- PNB Housing aims to raise affordable and emerging market loans to boost margins
- The company expects credit rating upgrade from AA to AAA soon
- Loan book growth target for FY27 is 18-20% year-on-year
PNB Housing Finance is aiming to increase the share of affordable housing and emerging market loans in its overall advances going ahead to aid its margins, MD & CEO Ajai Kumar Shukla told NDTV Profit in an exclusive interaction.
The housing finance company (HFC) is also expecting to get its credit rating upgraded to ‘AAA' from ‘AA+' currently, and gradually increase the share of repo-linked loans in its bank borrowings for margin improvement.
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Here are the edited excerpts from the interview:
What is your guidance on loan growth for FY27?
We will grow our loan book by 18-20% year-on-year (YoY) in current fiscal. Q4 is typically a busy quarter for lenders and thus our retail loan disbursements were highest ever in Q4. In Q1, loan growth would be slower across the industry.
Demand for loans against property generally increases in Q4. Further, our corporate loans will grow to 3% of our loan book in FY27 and over the next 3-year period, it will grow to 7-8% of our loan book. But retail will be of core focus to us.
How are you seeing margins panning out?
Broadly, net interest margin (NIM) will be maintained in the range of 3.55-3.65%. There are three factors to help us maintain it. First is the change in loan book mix. Currently, emerging and affordable loans form 40% of loan book, and over the next 2 years, they will rise to 44-45% and subsequently to 48-50%.
This loan mix will aid our margins. Plus, we are AA+ rated company and are expecting to become AAA rated. One rating agency has already upgraded our ratings to AAA. This will ease borrowing cost. We are also looking to gradually move our bank borrowing to repo linked loans versus MCLR linked loans.
Share of self-employed customers in loan book is rising…
HFCs typically focus more on self-employed customers. In salaried customer segments, there is intense competition from banks. Most HFCs, including us, have built strong underwriting skills to sanction loans for self-employed customers. Plus, loans against property is also offered majorly to self-employed customers.
This also helps us sustain our NIM. Having more salaried customers will lead to NIM compression. Even if you offer the best of interest rates, the chances of losing customers in the market for just 5-10 basis points (bps) will be very high.
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Stage-2 ratio has improved. What is the guidance on asset quality?
We have already moved our gross NPA ratio from 1.04% to 0.93%. Collections have improved. We would be focusing more on using technology-based conversations to improve our collection efficiency. Tech will play pivotal role in improving quality. We strive to improve asset quality across buckets.
How much funds will you raise in FY27?
We tend to raise Rs 2,000-Rs 2,500 crore via long term funds each month. We will use all six diverse sources of borrowing, basis best rates.
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