Going ahead with its stated objective to downsize its corporate loan exposure, city-based PNB Housing Finance wants to bring down the delinquency levels before it starts financing the sector again, its MD and CEO Girish Kousgi said.
The housing finance company, promoted by state-owned Punjab National Bank (PNB), has been bringing down its corporate loan exposure over the last few years and has adopted a retail-first strategy to fuel growth.
In the second quarter that ended September 2022, the company's corporate loan book share was reduced to 10 percent with an exposure of Rs 5,708 crore. The retail segment loan book stood at Rs 52,124 crore, constituting 90 percent of its overall loan book.
The company's gross non-performing assets (GNPA) at the end of Q2 FY23 stood at 6.06 percent. While the retail sector GNPA was at 3.39 percent, that of the corporate book stood at 30.37 percent.
"It is not about bringing down the percentage but to bring down the delinquency in corporate loans. Today the corporate loan book is over Rs 5,700 crore, it is less than 10 percent of the portfolio.
As of now, the focus would be on the retail segment and maybe in the next few quarters, once we bring down the delinquency in the corporate book, then we will restart (financing the sector)," Kousgi told PTI in a post-earnings interview.
Kousgi, who took charge as the head of the Delhi-based housing finance company (HFC) last week, said as of now the focus would be on retail loans, with affordable housing as one of the key contributors.
"So we are not looking at what should be the mix. We would be very, very keen on the right kind of customers so that the portfolio behaves well in the future," the official said, adding that corporate is a depleting book and "we are not doing too much of corporate loans."
In the first half ended September of the current fiscal year, retail constituted 98 percent of the total disbursements at Rs 6,992 crore, up by 54.4 percent from a year ago. Corporate sector disbursements were at Rs 123 crore, down by 48 percent from the year-ago period.
In the corporate loan space, it primarily lends to real estate developers and repeat customers.
The assets under the management of PNB Housing Finance stood at Rs 65,730 crore as of September 30, 2022. The company reported an increase of 12 percent in its net profit at Rs 263 crore in Q2 FY23.
Kousgi said the real estate sector has been witnessing robust activity for the past one-and-a-half years after the COVID-19 pandemic.
The real estate boom coupled with rebounding economic activity and shortage of housing in the country presents a good opportunity for housing finance companies, the official said.
"Putting all these things together, I feel that the demand is robust and we are witnessing this. If we look at the performance of the entire housing industry for the last four to five quarters, the sector is performing extremely well. We are very positive about growth for the coming quarters," Kousgi said.
He further said PNB Housing Finance is more keen to look at the top 20 markets.
"Going forward, we are more keen to look at the top 20 and then the next 50 because we are also getting into affordable housing now. Affordable housing opportunities are there in tier III, IV cities...so I think the focus should be on the top 20. If you take the top 20, it will account for 70-75 percent or 70-80 percent of the business," he noted.
Besides, the company will bring down the gross NPAs or bad loans as it is a key focus area alongside growth. "Our focus is growth and asset quality, so you will see growth (going up) and GNPA coming down on our book, and incrementally we will build a book which is pristine and has quality," said the MD and CEO.
In line with its retail-first strategy, the company disbursed 97 percent of the total disbursement to the retail segment in 2021-22 and reduced the corporate loan book by 39 percent during the year.
