PNB Housing Finance conducted a conference call on 25 January 2023 to discuss its financial results for the quarter ended December 2022. Girish Kousgi, MD&CEO of the company addressed the call:

Highlights:

The disbursements of the company increased 21% to Rs 3425 crore in Q3FY23 and 39% to Rs 10470 crore in 9MFY23. Retail disbursement was 98% of 9MFY23 disbursements.

Asset under Management (AUM) is at Rs 65753 crore end December 2022 as compared to Rs 67587 crore end December 2021.

The company is focused on growing retail loan assets and improving asset quality. Retail loans grew 7% to Rs 53123 crore end December 2022, which is 92% of the overall loan book..

In Affordable business, the company has expanded presence to 82 branches/outreaches, which will contribute to the Company’s strategy of building book in this segment.

The company expects the share of the affordable segment to increase to 25% going forward.

Corporate loans are at Rs 4911 crore end December 2022, reduced by 39% from December 2021.

The restructured loan book of the company stands at Rs 2037 crore end December 2022.

The yield on loans has improved to 11.38% from 10.7% in the previous quarter, the cost of funds has increased to 7.55% from 7.32%, spreads have improved to 3.83% from 3.38% and margins have improved to 4.68% from 4.1%.

The GNPA ratio has declined to 4.87% from 6.06% yoy and NNPA ratio has dipped to 3.22%.

Within the retail segment, the GNPA ratio stands at 2.86% and NNPA at 1.96% end December 2022.

The bank has good control over pre-closures and balance transfer out. The company has reduced pre-closures and balance transfer out to Rs 800 crore from earlier rate of Rs 1000 crore.

The company has taken steps to be closer to the customers, adding more zones and regions.

The company has set up 4 different recovery teams to focus on various types of NPA buckets.

The fresh slippages of loans declined 25% yoy in Q3FY2023.

The company has a strong focus on resolution of NPAs in the corporate segment and expects it to take 4 to 6 quarters to complete the resolution process.

The company is guiding at a net interest margin of 3.2% and spreads of 2.2% for the long term.

With the healthy disbursements in the last two months, the retail loan growth has improved to 7% end December 2022 and the company expects the growth to further accelerate to 10% by March 2023.

The company is targeting disbursements growth of 20-25% and loan growth of 17% for FY2024

Credit cost stood at 1.13% for 9MFY2023 and the company expect to contain the credit cost at 1% for FY2023

The company expects a normalised cost income ratio of 17 to 18%.

The retail segment credit cost will be 0.6% in FY2024.

The prime segment yield is 9.1% and the affordable segment yield would be 9.5-9.6%.

The company has changed strategy in terms of more focus on the retail loans segment. Within the retail segment, the focus will be on the salaried segment and low ticket size loans.

The company has set up a separate team for the affordable housing segment.