Pursuing its stated goal of reducing its exposure to business loans, city-based PNB Housing Finance wants to reduce default levels before it resumes financing the sector, its managing director and CEO Girish Kousgi said. The housing finance company, promoted by state-owned Punjab National Bank (PNB), has reduced its exposure to business loans in recent years and adopted a retail-focused strategy to fuel growth. In the second quarter ended September 2022, the share of the company’s corporate loan portfolio was reduced to 10% with an exposure of Rs 5,708 crore. The retail segment’s loan portfolio stood at Rs 52,124 crore, constituting 90% of its overall loan portfolio. The company’s gross non-performing assets (GNPA) at the end of the second quarter of FY23 was 6.06%. While the GNPA of the retail sector stood at 3.39 percent, that of the business book stood at 30.37 percent. ”It’s not about lowering the percentage but lowering the delinquency of business loans. Today, the corporate loan portfolio exceeds Rs 5,700 crore, it represents less than 10% of the portfolio. “From now on, the focus would be on the retail segment and maybe in the next few quarters, once we reduce the delinquency in the business book, we will restart (funding of the sector),’ Kousgi told PTI in a post-earnings interview. Kousgi, who took over as head of the Delhi-based Housing Finance Company (HFC) last week, said the focus going forward would be on lending to individuals, with affordable housing being the mainstay. one of the main contributors. ”So we’re not looking at what the mix should be. We would be very, very keen to pick the right kind of clients so that the portfolio performs well in the future,’ the manager said, adding that businesses are a dying book and ”we don’t do not too many business loans’. In the first half ended September of the current financial year, retail made up 98% of total disbursements at Rs 6,992 crore, up 54.4% from a year ago. Disbursements from the corporate sector stood at Rs 123 crore, down 48% from the prior year period. In the area of business loans, he mainly lends to real estate developers and loyal customers. Assets under management of PNB Housing Finance stood at Rs 65,730 crore as of September 30, 2022. The company announced a 12% increase in net profit to Rs 263 crore in the second quarter of FY23. Kousgi said the real estate sector has seen robust activity for a year and a half following the COVID-19 pandemic. The housing boom, coupled with the rebound in economic activity and the housing shortage in the country, presents a good opportunity for housing finance companies, the official said. ”Put all these things together, I feel the demand is robust and we are witnessing it. If we look at the performance of the entire housing industry over the last four to five quarters, the sector is doing extremely well. We are very positive about the growth for the next few quarters,” Kousgi said. He added that PNB Housing Finance is more keen on looking at the top 20 markets. “Going forward, we are more keen to look at the top 20 and then the next 50, as we are also entering affordable housing now. There are affordable housing opportunities in Tier III, IV cities…so I think the focus should be on the top 20. If you take the top 20, that will be 70-75% or 70-80% of the business,” he noted. Additionally, the company will reduce gross NPAs or bad debts as this is a key area of focus alongside growth. “Our focus is on growth and asset quality, so you’ll see growth (increase) and GNPA come down on our book and gradually we’re going to build a book that’s pristine and quality,” the Managing Director and CEO said. . In line with its retail-focused strategy, the company disbursed 97% of total disbursements to the retail segment in 2021-22 and reduced its business loan portfolio by 39% during the year.
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