PNB Housing Finance on 9 July 2020 announced that the outbreak of the Covid-19 pandemic required a change in the strategy for the organisations. As a result, PNB Housing also reworked on its FY2020-21 business plan and presented to its board, which approved the business plan for FY21.
The company said that the pandemic and the resultant lockdown impacted the disbursements in Q4 March 2020 and Q1 June 2020. However, the numbers are visibly improving month-on-month but on the overall basis the disbursements are expected to degrow during the year. The focus will be on the mass housing lower risk weighted retail segment. In the mass housing segment, the company will also disburse loans to high yielding "Unnati" segment (individual housing) with average ticket size of around Rs 17 lakh. Unnati segment will account for 10-15% of the total disbursements planned for FY2020-21.
Asset under Management is expected to maintain the similar trajectory in FY 2020-21 as was in FY 2019-20. With focus on retail segment, the retail loans are expected to further increase beyond 85% of the total AUM as on 31 March 2021. The efforts will be on maintaining neat spreads anywhere between 210-220 basis points for FY 2020-21 with no plans of any major securitization of retail loans during the year. Including the fee and other operating income, the gross margin is expected to be in a range of 300-315 basis points for FY 2020-21.
The operating expenses is expected to reduce by 5-10% in FY2020-21 in absolute terms as compared to FY2019-20 with focused effort on cost rationalization and efficiencies across all functions in the organization. The company said it had built adequate provisions during FY2019-20 and hence the credit cost is expected to be lower during the year compared to FY2019-20, subject to uncertainty which might arise due to COVID-19.
However, led by government measures there are early signs of real estate sector bottoming out after 7 years of muted performance. The firm said it is actively looking down to further sell down its corporate asset and make the balance sheet further asset light. With focus on lower risk weighted retail loans, cost rationalisation, contained credit costs, the Return on Asset is expected to be in a range of 140 -160 basis points while maintaining an average gearing of around seven times during the year post planned capital raise of upto Rs 1,700 crore.
PNB, promoter of PNB Housing, has stated its objective of maintaining minimum stake of 26% (current shareholding 32.65%) in the company, continue to be the promoter and provide brand support. Further, on the capital raise, the company has approached its promoter for their participation and is awaiting their response on the same.
The company in Q1 June 2020 disbursed about Rs 800 crore of loans and maintained cash and bank balance of around Rs 7,000 crore as on 30 June 2020. Further, there is a healthy pipeline of fresh borrowing which the company is actively progressing with multiple lenders. As on 30 June 2020, the retail loans under moratorium phase 2 account for about 29% of the retail AUM and on over all basis, about 39% of the AUM is under moratorium.
Shares of PNB Housing Finance fell 3.87% to 209.65. It hovered in the range of Rs 217 and Rs 208.70 so far.
PNB Housing Finance reported a consolidated net loss of Rs 242.06 crore in Q4 March 2020 compared with net profit of Rs 379.77 crore in Q4 March 2019. Total income fell 9.1% to Rs 1,951.84 crore in the fourth quarter from Rs 2,148.19 crore in the corresponding year last year. Net Interest Income declined 19.9% to Rs 488.1 crore in Q4 FY20 from Rs 609.7 crore in Q4 FY19. Net Interest Margin for Q4 March 2020 stood at 2.61% compared to 3.18% for Q4 March 2019.
PNB Housing Finance, promoted by Punjab National Bank, is a deposit taking housing finance company registered with National Housing Bank (NHB). The company's asset base comprises retail loans and corporate loans. As on 31 March 2020, the company has 105 branches with presence in 64 unique cities and 23 hubs.