Latest news with #GirishKousgi
Mint
14-05-2025
- Business
- Mint
PNB Housing eyes affordable, emerging segments to boost loan yields
Mumbai: After grappling with slower growth and elevated non-performing assets (NPAs) in its commercial loan portfolio, PNB Housing Finance is shifting its focus to profitability and margin maximization. The lender is targeting high-yielding affordable and emerging markets to counter competitive pressures from banks offering cheaper loans in prime and super-prime categories, according to a senior executive at the company. This shift also comes amid increasing competition from traditional housing finance companies (HFCs) like LIC Housing Finance, which are similarly targeting middle-to-lower-income customers. To achieve profitability, PNB Housing Finance is expanding its retail housing portfolio by increasing affordable and emerging market loans, opening new branches to serve these segments, and diversifying into commercial loans and the newly launched loan against property (LAP) vertical. Read this | Banks to walk the margin tightrope in Q1 as outlook remains uncertain PNB Housing's plans to grow its retail loan book from the current ₹75,000 crore to ₹1 trillion by FY27. Of this, the affordable housing book (branded as Roshni) will account for ₹15,000 crore, or 15% of the portfolio; the emerging segment will be around ₹25,000 crore, and the prime segment will make up the remaining ₹60,000 crore, said managing director and CEO Girish Kousgi. As of 31 March 2025, PNB Housing's assets under management (AUM) stood at ₹80,397 crore, of which loan assets comprised ₹75,765 crore, and retail loans accounted for 99% of all loan assets. Affordable and emerging segments 'We have very ambitious plans for both emerging and affordable businesses," said Kousgi, adding that while demand has been strong across segments, growth was higher in affordable and emerging segments in FY25 due to the smaller size of the books and margin pressure on the prime side. The emerging segment, launched in FY25, grew about 21% during the year, while the affordable loan segment rose 183% to ₹5,070 crore, with plans to expand to ₹9,500 crore by the end of the current financial year. Read this | PNB Housing's affordable loans drive pushes it to revive its commercial mortgage biz 'Our focus is slightly less on prime because of profitability reasons. The focus is more towards emerging and affordable," Kousgi said. The latter two segments currently account for 40% of incremental disbursements and comprise 23% of the total loan portfolio. The lender aims to increase this to 40% by FY27, he said. These segments are appealing because they largely consist of middle-to-lower-income customers and first-time homebuyers with limited credit histories, allowing HFCs to charge higher interest rates compared to prime borrowers who often receive finer pricing from banks. The current average yield for the emerging segment is around 10.25%, while the affordable segment yields 12.65%. The broader housing finance market also reflects a growing emphasis on lower-ticket loans. According to data from quasi-housing regulator National Housing Bank, loans to economically weaker section (EWS) borrowers comprised 12% of total disbursements by housing finance companies in the first half of FY25, while loans to the lower-income group accounted for 21%. However, despite the growing focus on affordable loans, the largest share of disbursements in FY24 was still concentrated in the higher-ticket segment. Loans above ₹25 lakh accounted for 58% of total disbursements, up 18.9% year-on-year, while loans up to ₹10 lakh rose 6.3% during the same period. After de-growing the commercial book in FY25, the housing financier has started re-looking at the corporate segment and plans to do about ₹1,500 crore of business in FY26 in this portfolio. "We have kind of restarted, so we will see disbursements happening in this year," Kousgi said, attributing the renewed interest in the segment to it being more margin accretive. In FY25, corporate loan disbursements were just ₹66 crore, down 55% year-on-year, with no incremental disbursements in the last quarter. "We want to take the overall mix of non-housing loans, at an enterprise retail level, to 31-32% from close to 30% today. That will help us on the yield," he said, adding that the recently launched loans against property (LAP) vertical will also help give an 'upside on yield". Balancing prime and super-prime exposure Amid a strategic move to higher-yielding loans, PNB Housing has halted fresh disbursements in the super-prime segment and slowed growth in prime loans, which grew 12% on-year in FY25. Kousgi said that within the prime segment, the focus is on 'identifying certain pockets, certain products where we get a higher yield," particularly in cities like Chennai, Hyderabad, and Bangalore, rather than the costlier real estate markets of Delhi NCR and Mumbai. PNB Housing should be able to improve the yield for the prime segment to 9.5-9.6% in FY26 from 9.4% currently led by a better mix of customer profile, product and geography, he added. While banks benefit from lower borrowing costs and can offer finer pricing to prime customers, non-bank lenders like PNB Housing face tighter spreads. The lender's loan spread remained flat at 2.19% in Q4 and FY25, with a 10 basis point sequential decline, underscoring the impact of limited pricing power in the prime segment. The shift to emerging and affordable loans is an attempt to offset this compression with higher-yielding segments. Disbursements in the final quarter of the last fiscal year (Q4FY25) were at ₹6,854 crore, up 24% year-on-year and 27% sequentially. Of this, prime loan segment disbursements were ₹4,141 crore, up 7% year-on-year, emerging segment disbursements were ₹1,422 crore, up 40% year-on-year, and affordable loans were ₹1,291 crore, doubling from the previous year. Profitability and operational challenges PNB Housing Finance reported a net profit of ₹550 crore for Q4FY25, up 25% on year and 14% on quarter. However, JM Financial Research noted that the profit was primarily driven by recoveries from the retail written-off pool, rather than core operational gains. Recoveries from written-off accounts more than doubled for the lender to ₹178 crore in FY25, compared with ₹68 crore in the previous year. PNB Housing saw a provision write-back of ₹64.8 crore, largely driven by recoveries from its retail write-offs pool. The brokerage firm said that PNB Housing's profitability in the near term is likely to remain tied to recoveries, with an outstanding write-off pool of ₹1,400 crore– ₹1,000 crore in corporate loans and ₹400 crore in retail loans–expected to drive further provision write-backs. Gross non-performing assets (NPAs) improved to 1.08% as of 31 March 2025, from 1.50% a year earlier, while net NPAs fell to 0.69% from 0.95%. However, the bounce rate for affordable loans increased to 11% in Q4FY25 from 10.4% in the previous quarter, and 8.2% a year ago, a rise Kousgi attributed to the book's growth rather than underlying stress. Read this | Are banks hiding weak asset quality with higher loan write-offs? Kousgi aims to reduce the gross NPA ratio to 1% in FY26. 'With recoveries expected to continue from the balance write-off pool, PNB Housing's credit costs are likely to remain low for the near term. Over the medium term, steady state credit costs are estimated at 20 bps (basis points)," JM Financial said, adding that a strong growth trajectory, steady branch expansion and consistent recoveries from written-off accounts should help keep the RoA (return on assets) at an average of 2.5% over FY25-FY27. Even as the focus has started shifting to higher-yielding segments, the lender's average yield on advances moderated to 10.03% in Q4FY25 from 10.12% in Q3FY25 and 10.08% in the corresponding quarter of the previous H The cost of borrowing remained stable at 7.84%, slightly up from 7.83% in the previous quarter but lower than the 7.98% recorded in Q4FY24. As a result, net interest margin (NIM) improved marginally to 3.75% in Q4FY25, up from 3.7% in Q3FY25 and 3.65% in the same period a year ago. Motilal Oswal Financial Services noted that PNB Housing's stock trades at 1.2x FY27 price-to-book value, with a favourable risk-reward profile. Yet, there are risks: the lender may struggle to expand net interest margins amid aggressive mortgage competition, and seasoning in the affordable loan book could lead to asset quality deterioration and elevated credit costs. Also read | Mint Explainer: How RBI's new digital lending rules will impact lenders and borrowers Nonetheless, Kousgi remains optimistic, highlighting the lender's capital adequacy ratio of 29% as a safeguard against immediate capital-raising needs. The reversal of risk weights on bank loans to non-banking financial companies (NBFCs) has also helped stabilize borrowing costs.
Time of India
30-04-2025
- Business
- Time of India
PNB Housing Finance to resume project financing soon: MD
KOLKATA: Mortgage lender PNB Housing Finance is all set to resume project financing this quarter after a gap of three years, with the current strength in asset quality providing a platform to renew tryst with developers' segment that troubled it in the past. Managing director Girish Kousgi told ET that a few loans to builders in a range of Rs 100-150 crore are already in the pipeline. "We may start project financing this quarter. We have set a target of achieving a portfolio of Rs 1,500 crore by the end of the fiscal," Kousgi said over a telephonic interaction. The lender's asset quality improved to 1.08% at the end of FY25 as compared with 1.5% a year back. It aims to bring down gross NPA below 1% this year. It had elevated gross NPA at 7.6% at the end of FY22, about 60% on account of the corporate loan book. It had a corporate loan book of Rs 14,614 crore at the end of FY20 and thereon it started reducing the exposure. The company's assets under management expanded 13% year-on-year to Rs 80,397 crore at the end of the last fiscal, while on-book loan assets grew 16% to Rs 75,765 crore. Out of this, retail loans grew 18% to Rs 74,802 crore. The lender's legacy corporate book from project finance stood at Rs 963 crore, reduced by 53% year-on-year following a conscious draw down exercise. The company has given an 18% growth guidance for FY26. Among other new initiatives, PNB Housing has set up a new vertical earlier this month to give a push to its loans against property (LAP) business. "We now have a dedicated team for LAP. This segment offers about 125 basis points higher yield on an average as compared to other loans," Kousgi said. He said that more housing loan demand is coming from the affordable and emerging markets loan segment. Its affordable loan business, which it started barely years back, grew 183% year-on-year to Rs 5,070 crore at the end of March. It aims to take the portfolio to Rs 9,500 crore by the end of this fiscal and Rs 15,000 crore by FY27. The company's share price rose 4.5% Tuesday to Rs 1,030.65 on BSE.
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Business Standard
29-04-2025
- Business
- Business Standard
PNB Housing Finance eyes retail book of Rs 1 trillion by FY27: MD & CEO
PNB Housing Finance is setting sights on a retail book of ₹1 trillion by the end of next financial year (FY27). It also plans to grow its affordable housing portfolio 'Roshni' to ₹9,500 crore by the end of this financial year (FY26) from the current ₹5,070 crore. In FY26, the housing finance company plans to open 50 new branches, focusing mainly on the Northeast, Girish Kousgi, managing director (MD) and chief executive officer (CEO), told Business Standard. Roshni, which is an affordable housing scheme, will be worth ₹15,000 crore by FY27. Meanwhile, the emerging segment would be ₹25,000 crore and the prime portfolio ₹60,000 crore. By maintaining a run rate of 18.2 per cent against guidance of 17 per cent, the company plans to achieve ₹1 trillion worth of a retail book by FY27. Roshni promotes affordable housing, especially among first-time buyers. Kousgi said demand for affordable housing is quite robust in Tier-I and -II cities. However, the only drawback is that some companies would focus on a certain category of cities. For instance, some would focus on Tier-III and -IV while others plan to target the outskirts of Tier-I and -II cities. In certain markets in top cities, there has been a slight de-growth, especially in the luxury and super luxury segments. Otherwise, demand by and large is good across all segments, he added. Due to a few state laws and intervention by state governments, some projects have been stalled. 'In Hyderabad, because of the Hydra project, there was a slowdown in the real estate industry. At a couple of other locations, because of the huge inventory pile-up, sales went down,' said Kousgi. On the rural market, he said it will take another 10 years for the company to focus on the mortgage business. Due to insufficient land records, most companies shy away from entering the rural market. The housing finance portfolio overall is in a sound position, he added. Gross non-performing asset (GNPA) as of March was at 1.08 per cent. In three years, the GNPA has come down from 8.13 per cent. He added that the company will continue to hire as recruitment will go hand in hand with business growth. Currently, the housing finance firm has not entered into any co-lending arrangement. However, Kousgi said whenever the opportunity arises, the company may consider co-lending pacts. Owing to sound collection, recovery mechanisms and expansion, operating profit of the company has increased year-on-year (Yo-Y). Due to rising operating expenses, the company has put in place cost optimisation measures. With the Reserve Bank of India (RBI) cutting the policy rate twice, the home loan rate is coming down. The rate should be in the range of 8-8.75 per cent for the prime and super prime segments. The super-prime segment represents borrowers with the highest creditworthiness, while prime borrowers are those with a slightly lower but still strong credit profile.
Time of India
29-04-2025
- Business
- Time of India
PNB Housing Finance to resume project financing soon: MD
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel Kolkata: Mortgage lender PNB Housing Finance is all set to resume project financing this quarter after a gap of three years, with the current strength in asset quality providing a platform to renew tryst with developers' segment that troubled it in the director Girish Kousgi told ET that a few loans to builders in a range of Rs 100-150 crore are already in the pipeline."We may start project financing this quarter. We have set a target of achieving a portfolio of Rs 1,500 crore by the end of the fiscal," Kousgi said over a telephonic lender's asset quality improved to 1.08% at the end of FY25 as compared with 1.5% a year back. It aims to bring down gross NPA below 1% this had elevated gross NPA at 7.6% at the end of FY22, about 60% on account of the corporate loan book. It had a corporate loan book of Rs 14,614 crore at the end of FY20 and thereon it started reducing the company's assets under management expanded 13% year-on-year to Rs 80,397 crore at the end of the last fiscal, while on-book loan assets grew 16% to Rs 75,765 crore. Out of this, retail loans grew 18% to Rs 74,802 crore. The lender's legacy corporate book from project finance stood at Rs 963 crore, reduced by 53% year-on-year following a conscious draw down company has given an 18% growth guidance for other new initiatives, PNB Housing has set up a new vertical earlier this month to give a push to its loans against property (LAP) business."We now have a dedicated team for LAP. This segment offers about 125 basis points higher yield on an average as compared to other loans," Kousgi said that more housing loan demand is coming from the affordable and emerging markets loan affordable loan business, which it started barely years back, grew 183% year-on-year to Rs 5,070 crore at the end of March. It aims to take the portfolio to Rs 9,500 crore by the end of this fiscal and Rs 15,000 crore by company's share price rose 4.5% Tuesday to Rs 1,030.65 on BSE.
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Business Standard
29-04-2025
- Business
- Business Standard
Aim to expand retail book to Rs 1 trillion by FY27: PNB HF MD & CEO
PNB Housing Finance plans to expand the affordable housing portfolio named Roshni to Rs 9,500 crore from the current Rs 5,070 crore by the end of the current financial year, while it aims to grow the retail book to Rs 1 trillion by the end of FY27. In FY26, the housing finance company plans to open 50 more branches, focusing on its expansion in the north-east region, Girish Kousgi, managing director and chief executive officer, PNB Housing Finance, told Business Standard in a telephonic interview. Roshni, which is an affordable housing segment, will be Rs 15,000 crore by FY27. Meanwhile,
