Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- PNB Housing Finance Ltd (BOM:540173, Financial) reported a strong financial performance with a 28% growth in disbursements and a 16.2% growth in the retail loan book.
- The company achieved a significant milestone by crossing the 3,000 crore mark in the affordable loan segment, showing a remarkable growth of 300% year-on-year.
- The net interest margin improved to 3.68% during the quarter, driven by a reduction in the cost of borrowing to 7.84%.
- The company's asset quality improved, with the gross non-performing assets (GNPA) ratio decreasing to 1.24% from 1.35% in the previous quarter.
- PNB Housing Finance Ltd (BOM:540173) plans to expand its branch network by opening 15 new branches, focusing on affordable and emerging markets, which is expected to drive future growth.
Negative Points
- The corporate loan book has been declining, which has impacted the overall interest income growth, despite the strong performance in the retail segment.
- Operating expenses increased by 19% year-on-year, primarily due to branch expansion, which could pressure profitability if not managed effectively.
- The company faces challenges in maintaining its net interest margin above 3.5% due to potential rate cuts and competitive pressures in the prime segment.
- There is a significant reliance on the affordable and emerging market segments for growth, which may expose the company to higher credit risks.
- The incremental yield in the affordable segment, although improved, may face pressure from competitive pricing and potential interest rate cuts in the future.
Q & A Highlights
Q: What factors have contributed to the increase in incremental yields across the prime, emerging, and affordable segments?
A: Girish Kousgi, Managing Director and CEO, explained that the increase in yields is driven by customer segmentation, geography, product, and program adjustments. The company has focused on these areas since June to enhance yields across all segments.
Q: How is PNB Housing Finance managing to improve yields in the competitive prime segment?
A: Girish Kousgi noted that the company is exploring sub-segments within the prime category, focusing on customer segmentation and product mix. Additionally, Krishna Kant, Chief Officer, mentioned shifting down the income pyramid and adjusting product mix as key strategies.
Q: What is the expected steady-state credit cost for PNB Housing Finance, considering the growth in affordable and emerging segments?
A: Girish Kousgi stated that the company anticipates a steady-state credit cost of about 40 to 42 basis points, with specific expectations of 18 basis points for prime, 40 for emerging, and 55 for affordable segments.
Q: How does PNB Housing Finance plan to sustain yields in the prime segment amidst competition?
A: The company is focusing on middle-income customers, expanding into the outskirts of cities, and increasing the share of non-home loan products. These strategies are expected to help sustain and potentially improve yields.
Q: What are the plans for the corporate segment, and how will it differ from previous strategies?
A: Girish Kousgi mentioned that the corporate segment will focus on construction finance with ticket sizes around INR 200 crore, targeting good quality developers and projects. The corporate book will remain below 10% of the overall portfolio.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
