Branch expansions to aid growth; retail portfolio growing strongly: PNB Housing Fin

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PNB Housing Finance's balance sheet growth remained strong in the fourth quarter but provisions have increased despite asset quality improvement. The disbursements grew compared to last quarter.

It reported a jump of 49 percent in its net profit to Rs 152.4 crore for last quarter ended March 2017 on healthy net interest income. The net interest income went up by 51 percent during the quarter to Rs 332.70 crore from Rs 219.90 crore.

Sanjaya Gupta the Managing Director of the company in an interview to CNBC-TV18 spoke in detail about the fourth quarter performance and the outlook going forward.

Below is the verbatim transcript of the interview.

Sonia: What will be your guidance on growth in FY18?

A: I will clarify on Q4 to Q4 basis; the disbursements grew by 43 percent and on annual basis the assets under management (AUM) grew by about 50 percent and assets on books grew by 42 percent. Our focus has been on retail lending and 82 percent of our book is continued by housing loans and non-housing loans. So the India story of retail is holding true and strong and that is why our company is growing strongly.

Anuj: What could be your disbursement in AUM growth in FY18?

A: We are not authorised to give guidance by our board but our growth story is based on geographical expansion. We have huge plans to add another 23 branches across the country and we hope that they will start giving business by end of the financial year. In the beginning of the year, we have 63 branches supported by 27 outreach programmes covering about 40-50 unique locations throughout the country.

So we are hopeful that our growth momentum should be better than the industry averages. I cannot comment beyond that.

Latha: The share of your non-housing portfolio has been increasing. How far will it go and how will Pradhan Mantri Awas Yojana (PMAY) help you in growth ahead?

A: First and foremost our agenda or our focus is very stable and our contribution of non-housing will never breach 30 percent - that's our promise to the industry and to the analysts. As I said we are a retail story, 82 percent of the book is contributed by retail customers.

Coming to Pradhan Mantri Awas Yojana, it has upped the sentiment in the sector and at least that gloom and doom is now over and done with and we are hopeful from the supply side, the real estate developers will start supply affordable or mass housing which can be subsidised through PMAY scheme and the middleclass of the Indian society can benefit from low interest rate regime coupled with the subsidy from PMAY plus the prices are very stable from last two-three years. So this is a best time for homeowner to own a home.

Sonia: The securitisation book has also been increasing. Will this continue to grow and aid in your net interest margins going ahead?

A: The securitisation that we did during the previous financial year was more of a capital restructuring because our initial public offering (IPO) got delayed and we were highly geared, more than 15 times. So that was more of a tactical move. I do not think we are going to securitize much of portfolio during FY17-18.

Anuj: Your asset quality has remained good but any signs of pressure of loan against property, corporate loans?

A: As I keep saying loan against property or the non-housing portfolio, different players have got different methodologies to underwrite and acquire those loans. We are pretty conservative and we will maintain our conservatism. So we are not seeing any forward flows on the non-housing portfolio, in fact the non-housing portfolio is performing at par with the housing loan portfolio.