In the quarter gone by, things have normalised. PAT is at 57%. Calculated NII is up 7%. Can I say that PNB Housing Finance after a couple of tough quarters is back on track?
Girish Kousgi: Yes, if you look at the last five-six quarters, there has been very good performance in all the metrics. Even on growth on the retail side we have grown by 14% on book. Corporate, it was a conscious call to degrow the book and work on resolution. Last March, the NPA was 3.83%. Now we are down to 1.5%. Overall, about 75% to 80%, we are back on track. We still have a couple of more things to do which we will cover up in the next few quarters.
Cost of borrowing moved because for any housing finance company cost of borrowing is the most important yardstick to understand, especially when liquidity conditions are strong.
Girish Kousgi: On the cost of borrowing as well, we have deepened the liability mix. For instance in FY24 we borrowed Rs 3,000 crore from NHB which was not there earlier. NHB funding comes at a lower cost, so that is one. We also got the rating upgrade from AA to AA plus so that will also ensure that in the next few quarters our cost of borrowing will come down.
We also started borrowing from the market in terms of both CP and NCD. Overall, if we look at the liability mix, there has been a significant improvement and we will reap the benefit in the next few quarters.
Are you back in growth mode because your disbursements are growing between 15% and 17%. Can I say that FY25 could be the comeback and more importantly the growth is back now for PNB Housing?
Girish Kousgi: We are already back on growth on the retail front. If you look at our book growth, it is the highest in the last five years. If we look at the disbursements of what we have done in quarter four, that is again all-time high in the last four years. So, we showed a growth of about 18.5% on disbursements and 14% on book. So, FY25, we are looking at book growth of 17% on retail. So, disbursement will be about 24-25%.
Let us also understand what the outlook is when it comes to your corporate NPA because you had mentioned that you expect a complete resolution in the account in Q4. Corporate NPA is still at 1.1%. What is causing the delay? When do you plan to achieve this?
Girish Kousgi: Last March, we were at about 23% on corporate NPA. Now we are down to about a little over 3%. We have just one small account which is about Rs 70 odd crore. We were expecting resolution in quarter four. It slipped to quarter one. So, quarter one, I think we can see that resolution as well. So, hopefully we should be able to declare zero NPA on corporate books.Given the affordable housing vertical, the loan book there surpassed about Rs 1,700 crore in the fourth quarter, can we expect the growth rate to sustain going forward? Do you have any expansion plans here?
Girish Kousgi: If we look at the entire affordable book of close to Rs 1,800 crore, which we have built in about 15 months’ time, this is from 100 branches. We have added 60 more branches between December and March. So, now we have 160 branches which would start doing affordable business. This growth is sustainable in the years to come as well.Is it true that one of your deputy MDs was also the head of the audit committee and he resigned. Any particular reason he was assigned to that?
Girish Kousgi: I think that was not in PNB Housing and we do not have a deputy MD.
Given that you have also seen multiple credit rating upgrades in your instruments recently, do you think that we can expect the cost of funds to decline over the next few quarters?
Girish Kousgi: We are expecting the cost of borrowings to come down in the next few quarters and not just that, we are also moving towards segments which can give us better yields. Last year, we started affordable in a big way and this year we have launched an emerging vertical. In FY25, about 40 odd percent of incremental sourcing would come in from affordable and emerging verticals.
What about your corporate book? As a percentage of the total book, where does that stand? How much have you been able to run it down by? What kind of target do you have?
Girish Kousgi: Today if you look at the entire portfolio, corporate is 3% and in absolute terms, it is about Rs 2050 crore. We plan to start corporate business sometime during this year, maybe in H2. We will slowly start growing the book as well.