter ended June 2023. Girish Kousgi, MD&CEO of the company addressed the call:

Highlights:

The company has completed right issue of Rs 2494 crore in Q1FY2024, which was subscribed 1.21 times. All the top 4 shareholders of the company participated in the right issue. The proceeds of the right issue are utilized for disbursements.

The Q1FY2024 was eventful for the company and the company has done well on most parameters.

The disbursements of the company have increased by 8%. With the intention of derisking the future balance sheet, the company focused on home loans, salaried segment and the low ticket loans.

The retail on book of the company has increased by 11%, while the overall loan growth was at 5% end June 2023.

The company is well on track to achieve the retail loan growth of 17-18% and disbursements growth of over 20% in FY2024

The loan book of the company has increased to seven quarter high of Rs 60395 crore end June 2023, amid continuous defocus from the corporate loan book.

The company has significantly reduced the book run off from 23% in Q1FY2023 to 16.58% in Q1FY2024.

There is a significant momentum on the asset quality side and the bank is very aggressive on the legal action, SARFAESI, collection and settlement.

The company has a good pool of asset ready for auction. Thus, the company is expecting significant reduction in NPAs in rest of the year.

The credit cost of the company stood at 0.36% which mostly was an account of raising PCR and building ECL provisions.

The share of below 1 crore accounts in the loan book has increased to 85% from 81% last year, while the share of the South region in the loan book is also improved.

The branch network of the company has increased to 198 from 189 and March 2023. The affordable housing Finance branches were at 88 end June 2023 and the company aims to raise this count to 100 branches in couple of quarters.

The corporate loan book has dipped 45% yoy and 10% on sequential basis end June 2023.

The yield has improved to 10.59% from 10.4%, while the cost of borrowing has increased to 7.97% from 7.76%. An incremental as well as book cost of borrowing stands at 8%.

The spread have eased marginally to 2.61% from 2.65%, while the NIMs have improved to 3.86% from 3.74%.

The return on assets stood at 2.07% and return on equity was at 11.18%. The capital adequacy ratio was 30% and the leverage was 3.82 times.

The company expects to maintain spreads at 2.5%, margins at 3.5% and credit cost at 0.6% for FY2024.

From next year onward, the company expects credit cost at 0.4%.

The company aims to improve the asset quality to the best in the industry in next 4 to 5 quarters.

The corporate loan book stands at Rs 3400 crore of which the NPAs stands at Rs 850 crore relating to two accounts with one account having 92% of the NPAs.

The company is aggressive on the resolution of these accounts and expects the large account to achieve resolution in next few quarters.

The company expects the gearing would rise about five times and loan book to touch to Rs 1 lakh crore in next 3 to 4 years.