Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY 2023-2024 Earnings Conference Call of PNB Housing Finance Limited. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Deepika Gupta Padhi, Head of Investor Relations and Treasury. Thank you, and over to you, ma'am.
Thank you, Darwin. Good evening, and welcome, everyone. We are here to discuss PNB Housing Finance Q2 and H1 FY 2023-2024 Results. You must have seen our business and financial numbers in the presentation and the press release shared with the Indian stock exchanges and is also available on our website. With me, we have our management team over here, led by Mr. Girish Kousgi, our Managing Director and CEO. We'll begin this call with the performance update by the Managing Director and CEO, followed by an interactive Q&A session. Please note, this call may contain forward-looking statements, which exemplify our judgment and future expectations concerning the development of our business. These forward-looking statements involve risks and uncertainties that may cause actual developments and results to differ materially from our expectations. PNB Housing Finance undertakes no obligation to publicly revise any forward-looking statement to reflect future events or circumstances.
A detailed disclaimer is on Slide 27 of the investor presentation. With that, I will now hand over the call to Mr. Girish Kousgi. Over to you, sir.
Good evening, and welcome to all the investors to Quarter Two FY 2024 Earnings Call. Our second quarter was very eventful. We have done well on all the parameters, disbursement, growth, and margins, asset quality, and profitability. If I have to talk about disbursement, quarter two, we disbursed INR 4,165 crore. This compared to last year, quarter two, was INR 3,528 crore, registering a growth of 18% YoY, and on sequentially, we have grown by 13.6% on disbursement. In affordable, we are seeing very good traction. We just started this business about eight months back, and quarter one, we had done INR 228 crore, and quarter two, we have done three-
Ladies and gentlemen, the line for the management seems to have disconnected.
In affordable, and we are very confident of crossing INR 1,000 crores in the short term. On login and sanction, the growth is about 31% YoY. So we are seeing overall growth, not just in disbursement, but also on login and sanction. Market is quite robust. We are seeing very good traction. Our loan book guidance of 17% stands, so, H2 will normally be better compared to H1, and quarter three and quarter four will be very good for the company, and we'll be able to maintain 17%-18% of, the growth. On the loan book, overall loan book, quarter two, the book was INR 60,852 crores. This compared to last year, quarter two, was INR 57,852 crores. On a YoY, the growth is 5.2%, and, sequentially, it is 0.8%.
We had resolved one large NPA account in the corporate, and therefore, the book has degrown. The corporate book has been degrown. Talking about of the corporate book, the book as of September is INR 2,381 crores, which was INR 5,700 crores last year, quarter two, which is a degrowth of 58%, and this is as per plan, because we have taken a call to degrow the book, work on resolution, bring down the NPA, and then, you know, at the right time, restart corporate business. The restart of corporate business is well within our plan, so very shortly, we're going to restart in a different form altogether, focusing on focusing on select projects, select locations. Our ticket size of INR 100-INR 100 crores.
You may go ahead, sir.
Okay, I'm not very sure whether I was heard. I know I spoke about retail disbursement, sanctions, logins. Okay, now let me continue. On the corporate, we have a plan to restart business that we will start in a few quarters. We will be doing in a totally different format, focusing only on construction finance. We'll be pick and choosy on developers, locations, projects. The ticket size is going to be about INR 150 crore, and this is a plan, and we will restart. The plan was to degrow the book. At one point in time, the book was INR 18,000 crore. We have degrown. As of September, the book is INR 2,381 crore. Same number last year's Q2 was INR 5,700 crore.
So there is a book degrowth of 58% in last one year, and sequentially, the degrowth is about 20%. Retail loan asset grew by 12% YoY, at INR 258,471 crores on September 2023, with H2 FY 2024 expect to perform better than H1. We are on track for, as mentioned earlier, we are on track for 17%-18% growth on, book. Core retail book run-off reduced to 17.1% in quarter two, FY 2024, from almost about 20% in quarter two of last year. So we had taken, you know, certain, decisions that we need to get the mix changed on the profile side. So we have been increasing salaried segment.
We are going a little slow on self-employed, and, in terms of, product, we are focusing more on home and slightly less on the non-home piece. And we have completely moved to retail granular business. So if you look at our 1 CR, it is now close to 88% incrementally, compared to 85% in quarter one. So this is due to our increased focus on lower ticket loans. So I'm not very sure because there was some disturbance. Let me repeat on the on sanction and logins. I mentioned about the disbursement in quarter one and quarter two, we have seen a very good traction. On logins and sanction, on a YoY basis, we have shown a growth of 31%. So we see very good traction.
Market is very good, it's quite robust, demand is robust, and our disbursement guidance and book guidance is on track. We also thought we should do some bit of tweak in terms of geographical concentration, so we have been increasing our share in South. South is a very good market. If you have to look at H1 FY 2023, the South contributed to almost about 29.5%. If you see that now, quarter two, FY 2024, it has gone up to 37.5%. Significant increase in contribution from South. If you look at West, West was 36%, and this is by design, we have come down to about 20.5%.
North, for us, North includes, you know, couple of locations from East as well, which was 34.64%, has now come down to 33.12%. So I think broadly, North is same, West is slowly coming down and South is going up. On asset quality, on a year-over-year, last year, quarter two, we were at 6.06%, and now we are at 1.78%. That is 427 basis points lower. And compared to quarter one, we were at 3.76, now we are at 1.78, which is 197 basis points lower. In terms of retail GNPA, compared to last quarter, which was 2.49, now it is 1.74.
On a YoY, which was 3.39% last year, quarter two, now we're at 1.74, which is 165 basis points lower. On the corporate side, last quarter, our GNPA was 25%, and now it has come down to 2.86%. So net NPA is now at 1.19%, compared to 2.59% last quarter, and a year back, quarter two, FY 2023, it was 3.59%. So there has been a very good traction on corporate with resolution of one large account. And on the retail side also, I think it has been a combination of aggressive cash collection and also, you know, bit of we took a one-off call on the retail side, and we also increased the PCR.
On the borrowing mix, there has been a very little change compared to last quarter, but however, in next two or three quarters, slight change. Our bank borrowings, you know, which was 42% last quarter, now it has come down to about 40%, and this might further come down by 1% or 2%. Deposits, it was about 32%, and now it is 31.4%. I think it would remain where it is. Maybe it might go up by 1% or 2%. NCDs, we are slowly increasing. We are now trying to raise the market in terms of both NCDs and CP. CP, which was 0.7%, now it is 3.3%. So slowly we are increasing.
NHB refinance, you know, as of now, it is 4.8%, but this will go up, since, you know, we very shortly will be availing, you know, finance from, NHB. So on the liability mix, not much of changes, but there'll be slight, you know, a tweak in terms of bank borrowings, NHB, NCD and, CP. On margins, I think we had guided spread of 2.5% and NIM of 3.5%, and, this would be maintained. On credit cost, we had guided 0.6% for this year, and from next year onwards, it will be 0.4%. I think we are very much on track. If you look at H1, credit cost, it is 31 basis points. Last quarter was 37 basis points, and this quarter is 26 basis points.
CRISIL and ICRA has updated the outlook of PNB Housing Finance to positive from stable in quarter two of FY 2024. CARE updated the outlook in quarter one. I would request Vinay to cover on financials.
Yes. Hi, good evening, everybody. I will take you through some of the key financial highlights. So as you have seen PAT, we have reported around INR 363 crores of PAT in Q2, which has grown 46% year-over-year. For H1, our PAT grew by 47% to INR 730 crores. Revenue grew by 6% year-over-year to INR 1,780 crores in Q2. However, there was a one-off of INR 160 crores in Q2, FY 2023, on a signed loan due to benchmark rate reset. Excluding the one-off of last year, revenue grew by 17% year-over-year. Similarly, for H1, revenue has grown 13% to INR 3,487 crores.
Yield and cost of borrowing is at 10.58% and 7.99% respectively during Q2 FY 2024, which are maintained at similar levels on a sequential basis. Spread is also maintained at 2.59%. NIM for the quarter is 3.95%, up 9 basis points quarter-on-quarter. On year-on-year basis, again, our NIM shows a decline by 19 basis points, due to the one-off that we spoke about in the interest income line last year. Excluding one-off, NIM has actually improved by 83 basis points on a year-on-year basis during Q2 FY 2024. Credit cost, for the quarter is 26 basis points, for Q2 and, 31 basis points for H1 FY 2024, which is within our guidance of 0.6% for FY 2024. We maintain our guidance on the...
We maintain our guidance on the credit cost for full year at 0.6%. ROA, which was at 1.6% for FY 2023, is 2.14% for H1, FY 2024. We have also registered an increase in ROA on a sequential basis. ROE for H1 is 11.1%. In Q2, OpEx has grown 24% year-on-year, and in H1, OpEx has grown 25% year-on-year. This is primarily driven by royalty expenses and investment for affordable business, which was not there in the last year. Our capital adequacy is at 30.38% as of 30th September, which includes tier-one capital at 28.5%. Handing it over back to Deepika.
Yeah, we can now open the floor for Q&A, please.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Varun from Kotak Securities. Please go ahead.
Hi. I had a question regarding the cost of borrowing. Your cost of borrowing looks to have flattened out, but still there must be some impact left of NCDs repricing, right? Where do you expect this to settle?
NCDs are all fixed rate, so there is no impact left. And again, for MCLR also, most of the repricing has already happened, and hence our cost of funds are flat right now.
I mean to say that as they mature, you need to, refinance it, right? You'd be raising NCDs or getting them replace the other kind of borrowing. So your incremental must be higher than what you have borrowed something like two years or three years ago.
No, no, no, not really. The cost is actually almost same or in fact, slightly lower than what it was like two, three years back.
Okay. So this is what you would expect for this full year and going forward, maybe slight benefit, right?
Yes, yes. It should be. It's a, it's a regular course of business. We will keep replacing. There should not have any further impact.
Okay, thanks.
Thank you. The next question is from the line of Shubhranshu Mishra from PhillipCapital. Please go ahead.
Hi, thank you for the opportunity. I was looking at the slide that says 14,000 channel partners. This is for all retail loans. Is that a fair understanding?
Yeah, this is for all the retail loans. Largely on the prime side and deposit agents. Both put together, we have 14,000 partners.
Understood. So also that is like an entire 100% of your sourcing. If you can tell out what would be the concentration in the channel partners? Or say, top 100 channel partners contribute to what percentage of disbursements versus say top 500 partners contributing to what percentage of disbursements at this point?
No, there is no concentration. We have multiple channels. One is, DSP, second is DSA, third, we have digital, and of course, to a small extent, we have branch walking, which we call as direct. So there is no concentration because our, if you have to look at, the sourcing mix between DSP and DSA, DSA is about 40% and DSP is 60%. So there is no concentration with respect to sourcing from DSA.
Understood. And, in terms of branch concentration, top ten branches contributing to, any, any particular number of risk concentration or we can look on that, concentration of?
No, there is no concentration in terms of branches, but of course, there are certainly, you know, the top five states for us is Maharashtra, on a, this is on a book level, Maharashtra, Delhi, Tamil Nadu, Telangana and Karnataka. And typically, if you look at, you know, these five states would always be in the top seven or eight states for us. So it is, you know, we had changed our strategy and we wanted to get a better share from South, and therefore we were little bit more focused on South, and that is where we saw that there is a shift in business, and there is an increase almost by about nine, 10, you know, in the mix from South.
Understood. If I can just even one last question on this South strategy. Actually, South, the credit could be slightly super close because of the number of organized players, and there could be slightly more salaried versus North India. So then, are we necessarily taking the yield compression, building into the business model as such?
I couldn't hear you properly. I think your question was that we are now focusing more on South because we want to increase our salaried. I think it is not just South, it is across the country, all geography we want to change our profile mix. We wanted to increase our, you know, sourcing from salaried, and typically, South happens to contribute, you know, on the higher side, on the salaried side. Otherwise, you know, we are present across the country, and our focus remains, you know, focused on, 22 odd states where we are present.
So, then, I understand that would be that it will lead to yield compression as we focus more on salaried?
No, not really, because within salaried... See, one is in terms of profile, we have changed our mix slightly, incrementally, slightly skewed towards salaried. But what we are doing on salaried also, we are now focusing more on the affordable side, affordable income salaried, you know, so that the yields could be higher. So there is no yield compression because of the change in profile mix. Within salaried, we have identified opportunity where we can build book at a higher yield.
Understood. Thanks, thanks. I'll come back to you.
Thank you. The next question comes from the line of Renish from ICICI. Please go ahead.
Yeah, hi, sir. Just two questions from my side. One is on this, you know, excess provision write back, which we had due to the last profiled account getting resolved. So in P&L, where does it reflect? I mean, the stage provision is also sort of flat, and there is no subsequent increase in the PCR as well. So does it, I presume that we have done a write-off in the retail side?
So, on the retail side, we, you know, of course, obviously, got a write-back, you know, of provision on the corporate account, and that we have utilized, you know, for three purposes. One is ECL true-up on retail corporate, and also we took some one-off on the retail, apart from cash collection.
So you mean retail write-off, I mean, one-off retail write-off?
Yeah. Yeah, that's right.
Okay. Okay. Got it. And, secondly, sir, just slightly, you know, from a medium-term strategy point of view, you know, so let's say pre-COVID, our leverage used to be seven-eight times, and we used to generate 14%-15% ROE on a 1.5% kind of ROA. Now, given our ROA has improved significantly, and you know, considering our guidance, be it on NIM, be it on credit costs or be it on the earnings growth side, it seems to suggest that the current trajectory more or less will sustain. So, where does our ROE should settle, maybe in a medium term, considering the past leverage?
See, if we now look at our affordable business, I think incrementally it is contributing to about 9%. So I had earlier mentioned that, you know, this year it will be close to 10%. I think it looks like we might exceed what I had indicated earlier. So we are pretty aggressive on the affordable side, and we are able to build traction, you know, on the affordable side. So maybe this year we'll end up with slightly more than what I had indicated earlier. So with every quarter, the mix between Prime and Roshni is getting changed. Roshni is affordable. So, and I've also mentioned that we'll be able to maintain, you know, margins at the current level. So going forward, it has to only improve. It will take time because affordable, it is, small ticket loans, and therefore it takes time.
But I think, you know, we probably would be one of, the housing finance company to build a book of, let's say, INR 1,000 crore, you know, fastest. And so with every quarter, with every passing quarter, the mix keeps changing. So I think eventually, I think the ROE profile also should, improve.
So I mean, the steady state ROE should be 17-18?
So our rating now is 3.77. Okay.
Right.
So, we plan to take that up to 6-6.5, since we are now focused on growth also along with profitability. So we have a vision of building book to INR 100,000 crore, and therefore, you know, leverage, which is now less than 4, might go up to 6-6.5. So this might happen in next 2.5-3 years. You know, ROE is low because obviously we raised rights, we did Rights Issue recently, and there will be a drag for some time, but that will catch up with the growth in volumes.
Got it. Got it. And so just, last question on the growth side. You know, considering our first half growth, you know, is slightly muted. I mean, on YTD basis, it is close to 1.5%. Now, even if we have to go with the lower end of the guidance, which is at 17%, you know, which implies a very tall task in the second half, implying maybe ten percent odd sequential growth rate in Q3, Q4. So just wanted to reconfirm that we are confident of, you know, maintaining this trend in Q3, Q4. Right, sir?
If you look at last four quarters, we have done a lot of tactical changes in our strategy. Just to mention a few, we wanted to reduce the ticket size, focus on retail. Today, as I mentioned, now we are close to 90%, up to INR 1 crore. Our LAP ticket size has come down drastically. The focus is now more on home, focus is more on salaried. We've done all of these things, and also the book, what we're going to build in future has to be pristine. And therefore, we've taken some call in terms of certain geographies, certain products. We have fixed some of the processes.
So basically, if you see last three-four quarters, we spent a lot of time to get all of these things right, so that, you know, few quarters from now, we will be one of the best housing finance companies and would be comparable, right? And, I had guided book growth of 17%-18%. That is intact. So we will be able to grow at 17% this year over last year. And we had guided the disbursing growth of, 22%+ . I think we will be there very comfortably.
Got it, sir. Got it, sir. Thank you so much and best of luck, sir.
Thank you.
Thank you. The next question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead.
Yeah, good evening, everyone. Just following up from the last participant, your guidance of 17%-18% loan growth is on retail, right? Not on-
Yeah, it is on retail.
Right.
It is on retail. It is on retail, but however, if you look at the corporate book, you know, it is de-growing. So now the book is less than INR 2,400 crore. So the guidance, what we had given was on retail. Yeah, you're right.
Got you. So the other thing is, again, coming back to that write-off that we have done. So it seems like, I mean, I mean, excluding this one corporate account that we have resolved, I mean, the gross NPA has come down by about INR 400 crores, excluding that corporate account. And out of that, we've taken around INR 320 crores of write-offs in retail. So if you could just explain this part a little better, that whatever releases we had from the corporate NPA account, almost INR 200 crores of releases is what I see. How did we kind of... Because the thing is, I mean, one would have thought you will want to increase the provisioning cover on your, on your maybe retail loans, but contrary to that, we've chosen to sort of take a write-off.
If you could just explain the thought process behind that.
So if you look at our overall GNPA last March, it was 8.13%. Now, last quarter it was 3.76%, and this quarter it is 1.78%, right? Now, even if you look at retail, last March was 5.5%, and last quarter was 2.49%. So what I'm trying to say is that, you know, there has been a consistent decline in the retail GNPA as well, not just the corporate. Now, whatever provision write-back there is, we have utilized that for three things. One is ECL true-up, that is ECL, you know, on retail and ECL on corporate, and, you know, we utilized that amount for a bit of write-off. So it is combination of all these three.
Got it, sir. And so just one clarification here. I'm just referring to note number four of the SEBI results release. There it says that from this corporate NP account, which has been resolved, we've recovered INR 828 crore. Am I reading it right?
Yeah, you are right.
Got it. And so this, all of this INR 828 crore, we've received it in cash? There are no assets which are involved.
Yeah, it's, it's 100% cash deal.
Got it. So then one last question. Again, I mean, when you kind of talk to, I mean, senior leaders like you in the industry, somewhere there is an acknowledgement that maybe in mortgages, particularly smaller ticket mortgages, again, INR 15 lakh to maybe INR 25 lakh-INR 30 lakh kind of a ticket size, there is some slowdown that people are talking about. Are you also seeing that? Because, I mean, obviously, it doesn't reflect in the disbursement numbers that you've reported, but are you structurally seeing some slowdown in maybe urban affordable or lower ticket affordable housing?
So, you know, if we talk about affordable income base, the competition has increased. But if you talk about overall affordable, you know, which typically all the NBFCs and HFCs focus, I think there is no slowdown. There is no slowdown. You know, as I had mentioned, there are four segments: super prime, prime, affordable income, affordable assessment. So if you are talking about, I think, bit of prime on the lower side and affordable income, I think there for some time there was bit of slowdown, but we have not seen any slowdown. For us, you know, we had to correct lot of things internally, and therefore, you know, we had guided a disbursement growth of 22%, and we have, you know, already shown 18% growth.
So in next two quarters, we will catch up and we will be more than 20%-23% growth on disbursement. On the book, we had guided 17%, 17%-18%, and in next two quarters we will catch up and we will be able to show growth of 17%-18%. So we have not seen, even if you look at our affordable, even though the size is very small, because we started about eight months back, if you see, you know, whatever is, you know, with the size, I think we are, we are seeing significant traction given the number of branches and team size. You know, we've seen significant traction. We've been growing at about 60% quarter- on- quarter on the affordable. So we have not seen that slowdown.
However, even I have read many reports which spoke about a bit of slowdown in this segment.
Got it, sir. And just one last question. My line was little bad when you were explaining the ROE improvement and consequently ROE also improving as the average picks up. Is the understanding right that, I mean, obviously we have levers on the borrowing cost side. I mean, going forward, there could be potential credit rating upgrades, which could feed into an improvement in or the decline in borrowing costs. At the same time, as you keep doing affordable, maybe yields can improve marginally from here, which suggests that margins could remain stable to a minor improvement. But, I mean, in terms of your guidance of credit costs of 40 basis points for next year, OpEx, I mean, I don't know how much of a room is there to further optimize OpEx.
So just trying to understand, I mean, what is it that you are telling about ROE expansion from next year onwards, 2025 onwards?
In terms of OpEx, I think we will be more or less stable in terms of percentage. We'll be somewhere between 80-90 bps. In terms of credit cost, I had guided 40 bps from coming year onward. This is blended. I'm not talking about short term, I think long term. I think 40 bps will be the credit cost, you know, given the blend of prime and affordable. Right, and the mix, as I mentioned, is changing. So incrementally this year we will probably looks like we will be at about 12% and odd on Roshni, out of the overall disbursements what we are going to do this year, and this will keep improving.
So, I think directionally, I think our effort is to ensure that we identify pockets where we can build book at a much higher yield on the prime side, increase Roshni penetration so that the yields would be higher and which will help us in better profitability. On the OpEx side, we'll be able to maintain at the current levels between 0.8-0.9. I think on the credit cost, it will be 40 basis points from coming year onward. I think this is the overall direction what we want to take.
Okay, this is useful. Thank you so much. Wish you and your team the very best.
Thank you.
Thank you. The next question is from the line of Omkar Ghogare from Shree Investments. Please go ahead.
Yeah. As the overall NPA have come down drastically, what would be the guidance or trajectory of the NPA in coming two, three quarters as well as the next two years?
See, I think in next three-four quarters' time, we would want to be one of the best in the housing finance industry on asset quality. This will be a combination of, you know... Hello?
Hello. Sir, you are not audible.
Hello? Hello.
Yes. Ladies and gentlemen, the line for the management seems to have disconnected. Please stay with us while we reconnect with the management. Ladies and gentlemen, we thank you for your patience. We have reconnected with the management. Omkar, I would request you to please repeat your question.
Yeah. I was asking about the NPA trajectory for, say, next two-three quarters, as well as for next one-two years on a gross level.
... Yeah, so I think there, Andy has responded. So that right now is at 1.74. We are trying to bring it down in line with any other, you know, comparable with housing finance company. We shall be comparable on this parameter in the next two-three quarters with any other well-managed housing finance company. Even on the credit cost, we have guided around 0.6% for this year and 0.4% from next year onwards.
This in line with the other indices or best in the class you are talking about add-
Yes.
Yes, for individual as well as for the corporate loan, right?
Yeah. Overall, yes, because largely we are now retail. 97% is our retail now. So it's overall.
Okay, just wanted to know what are the cost of funds for this quarter and incremental cost of funds right now?
It's almost same as previous quarter. We have closed this quarter at 7.99%, and incremental also is somewhere in the same range, 7.9%.
Okay. And there were a couple of one-offs in this quarter, say, like, for pre-provisioning profit and for NIMs and all that. So that will continue for the next quarter as well, or that would be like, that would normalize in coming quarters?
No, no, there are no one-offs in this quarter. One-offs were in the last year, same quarter. So for a comparable purposes, we have excluded and given a comparison, but this quarter there are no one-off. Even on the credit card side, there are, I mean, those one-offs are utilized for enhancing provision on corporate side and taking second one-off on the retail side. But, other than that, there are no one-offs in the financials in this quarter.
Okay, can you just highlight your guidance on ROA front?
ROA right now has is around 2.24 this quarter. It has been improving sequentially. Previous quarter was 2.1, and now we are at 2.24. Our endeavor is to keep improving and keep working on it. I mean, we are not giving guidance on this. We are giving guidance on the spread and NIM, which we are going to maintain.
Okay. And as far as the gearing is concerned, you have already mentioned in next two-three years, you will be at, say, 6.5%-7%, right?
Yeah, 6%-6.5% is what we are planning.
Okay. All right. Thank you.
The next question is from the line of Kunal Shah from Citigroup. Please go ahead.
Yeah, hi. So the question with respect to yield, given that now the focus is also going to be on the individual as well as on portfolio, and given the ticket size of almost like INR 29 lakhs and INR 32.5 lakhs in there, how do we see the risk in terms of the balance transfer, given where we are in terms of the cost of borrowing? And over last three odd quarters, how much has been the pricing power with us when we were growing the retail portfolio? How much have we been able to pass on in terms of the lending rates? So if you can just let us know in terms of the incremental lending rates, particularly in this category of ticket size. Yeah.
Our run-offs for us have been very stable and consistent. We have been in the range of 15%-17%. This is total run-off, including the regular EMI payoffs and BPs and foreclosures. The total has been in the range of 15%-18%. It used to be in the range of 20%-23%. So it has been now in this particular range for last few quarters, and we intend to maintain it. I didn't get your second part of the question. Can you just repeat?
No, I just wanted to check, so for a yield that it's somewhere around 4.5% run rate for a quarter, which leads to like almost 18% increment and, I don't know. But just in terms of the risk on the yield side, okay, because this is going to be extremely competitive and, have we seen the pricing power for us, maybe for the industry, if the rates have gone up, to what extent we also have been able to pass it on, over last three odd quarters in terms of, particularly the home loan portfolio, how much is the lending rate increase that we have taken?
So we have completely passed on the entire increase that we have seen on the repo rate. So that has been completely passed on. Roughly two quarters to 50 basis point has been passed on, and this is the rate now on a steady-state basis after all the stop forms are done.
Okay. So incremental yield would be how much now on loan and LAP?
Incremental?
Incremental lending.
9.6-9.7.
9.6-9.7. Okay. Compared to our book yield of 10 point.
Correct. Correct.
Okay. Okay, got it. And last year, in terms of risk break up, so this INR 45 crore, if you can just help in terms of how much was the write back, how much was the write off, and there is some recovery coverage that you can really highlight. Was not able to gauge in terms of how much is the write off and the recovery, yeah... so INR 45 crores is the net amount? Yeah.
Yeah. So INR 200 crore was INR 199 crore was the write back that we have got on reservation on one corporate account, and the net PNL impact is INR 45, so you can work out the math as well.
Okay. And this entire amount would be write-off, then largely, or it would be provisioning as well?
It is, it is used for both.
Forty-five. Yeah.
It is used for both, for strengthening stage one ECL on the corporate and for strengthening ECL on the retail, and for certain one-off that we have taken on the retail.
Okay. Okay, yeah. Thank you.
Thank you. The next question is from the line of Jigar Jani from B&K Securities. Please go ahead.
Yeah, hi. Thanks for taking my question. Sorry to just continue with the previous participant's question. If you, if I look at your presentation, in terms of the ECL provisioning, Q1Q, your total ECL provisioning has dropped from INR 1,485 crore to INR 1,196 crore. This is despite you taking a INR 245 crore kind of provisioning. It is the INR 199 crore back, and the INR 45 crore to the PNL. Is it fair to understand that the overall write-offs would be somewhere around INR 400-450 crore?
No, no, no, it's not.
Can you just explain to me the bridge as to why our ECL provision is kind of going down despite having write-backs and provisioning to the PNL?
No, I think that we can take up offline. I mean, that is like a lot of numbers, so we can take it up offline.
Sure, sir. No worries. I just wanted to know what are, what is the incremental yields that we are doing on the affordable housing portfolio on the HL and the LAP side, or we are just doing HL side?
Overall, as I said, it is between 9.6 or 9.7. On the affordable side, our overall yield is around 11.5%.
We'll be doing both HL and LAP here, right?
Yeah, both HL and LAP put together.
Okay. Okay. Thank you so much for answering my questions.
Thank you. The next question is from the line of Anusha Raheja from Dalal & Broacha. Please go ahead.
Yeah, thanks for taking my question. So you said that on construction finance, you would want to, you know, grow this book back again. So if you can just, you know, throw some light in terms of strategy, like how you're planning to grow this book, how much is the average ticket size, and, you can, you know, what share we can, you know, expect from this book in an overall loan book?
So I think, as a mix going forward, you know, when we start doing corporate business, in the overall mix, this will be less than 10% at its peak. So, we will restart this business in few quarters from now.
Okay.
When we restart, we'll be focusing only on construction finance. We'll be pick and choosy on the builders and projects and locations.
Hello? Can you hear us? Hello.
Anusha, you are audible. You may proceed.
Anusha, can you hear? Can you take the next question, Ravi?
We will take the next question. Yes, sir. The next question is from the line of Harshvardhan Agrawal from Bandhan Asset Management. Please go ahead.
Yes. Hi, sir. Thanks for the opportunity. Just wanted to get some more color on the write-off that you've taken on the retail part. One is, if you could share the quantum of the write-off, and secondly, give some more color as to what kind of ticket sizes those loans were. Were they specific to any geographies? Were they independent houses or apartments? If you can give some more color around that, please.
The write-offs, as I stated, you know, it was on the P&L side, around INR 200 crore we had, which was available to us. The net P&L is 45, so around INR 245 crore we have used between write-offs and for strengthening the PCR on stage one assets of corporate. So it is basically a combination of these two that there is a funds have been utilized. It was largely, you know, doubtful two doubtful three category assets.
So just for, like, what ticket size of loan that we had written off?
These are normal retail cases, so there is no any, you know, specific pool as such, but these are normal, you know, retail cases which were in NPA, in doubtful one and two category.
Sure. And sir, just one last thing as to... Because the guidance that you have given on the asset quality, it tends to increase from further year on. So any such one-off write-off that we planning in future quarters?
As of now, there is no plan. There is no plan, you know, for any one-off in future. We will not be able to comment on that, but definitely, as you know, our endeavor is to try and bring down the NPA on it as well. I think largely it will be driven by collection and legal.
Sure, sure. Great, great. Thanks a lot, sir. Thanks, thanks for this.
Thank you. We have the next question from the line of Bhuvnesh Garg from Investec Capital. Please go ahead.
Yeah, thank you for the opportunity, sir. Couple of questions. Firstly, sir, what was our PPR rate for this quarter and for last couple of quarters?
PPR. Hello? See, overall, we have given a runoff rate of 16%-18%. This includes normal runoff as well as BT and foreclosure. It will be somewhere between 7%-8% for only for BT.
Yeah. What was it for, say, Q1 and Q4?
Q1 was also... It is in the same range for the last few quarters. It used to be in the range of 9%-10%. It has come down to the level of 6%-7% now for the last few quarters.
Got it, sir. Got it. And in terms of growth, sir, if I look at, on our Slide 6, that, that we have growth path for retail loan book. So in Q2, I mean, our retail loan book has grown by INR 1,493 crore, similar, slightly lower than what, the growth was in Q1. But generally, what we have seen that Q2 is a better quarter than Q1. So so what explains this lower growth in retail loan book in Q2?
So, retail has grown, retail has grown better in Quarter two than Quarter one. If you look at disbursement sequentially also, there has been a good 13.5%-13.6% growth over Quarter one.
Right. Yeah, but, but in, in this Slide 6, top left here, so I see from April to June, INR 1,507 crore, and then from June to July to September, INR 1,493 crore. That increment in retail loan book. Just want to understand, sir.
Yeah, there is some impact of write-off in that, so hence it is looking lower. But if you see gross disbursement, that has grown 13% quarter-on-quarter.
Got it. Sir, considering that our total disbursement for H1 has grown at about, I think, 13% YoY, and we are guiding for 22% YoY growth for full year. So what gives you confident that it will accelerate in H2? So what are the key trends or the drivers that you are witnessing?
So I think last three, four quarters, you know, as I mentioned earlier, we were really working on trying to change some of this mix, you know, profile mix, product mix, geography mix, moving away from super prime completely and moving to prime and affordable. So we were focusing on all these things, and therefore, you know, it was by design, consciously, we had to grow at this level. And you know, H1... H2 is always better than H1. And within H2, you will see that quarter four would be, you know, really very good compared to quarter three, and quarter three will be far better than quarter two. And we will cover up in quarter three and quarter four.
So, which is what I mentioned earlier as well, 17%-18% of book growth and 22%-23% of disbursement growth is well in sight.
Got it, sir. Got it. That is from my side, and thank you for that, sir. Have a good day. Thank you.
Thank you. The next question is from the line of Ravi Naredi from Naredi Investment. Please go ahead.
Hello. Thank you. So my question is regarding your comment, your comment in press release, that INR 160 crore one-off in Q2 financial year 2023. So, and so it excludes this NII growth 35% year-on-year. So please elaborate this INR 160 crore one-off income. It's coming not in last year Q2 result also. So...
You see, as I said, so whenever there is a benchmark rate reset, even on the securitized book, you have to change the rate for that book, and you have to take an upfront gain. So that upfront gain came as a one-off in Q2 last year, when we changed our reset rate by around 100 basis points. So it was a one-time gain that came last year, which is not there in the current quarter, so hence it has been called out separately.
Okay. And, sir, next question is regarding the COVID-19 related strict stress effect. So it is INR 1,600 crore above. So what is the average tenure of this exposure? And, what is your assessment related to this exposure?
So I think you're referring to restructured pool. So the tenor is on par with the entire portfolio tenor, so there is no difference. But, you know, but for the only change that during the restructuring period, you know, some of these customers would have opted for moratorium, interest moratorium, you know, which could be for maybe ranging from three months to 12 months or maybe 15 months. So otherwise, the tenor is broadly in line with the entire portfolio, retail portfolio.
Okay. Thank you, sir.
Thank you. The next question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead.
Yeah, thank you for allowing me to follow up. Just one question. Recently, you were in your opening remarks talking about restarting construction finance in a couple of quarters. You'd also mentioned the ticket size that you're looking for. Can you just elaborate on that? What ticket sizes are you looking for in construction?
Yeah, we are still working on that, but there is a plan to start corporate business very shortly, could be two, three quarters from now. So when we restart, we'll be really pick and choosy. We will do corporate business more from a strategic point of view, which could enable our retail growth. Ticket size would be about INR 150 crore-INR 200 crore. That is what we would be looking at, and we'll be very pick and choosy on the developer project, and we'll do in select locations.
Got it, sir. And sir, typically, this, these projects that you're planning to do, I mean, I understand, I mean, maybe two, three quarters away and too early to comment, given that maybe you're not started working on this piece yet. But, broadly, will the yields in the corporate book that you will be building be lower than the yields that we have in retail today?
Not at all. I think the yield on corporate will be much higher than the retail book. But yes, I know since we are going to focus on select developers, good developers, the yield may not be significantly higher than the prime yield. But definitely, you know, if you, if you compare to, let's say, our affordable business, Roshni, it will be on par or maybe slightly less than that. Because today, Roshni, our yield is about 11.5%. I think this would increase over a period of time, and this could go beyond 12%. So even the corporate book yield, you know, would be on similar lines.
Got it, sir. That's all from me, sir. Thank you so much.
Yeah.
Thank you. We have the next question from the line of Varun from Kotak Securities. Please go ahead.
Hi, sir. Thanks for giving me the opportunity again. So if I look at the restructured book, that was about INR 1,700 crore, and there's some movement with, of that into NPAs and some of it has been written off. But there's still some INR 1,500 crore in the standard book. So is this coming out of resolution or have some all of it moved out of moratorium? Where are they right now in stages, and what's the provision on them?
So as of now, there is nothing, you know, in the restructured window. So all those cases which are restructured, EMIs have fallen due and they are servicing. So whatever we see today in various stages, stage one, stage two, stage three, is post the completion of the restructure period.
Are there any additional provisions on this research or as per ECL model? That's what you have provided?
There is nothing additional.
As per ECL model, the provisioning is done. Yeah.
Varun, does that answer your question?
Yeah, it does.
Thank you. We have the next question from the line of Omkar Ghogare from Shree Investments. Please go ahead.
Yeah, you were talking about overall loan book growth of 17%-18%. That was only for retail category or overall loan book you are talking?
Retail category, because corporate we are degrowing and, you know, by the time we start, it will take another two-three quarters. So the growth, what we were talking, was only on retail.
What about the overall growth then?
I think more or less it will be in line, because today, if you see out the overall portfolio, retail is about 97%. And even if you see what the book was last year, you know, I think the gap is going to be about maybe 3%-3.5%. Otherwise, largely the growth is going to come from retail till we start the corporate.
So overall growth would be similar to the retail only?
17%-18%, what I mentioned was, on retail.
Yeah, correct. Once you start growing the construction finance, what can happen?
Yeah. No, construction finance, it will be a very small business for us. At its peak, it will be less than 10% of the entire portfolio.
Okay. And right now, the retail is consisting around 97% of the overall loan?
Yeah.
Okay, got it.
Thank you. We have no further questions, ladies and gentlemen. I would now like to thank you and the management for closing comments. Over to you, sir.
Thank you. Thank you, everyone, for joining us on the call. If you have any questions unanswered, please feel free to get in touch with investor relations. The transcript and audio of this call will be uploaded on our website. Thank you.
Thank you. Thank you. On behalf of PNB Housing Finance Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.