The Economic Times daily newspaper is available online now.

    Aiming to have best asset quality among HFCs: Girish Kousgi, PNB Housing Finance

    Synopsis

    I think we had a very good quarter two. We stick to our book growth guidance of 17 to 18%. So as I mentioned earlier, first we will catch up with disbursement and then the book growth would follow.

    gk3Agencies
    And out of the rest, I think ideally, we would like to reach 60% on prime and 40% on affordable.
    "I think if you look back in last one year, the GNPA was a little over 6%. Now it is 1.78%. So as I had mentioned earlier, every quarter, we will see improvement in asset quality both on retail and corporate," says Girish Kousgi, MD & CEO, PNB Housing Finance.

    You have posted retail loan growth of about 12% in the second quarter, as opposed to 11% in the first quarter. Are you still sticking by with your 17 to 18% growth guidance?
    I think we had a very good quarter two. We stick to our book growth guidance of 17 to 18%. So as I mentioned earlier, first we will catch up with disbursement and then the book growth would follow. If you look at quarter two, obviously, on retail, the growth is about 18% on disbursements. And not just on disbursement, even the logins were about 31%, sanctions up 30% on a year-on-year basis. So we stick to our guidance of both disbursements, which is 22% plus growth over last year and book growth of 17 to 18%.

    The highlight of your second quarter, was the resolution of a major NPA account worth about 784 crore rupees. From here on, where is the asset quality headed then?
    I think if you look back in last one year, the GNPA was a little over 6%. Now it is 1.78%. So as I had mentioned earlier, every quarter, we will see improvement in asset quality both on retail and corporate. Now corporate is almost done. We have just one account, which is about Rs 68 crores. So corporate, which used to be about 33% GNPA is now down to less than 3%. And on retail, now it is 1.74. I think going forward, every quarter we will see improvement on the asset quality. Maybe next three to four quarters time, we would like to be one of the best and comparable in the entire housing finance industry on the asset quality.

    I wanted to also understand whether or not you are taking additional write-offs in the second half from the reversal in provisions, like you did in Q2?
    I think largely our strategy has been to work on actual collections in terms of cash and settlements. However, since we had resolved one large corporate account in Q2 and therefore, we had to write back. So we thought we would strengthen the balance sheet. And therefore, we had technically written off. So I think our focus in future also would be in terms of reducing GNPA. Largely, the focus would be on collections. But if there is a need, I think we can always look at it.

    And what are typically the yields that you charge in affordable housing?
    I think for us, affordable is a great story. I think it is now eight months that we started, we have reached a book of Rs 750 crores. And very shortly, we will hit 1000 growth mark, and probably will be one of the fastest in order to reach a book of 1000 crores. We are seeing a lot of traction on affordable. I think every quarter we are seeing disbursement growth of about 65%. So there is a good story which will pan out for us going forward.

    Cost of funds, do you think they have peaked out for you? And do you think that given the potential credit upgrade and of course possibility of eligible for low cost NHB borrowings as well?
    Yes, I think this year we are eligible, we are working with NHB for funds. So that would come in and obviously the cost would go down from the current level.

    And what is the NIMs trajectory that you expect given this outlook?
    I think on cost of funds, I think it has almost flattened. Now we are at about 7.99% cost of funds. So there could be little reduction from the current level. I think by and large, our focus is to build more profitable book. We do two types of business; one is prime and second is affordable. On prime, we are slowly moving towards more profitable book building. On affordable anyway, it has been a great story. On the corporate side, it was a conscious call to de-grow the book till we resolve and then restart. So I think restart is now, I think very soon we will be able to restart in about, let us say, two to three quarters time.

    So what is the long term growth target when it comes to corporate lending?
    I think corporate we would always do business more from a strategic point of view. The idea of corporate is that when we restart, we will be focusing on select developers, select projects in select locations. We would focus only on construction finance with the retail linkage. So the idea of doing corporate is more to enable retail growth.

    What would be the outlook on your loan mix? How is that going to evolve between prime, affordable and the corporate lending segments?
    In fact, I had mentioned this earlier, incrementally by this year end, we will be able to reach about 10% of disbursements coming in from affordable. We are already at about 9%. I think we might breach the 10%. So affordable would grow at a much faster pace compared to prime. I think incrementally, we should get to a stage of about, let us say, 60 to 40%, 60 from prime and 40 from affordable. But of course, this will take time, because given the ticket size on affordable and the effort which needs to build up affordable, it will take time.

    But I think that is the mix, what we are looking at. If we look at the overall portfolio, when we restart corporate, and corporate at its peak would always be less than 10%. And out of the rest, I think ideally, we would like to reach 60% on prime and 40% on affordable.




    (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2024 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more


    (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2024 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
    The Economic Times

    Stories you might be interested in