Next quarter onwards, hope to see positive growth: PNB Housing Finance CEO

On the retail side, for eight quarters, our portfolio shrank, but this quarter has witnessed flat growth, said CEO Prasad

PNB Housing Finance is set to present its short and long-term capital requirements to the board, CEO Hardayal Prasad tells Nikunj Ohri. It is also looking to increase its presence in tier 2 and 3 cities to expand its affordable housing portfolio. Edited excerpts: 

Housing demand has picked up but your profit has declined by 25 per cent. Why? 

We decided to reduce our corporate book in 2019, which resulted in a decline of 44 per cent. This was a high-yielding book, but risky due to stress. Income has come down, but expenditure hasn’t. Interest rates started to decline, and that had also become a challenge.

Will your entire focus be on the retail segment?

On the retail side, for eight quarters, our portfolio shrank, but this quarter has witnessed flat growth. We will start growing from the next quarter in terms of retail books. There has been a 68 per cent increase in disbursements, and 96 per cent of these are to the retail segment. From next quarter, we will either look at a slight or zero growth. It will not be negative, as we are experiencing for 8-9 quarters. And later, the growth would be 7-10 per cent, in line with the industry growth.

Will the stress be more towards affordable housing?

We created a vertical in Janua­ry to focus on affordable housing. We have opened six branches (for affordable housing) and another seven would be opened by December. We will start looking at this portfolio in a big way. 

Will you expand your presence to cater to the affordable housing segment?

This business comes from smaller towns and we are continuing to push it through our presence into new territories. We have identified states such Rajasthan, Gujarat, Uttar Pradesh, Maharashtra, Telangana, Kerala, and Madhya Pradesh. We plan to start operations in seven cities by December. 

After your share-sale plan with Carlyle fell, what is your capital-raising strategy now?

PNB Housing is comfortably capitalised with a capital to risk (weighted) assets ratio (CRAR) at 20.66 per cent, and with focus towards the retail segment, the ability to finance retail books is high. However, since capital is required by any company that is growing, we continue to look at all avenues and options. And for the short, medium and long term, based on our growth trajectory, there will always be a shortfall of capital. This capital, we are going to ask our stakeholders to provide. 

What will be the approach on raising growth capital? 

As and when capital requirement is there, we will go to the market, and seek permission of the board. Short-term capital requirement will be up to March, medium term would be one to three years, and long-term capital beyond that. All three options would be discussed with the board.  

PNB couldn’t participate in the QIP earlier? How would it provide capital this time?

That’s best left for PNB and other stakeholders to answer. Once we prepare a plan, and discuss it, we will know their decision. More importantly, they have committed on Tuesday, during the board meeting, that they remain supportive of the company. They know that there is a requirement for capital and they will evaluate it once we present it to them. So, we want to present it to the board and then seek guidance from the board on how exactly to proceed.