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PNB Housing Finance Ltd will look to tap corporate lending (for housing construction purposes) as it re-enters the segment over the next few quarters. The company will continue to concentrate on retail lending, specifically targeting affordable housing.
Over the next 4 to 5 years, the plan is to take the share of affordable housing to 35-40 per cent of its incremental business, whereas 60 per cent will be from prime segment. The remaining 10 per cent will be corporate finance.
According to Girish Kousgi, MD and CEO, PNB Housing Finance, the affordable housing finance segment, launched in Q4 FY23 under the name Roshni, is witnessing a 50-60 per cent growth quarter-on-quarter, considering a lower base.
In India, affordable home sales comprise 20 per cent of total housing units sold in the top seven cities during the first half of 2023. This was against 31 per cent in January-June of 2022, according to a recent report.
“With Roshni, we continue to augment our affordable housing portfolio. And will be present also across Tier 2 & Tier 3 cities. We remain optimistic of the segment. Over the next five years, affordable housing should be around 35-40 per cent of our incremental business. And corporate lending, as we get back into the segment, will be at the most 10 per cent of our portfolio,” he told businessline.
Post-Covid, a boom in demand for homes saw the company grow its retail division. Disbursements are expected to be up by 22 per cent-odd, while retail loan assets are likely to grow at 17 -18 per cent.
Corporate lending
According to Kousgi, there’ll be a cautious return to the corporate lending (also called construction finance) segment, which is about 5 per cent of the lender’s portfolio at the moment. There was a conscious call to de-risk and “de-grow the portfolio” specially after a meltdown in the real estate sector.
“Over the next three to four quarters we would look to restart the construction finance business,” he said. Corporate loan book was de-grown by 45 per cent YoY.
The company recently said that it had resolved a significant NPA, pertaining to a developer loan of ₹784 crore.
As of June 30, PNB Housing’s gross NPA was to the tune of ₹2,270 crore, representing 3.76 per cent of its loan assets. Loan assets were ₹60,395 crore.
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