PNB Housing Finance will resume corporate lending in the next 2-3 quarters, managing director and chief executive officer Girish Kousgi has said. However, this will be with the sole purpose of fuelling growth in its retail segment.
“Now, we are focussed on retail. Within retail, we are growing our prime book. We started affordable eight months ago, which is gaining a lot of traction. That will improve,” Kousgi said.
Retail segment constitutes 96% of loan assets as on September 30.
Total disbursements rose 16.3% year-on-year to Rs 4,180 crore in the September quarter. While retail disbursements rose 18.1% year-on-year, the corporate segment fell nearly 78%.
The affordable segment contributes 9% of retail disbursement as on September 30.
“Each quarter, we are witnessing a 65% growth in disbursements. While the book is small, demand is quite robust. We see huge potential on the affordable side,” he said.
The affordable housing business expanded to 89 branches, and outreaches as on September 30 from 88 as on June 30. The company’s plan is to hit 100 branches and outreaches soon. In the last eight months, the company has ramped up its affordable housing book to Rs 750 crore, and this is expected to rise to Rs 1,000 crore.
The affordable housing segment will constitute 11-12% of overall retail disbursements by March 2024. Further, it will constitute 18% of retail disbursements by March 2025.
Broadly, Kousgi feels that the company’s focus on the affordable housing segment will help aid its margins going ahead. In addition to this, the company is sourcing from certain high-yield segments within the prime segment.
“Our costs have come down. There is a good upside on our fee income. Within prime, we have certain profiles wherein, we have the opportunity for higher yields,” he said.
The company expects its net interest margin to be at 3.5% in the long-term.
“The performance of the company has been great in the last few quarters. With key metrics improving, we are expecting an upgrade in our credit rating shortly. This will enable to raise funds at a lower cost,” he said, adding that the company will also now have access to refinance facilities National Housing Bank, and these will come at a lower cost.
Additionally, the company has also negotiated with various banks on existing term loans, and has got some of these re-priced. As a result of these measures, Kousgi expects cost of funds to fall by 15-18 basis points in the next two-to-three quarters.