PNB Housing Finance to expand corporate lending portfolio to boost margins, says MD & CEO Kousgi

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PNB Housing Finance Ltd (PNBHFL), country’s third-largest housing finance lender, plans to resume expanding its corporate lending portfolio this quarter as part of a strategy to enhance overall margins, according to Girish Kousgi, Managing Director & CEO. 

The corporate book will however remain below 10 percent of the total portfolio at all times, Kousgi emphasised in an interview with businessline following the Q2 results announcement.

Currently, PNBHFL is primarily a retail focused player with overall assets under management of ₹ 69,500 crore, of which corporate book is just ₹ 1,500 crore. 

“It is more for strategic reasons that we are restarting corporate book. Portfolio of corporate within overall mix is going to be less than ten percent. When we get into corporate funding (construction finance). It will help us on the margins”, Kousgi said.

He highlighted that earlier it was a conscious call not to grow corporate book. However there is now change of plan to restart corporate lending in Q3, Kousgi added.

PNBHFL on Thursday reported a 22.7percent increase in consolidated net profit for the quarter ended September 30,2024 at ₹ 470 crore (₹ 383 crore).

The latest bottomline performance is also higher than the net profit of ₹ 433 crore recorded in June 2024 quarter.

For the first half of the current fiscal, PNBHFL recorded a net profit of ₹ 903 crore, up 24 percent over net profit of ₹730 crore recorded in same period last year.

Kousgi expressed confidence that PNBHFL would be able to sustain its latest bottomline growth performance in the coming quarters as well.

“In the second quarter, there has been all round performance. We have done well in eight out of the last nine quarters. Q2 was the best ever quarter for us”, he said.

For the quarter under review, the retail book growth has touched 16.2 percent on a year on year basis. This is against a growth guidance of 17 percent for the current  fiscal. 

This 16.2 percent increase is the highest ever retail book growth in the last five years.

“The 16.2 percent growth is reflection of demand and good performance by the company. Iam confident that we will sustain and further improve on disbursement growth and we will be able to sustain our profits”, he said.

On net interest margins (NIM), Kousgi said that NIM now is 3.6 to 3.75 percent. “We will be able to maintain that for next two to three quarters time. After that we expect NIM to start inching up”, he added, without giving a specific guidance on this front. 

Affordable Housing 

Kousgi said that PNBHFL would be able to achieve book size of ₹ 5,000 crore by March 2025 in this segment. 

Already the company’s affordable home loan book has touched ₹ 3,000 crore. The company had commenced lending for the affordable housing segment in January 2023.

To a question on capital raising, Kousgi said that company has sufficient capital for the next three and half or four years time. “Our leverage is 3.59. We can go upto 6. We don’t need more capital. We have enough room to grow our business without raising capital”, he said.

On RBI rate cut expectations, Kousgi said that it would definitely happen this Financia year. “I feel the first rate cut will happen in Q4 and not in Q3. I hope RBI will go in for 25 bps cut as cost is going up for banks, HFCs and NBFCs”, he said.