The growth potential of the affordable housing segment is significant as the demand for such houses remains robust, says PNB Housing Finance managing director and chief executive officer Girish Kousgi.
Kousgi’s is optimistic even as affordable houses comprised a mere 20% of total housing units sold in the top seven Indian cities during the first half of 2023. This was against 31% in January-June of 2022, according to a recent report.
“I think the demand in the affordable housing segment is robust despite the withdrawal of the credit-linked subsidy scheme. The recent slump is cyclical and we see a lot of traction in this space,” Kousgi said.
The housing financier has set up 88 affordable housing branches as on June 30 and plans to increase this to 100 in a couple of quarters.
Disbursements in the affordable housing segment rose 66% year-on-year in April-June, albeit on a low base. Overall disbursements rose 7% YoY to Rs 3,686 crore.
While assets under management rose a mere 2% YoY as on June 30, the company is confident of meeting its FY24 growth targets. “First quarter was in line because it is seasonal. If you look at any year, quarter one will be muted both in terms of growth and GNPA. It usually picks up in quarter two and goes on to improve in the third and fourth quarters,” he said.
The company is targeting a loan growth of 17-18% and a disbursement growth of 22% in 2023-24.
PNB Housing remains focused on the retail loan segment, especially prime customers and affordable housing, even as it is strategically reducing exposure to the corporate segment. The corporate loan book shrank 45% YoY to Rs 3,416 crore as on June 30. “We are de-growing the corporate book. This will continue for some more quarters before we could restart,”he said.
The spread on loans rose to 2.6% for the June quarter from 1.4% a year ago. Net interest margin was at 3.86%. The company is targeting spread of 2.5% and a net interest margin of 3.5% in the current financial year.
Kousgi feels that the exit of Housing Development Finance Corporation from the corporate bond market will help other housing financiers raise funds at better rates.
“I think this will help ease out competition on the liability side, especially on non-convertible debentures and commercial papers, in terms of availability and pricing. To some extent, it will also help on deposits and bank borrowings,” he said.