Ladies and gentlemen, good day, welcome to the Q1 FY 2023-2024 earnings conference call of PNB Housing Finance Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please remain on the leader by pressing star 0 on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Deepika Gupta Padhi, Head Investor Relations and Treasury. Thank you, and over to you, ma'am.
Thank you, Aman. Good evening, welcome everyone. We are here to discuss PNB Housing Finance Q1 FY 2024 results. You must have seen our business and financial numbers in the presentation and treasury, with the Indian stock exchanges, is also available on our website. With me, we have our entire management team across verticals sitting over here, led by Mr. Girish Kousgi, 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 reflect 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 statements to reflect future events or circumstances.
A detailed disclaimer is on slide 28 of the investor presentation. With that, I will now hand over the call to Mr. Girish Kousgi.
Good afternoon, and welcome to all the investors to quarter one earnings call. First of all, thank you very much. We completed a rights issue in quarter one to the extent of INR 2,494 crores. Thank you so much for long-standing support to this company. Issue was subscribed 1.21x . All the four top shareholders, namely PNB, Carlyle, Ares SSG, and General Atlantic, they participated in the rights issue. This apart, I think a lot of institutional investors participated. Proceeds from the rights issue are being utilized for disbursements. Quarter one was very, very eventful for us, and as a company, we've done well on most of the parameters. On disbursements on a YOY, we've shown a growth of 80%. Market is quite robust.
There was a bit of a cyclical, you know, aspect in quarter one. Yes, you know, we have been trying to do a lot of things to de-risk, you know, the in future. For example, our focus was more on salaried. Our focus was more on home. Our focus was also more on low-ticket, you know, size in terms of our incremental disbursements. On a quarter-on-quarter, compared to quarter four, there was a drop in disbursement. This is in line with, you know, market trend in the industry. We saw a lot of traction in affordable space. We were able to grow our disbursement by 66%. In quarter one, we did INR 228 crores, and the previous quarter was INR 137 crores.
We see a lot of traction, that was really, you know, good for us. If you have to look at the login numbers, just to give you a data point, login numbers on a YOY grew by 11% and sanction value by 15%. On the loan book, on the retail side, we were able to grow by 11%, and this happens to be the highest ever book growth in last 15 quarters. Overall, loan book grew by 5% on a YOY basis and retail book 11%. Sequentially, loan book grew by 2% and retail loan book grew by 3%. We are on track in terms of our guidance for book growth, which is about 17%-18%, and disbursement growth of 22%+ for the year.
In spite of our conscious strategy in terms of degrowing corporate book, the loan book crossed INR 60,000 crore. As of thirtieth June, the book was INR 60,394 crore, and this again, is highest in last seven quarters. In terms of customer retention, I think there has been a significant improvement on a YOY basis. Last year, quarter one, the book run-off was 23%. Am I audible? I think there's some disturbance. Last year, quarter one, the book run-off was 23%, which is down to 16.58% this quarter. The book run-off has reduced by over 600 basis YOY. In terms of asset quality, there has been a lot of traction. We are pretty aggressive on third party and legal action. There is significant focus on cash collections and settlements.
We have a good pool of retail loans, which is ready for auction. Remainder of the year, you know, we should see good traction in terms of NPA reduction. Typically, when you see quarter one, quarter one will be muted, A, in terms of growth. B, in terms of asset quality improvement. Quarterly, there is slight increase. I think given our book and the challenges, what I had discussed in the past, we were able to still bring down GNPA on the retail book. I think the action is pretty good. I think in next few quarters, we will see this number coming down, quarter after quarter. With respect to corporate GNPA, we have two accounts. There has been no addition at all.
Only thing is because of interest, the percentage looks higher and also the book degrew compared to March. If you have to talk about credit cost for the quarter, it is 0.36%. I think for credit cost, largely, we had said in the past that we will build up ECL. We will increase the PCR, I think to a large extent of 0.36%. It was only to true up ECL on especially on the retail and to a certain extent in corporate. Otherwise, cost has been very, very less for the quarter. I was talking to you about our focus on getting the profile mix right. I think we are on line in terms of, you know, what we had stated earlier. Our salary is increasing.
If you have to look at year-on-year, there has been consistent increase in salary and the self-employed share is going down. This is true even incrementally as well. Just to give you some data points, if you have to look at less than INR 1 crore, it was 4.3% last year, quarter one. If you have to see that number now, it is increased to about- If you have to look at less than INR 1 crore, it was 51% last year, quarter one, and this year, quarter one, that number has increased to 63.3%. Which means our focus is, A, on retail, B, in terms of up to INR 1 crore. Our focus is up to INR 1 crore, even though, you know, we have a cut-off at INR 3 crore.
We rarely do any case beyond three. Our focus is at up to INR 1 crore. We are seeing that there's a lot of, you know, concentration of the loans what we do up to INR 1 crore. This is good for the portfolio in the long run. This same trend is seen even incrementally as well. When we saw this, you know, couple of quarters back in terms of geographical mix, we were quite low in South. We consciously tried to increase our business from South. If you have to look at, let's say quarter four of last year, it was 32.5%. Quarter one of this year, which is, you know, just after a quarter, we are close to about 36% in South.
The mix in quarter four on disbursement was North was 34.3, East was 33.2, and South was 30.5. Quarter one, North is 33.3, East is 29, and South is 35.8. We are slowly trying to increase our business from South, which was pretty low, given the mix, what works for this industry. Same trend is seen incrementally as well. Total branches expanded to 198, as on 13th of June, which was 189, as on 31st of March, 2023. Affordable branches expanded to 88 as on 13th of June, primarily in Tier two and Tier three cities. On the affordable, we would reach 100 branches in a quarter or two.
Currently, we are at 88, and we will reach about 100 branches in a quarter or two. On the corporate book, we had two NPAs last quarter. This quarter as well, it is two NPAs. The total amount is INR 854 crores. Out of this, one account constitutes to 92%, which is backed by a large developer. The increase in corporate is essentially because of interest effect. There has been no nil Stage two in corporate. I think the last three quarters, there has been zero accounts in Stage two. On a YOY basis, the corporate book has degrown by about 45%, and sequentially, the book has gone down by 10%. Little bit on the financials. On revenue, on a YOY basis, we've shown a growth of 21%.
Net interest income, there is growth of 70%. POP is 41%, PAT, there is a growth of 48% from INR 235 crore- INR 347 crore. Yield has improved even sequentially from 10.41% to 10.59%. Cost, there is marginal increase in cost. Last quarter, the cost was, cost of borrowing was 7.76%, and now it is 7.97%. Now the cost on portfolio and incremental, both are around 8%. Spread, we were able to keep it flat. We are at a 2.60%, last quarter was 2.65%. NIM slightly improved from 3.74% to 3.86%. Gross margin improved from 3.83% to 3.91%.
Trade cost, as guided for the year, is 0.6%. quarter one was 0.3%. As I mentioned, 0.36% was largely, this was due to true-up in ECL, both in retail as well as corporate, if you want to increase our TCR. ROA, which was 1.71% last quarter, for the whole year, 1.61%, now is 2.47%. ROE has improved to 11.18%. Capital efficiency, now we are at almost 30%, and the leverage is 3.82. Couple of, I think, couple of points on the outlook. I think demand is quite robust. We are seeing a lot of traction across markets, so we are pretty, we see a lot of demand on the prime side and more so on the affordable side.
Even I am privy to some of the reports which talked about affordable, you know, demand going down. We have not witnessed that. Even though this is very small, we started few months back, we are seeing very good traction on the affordable piece. There'll be a lot of traction in the coming quarters in the affordable side. ROA of 2.07%, this is the highest in almost a decade for the company. In terms of guidance, I mentioned the spread of 2.5%, beginning of 3.5%. Trade cost for this year is 3.6%, from next year onwards, it should be 0.4%. We happy to inform that CARE Ratings has revised rating outlook to positive from stable.
The trade rating of the company from CARE is now BB with positive outlook. We are engaging with other rating agencies for possible, you know, outlook change or an upgradation. Ay-Ayutya?
Aman, we can go ahead and take the further Q&A.
Sure. 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 the question 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. Anyone who wishes to ask a question, may please press star and one at this time. The first question is from the line of Ashwini Agarwal from Demeter Advisors LLP. Please go ahead.
Good afternoon. Congratulations-
Ashwini, your line is not very audible. Please use the handset.
Is this better now?
Yes.
Yeah. Good afternoon, team. Congratulations on, very good set of numbers. A few questions. I mean.
Ashwini, sir, the line is still echoing a little bit. Can you please use the handset mode? It's still echoing.
Let me come back. Why don't you proceed with the Q&A and call me 1 time?
Sure. The next question is from the line of Renish from ICICI. Please go ahead.
Yeah. Hi, hi, team. Congrats on the numbers. Just one question on the margin side. Okay, now, considering that we have raised capital at the tune of INR 20 crore billion in May, so there will be a positive impact on the borrowing side in coming quarters, given this quarter there is an impact of only one month. Given the portfolio mix, you know, is going to shift towards affordable and prime, which is a higher yield. What is the reason we are still guiding for a lower NIM in coming quarters, when you see that, you know, full year NIM will be 8.5%, versus more than people need now?
No, no. Actually, in terms of guidance, spread and NIM, this is the threshold. We'll be able to sustain what NIMs you're seeing now, which is about 3.75% or so. I think the guidance in a long-term stability sense is going to be 3.5%. That is the threshold, what I mentioned.
Okay. Okay. Maybe next couple of quarters, there is a fair amount of chance that NIM could sustain at around this level, considering the fundraising and the booking change.
Yeah.
Okay. Okay. That's it from my side. Thank you.
Thank you. The next question is from the line of Ashwini Agarwal from Demeter Advisors LLP. Please go ahead.
Hi, is this better now?
Yes, much better. Please go ahead.
Thank you. Congratulations to the team for good numbers. two, three questions. One is, you know, how do you feel about the retail GNPL numbers, considering the kind of mix you're pursuing? Do you think in a couple of years we should be looking at industry level NPLs, which are GNPL ratios somewhere in the handle of 1.0%-1.4%, and credit costs in the ratio of, you know, 20-20 basis points? I know you have 14 basis points guidance of 50-55 basis points, but how do you feel about this?
GNP, I think two years is too long a time. We are looking at being comparable with best in the industry in next four to five quarters. The numbers what you mentioned, in terms of credit cost, I think I would want to stick to 0.4%. This will be a mix of both prime and affordable. Typically, if you look at the credit cost for a company which is focusing only on let's say super prime and prime, credit cost will be, you know, around 0.2%. It could be, you know, two or three bits, more or less. If it is a combination of prime and affordable, and, you know, with every passing quarter, the mix of affordable will keep increasing. That is where we see a lot of value. Of course, affordable is prime and segment.
Before, you know, we would like to guide a credit cost of around 0.4%. We can take a call maybe after, you know, three or four quarters. At this point in time, we feel that 0.4%, given the mix of prime and affordable, which will emerge over a period of time, I think that is what we feel is comfortable.
Okay. Sir, over the next two years, what kind of gearing do you think is achievable? I know you have an eye on credit rating as well, you know, unless the gearing goes to at least 5x or 6x, the ROE handle will not go to mid-teens, at least that's what I think. How do you feel about gearing and the ROE versus credit rating balance?
We are at 3.83 now, we will be comfortable between 6x to 6.5x . That's the plan. We also have no ambition to grow book to a level of INR 100,000 crore.
Which should therefore translate into an ROE, say, two and a half, three years out in the handle of 16%-17%, would that be fair?
Yeah. I mean, it will take three to four years to reach to a level of 5+, and then it should further increase from those levels.
Okay. Do you plan to return to paying dividends at some point?
We will take an appropriate call at the appropriate time, but yes, you know, the idea is to grow a profitable book, keeping in mind all the return ratios. As far as dividend is concerned, I think we will take an appropriate call, in consultation with all the stakeholders.
The last question is the large corporate loan account. Do you have any sense on when it will get resolved, either by way of a sale or a settlement or something?
See, as we speak, we are working on, you know, the all the corporate accounts. Today, if you see the book has, you know, come down to almost about little over INR 3,000 crores, right. We don't, we really don't see stress in the existing book. If you look at our book for the last few quarters, we don't have anything in Stage two, and we have just two accounts in NPA. Out of two accounts, one account constitutes to about 90%. We have been constantly working on resolution, and we have done some resolution in the, in last few quarters. Naturally, if you see, I think the book should run down maybe in next three years and odd, but we are trying to accelerate, you know, the repayment. It could be possible resolution in terms of settlement.
We are looking at various options. I think the book could definitely run off, but not, you know, the timeframe is not over three years in any which way.
Okay. No, my question was more relating to this one large NPA, INR 800 odd crore number. I mean, is there any visibility on that getting resolved?
We are working on resolutions, and it is through multiple channels, so I would not be able to divulge more details on that, but I can only say that we are pretty comfortable.
Okay, perfect. Thank you, sir. All the best.
Thank you.
Thank you. The next question is from the line of Ravi Naredi from Naredi Investments. Please go ahead.
Thank you very much for the opportunity to me. Sir, your investor presentation, page number 10, you have shown INR 2,762 crore reduced from corporate loan book. Will you tell how much we have received and how much we have write-off?
If you can see in the same table, we have also given below that what all has been through our sell-down, natural run-off, as well as write-offs. As you can see from March till June, which is five quarters, we have a natural run-off around INR 1,100 crore, INR 1,400 crore of sell-down, and INR 1,500 crore of approximate as write-off.
No, can you give the bifurcation of 4,762 systematically? The level 140, 1,400 and 1,500, how I can reconcile this?
Look.
Separately, we can share.
Yeah, we will share. It's basically from March, because that's where the year we have taken.
From March or June, whatever you want to tell, please just say how much we have write-off and how much we have received. Two figure I want, how much we write off and how much we receive.
Write-off is there around INR 1,500 crores, and the balance will be a part of either run-off or the sell-down.
What is the meaning of run-offs?
Accelerated repayment.
Yes.
Okay. This now balance payment is INR 3,416, right? You are telling one is 80% is one in one group only, right? Real estate, large developer.
No, no.
No, no, no. The book is now INR 3,400. We have NPA of about INR 850 crores. Out of INR 850 crores, there are two accounts, two NPA accounts. Out of two, one account constitutes to 92% of the NPA.
Okay, 92% of NPA.
Mm-hmm.
We are hoping it will settle in this current year, by current financial year, or maybe next year?
I think we have been pretty aggressive on resolution, so we are pretty positive that it should be resolved in next few quarters.
Sir, secondly, after rights issue, PNB Housing comes at a second number after Carlyle. Carlyle is having 32.7%, PNB, 28.2%. What will happen now, is PNB lose as a promoter soon, or will you and will you change the name PNB also?
I think I would not be able to answer that. As of now, you know, PNB is a promoter and they intend to continue as promoter.
Sir, as per Companies Act, now PNB has no promoter at all because Carlyle has more stake than PNB. If Carlyle has given you the proposal in the next board meeting, please change the name. You have to change it.
No, sir, it is not like that. Even under the regulation, it is not like that. PNB will continue to be the promoter. They have also, if you can see that there's a press release they have issued, that they'll continue to be the promoter, who currently holds 8.2% stake in the company. Even our trademark agreement is very clear on that front, that we continue to use the brand name of PNB.
As a PNB, the company has been total mess. Till you remove the name of PNB, it can't be bright future ahead. My opinion, how you change the name, it will be more better for investor and you. Okay, thank you very much.
Thank you. Next question is from the line of Onkar Ghugardare from Shree Investments. Please go ahead.
Yeah, in the investor presentation, which you have uploaded, you have mentioned, and in the conference call, just now you mentioned that you are targeting around 17%-18% of loan book and disbursement of 2021 book bank. For this quarter it is, I mean, huge difference, around 5%-6% growth and 3%-4% growth. I mean, how will you manage that for the whole year? If you are looking 17%-18% and 2021 kind of growth.
Yeah, correct. If you see, quarter one is always cyclical. I think this is true for the industry. For all the HFCs, we can see this trend. For us, you know, there are two, three reasons. One, of course, it is cyclical. Number two, quarter one of this year, quarter one of last year is not comparable. Having said that, if you look at our last couple of quarter performance on either book growth on the retail side or disbursement growth, we've been pretty, you know, good on that. Our 17%-18% book growth and disbursement growth of 21% is, in fact, and we will be able to achieve that.
In order to compensate this low growth of this quarter, you'll have to do significantly better for the rest of the year, right? Nine months. Is it possible to do that?
Very much possible.
Okay.
I just want to touch upon the earlier point. I think if this is done, see, PNB is a promoter, and they've very clearly confirmed that, you know, their holding is now 12.2. They are a promoter, and the loan continues, and PNB, you know, as a parent and as a promoter, they have been really supportive over. At the same time, we also have, you know, a few large investors like Carlyle, Ares SSG and GA. They're all supportive and nothing changes just because the shareholding has changed.
Okay. The second question is on the that you mentioned that, if I heard that correctly, the gearing is currently 3.82, it will take around four to five years to reach gearing at five left. Is that correct?
Yes, three to four years is what we are expecting, that we should reach somewhere around 5+. Again, depending on the growth and overall target that we have over INR 1 lakh crore, it might be faster also, but, I mean, this is what seems likely scenario right now.
Okay. In three to four years, 5+ gearing and, like, what kind of ROE we can achieve?
Could be mid-teens. That's what we are looking at.
ROE or ROE?
ROE.
ROE, I am looking for.
ROE.
ROA.
ROA, see, we. We are now at 2.07. I think with every quarter and the mix changing, obviously, you know, there will be, our focus is on profitability. Given the growth what we have guided, definitely I think it should improve. We'll not be able to, you know, give you a number at this point in time, but definitely it will improve.
ROE, you are targeting mid-teens, right? In the next three to four years. Correct?
Yeah, three years.
Okay, next year. Assuming that you are saying that INR 100,000 crore book, that is also for next three years from current INR 60,000 crore?
Yeah, three and a half years, right.
Three and a half years. From INR 60,000 crore-INR 1,00,000 crore, right? Okay, thank you very much.
Thank you. Just a point on the other one, see, if you look at, you know, few quarters back, our overall book growth was negative and retail also was flat. Last year, we closed the retail growth about 10%. Overall book at 2%. Quarter one is got to do with the cyclical nature of the industry. The next three quarters, we'll be able to correct, and this we have seen at least for many, many years, at least for a little over two decades in this industry.
Thank you. The next question is on the line of Pratik Chheda from Guardian Capital Partners . Please go ahead.
Yeah, thanks for taking my question. My question is more on the strategic part. When we say that we want to, you know, sort of grow aggressively in affordable housing, what is the strategy here? This is anyway a very crowded space, and there are players who have created their niche or somebody in the maybe, 20 km radius of the city, somebody in a 50 km radius of the city. What is our strategy? Where are we placed? What are the ticket sizes that we will be targeting? How much sort of infrastructure in terms of physical branches or employees are we likely to put in place in the coming 12 months or so?
Basically, sir, affordable, see, let me take one minute to explain about, you know, the market segmentation. There are basically four segments: super prime, affordable income, affordable assessment base. As of now, our focus is on prime and affordable income base. We are not into affordable assessment, so it's hardly anything. We don't cater to super prime, and we don't cater to affordable informal segment. We focus on the second and third segment. Our prime business is focused on second segment, that which is called prime, and our affordable would cater to affordable income base. Now, today, if you look at any organization, be it a bank, whether it is private or PSU, very HFC, large, mid-size or small, or even NBFC, they, all of them, they focus on at least two or three buckets.
If you look at HFCs, some of the mid-size HFCs and small HFCs, they focus on prime segment and affordable income segment. This space is not really crowded. What is really crowded is the affordable informal segment, which is a high-risk business. When we say that we want to grow affordable business aggressively, my definition of aggressively, overall, both prime and affordable put together is about 17%-18% book. If we talk about affordable, because the base is very small, we might grow at maybe another 7%-8% more than the overall growth. When we say aggressively, that is the definition of aggressiveness. It's not 40%-50%. Definitely, we will not get there for the simple reason our focus is on asset quality, whether it is prime business or affordable business.
There is a very clear segmentation, A, in terms of customers, B, in terms of geography, C, in terms of type of properties, four, in terms of what is the ticket size we focus. In affordable, we, our ticket size will be about INR 16 lakhs-INR 17 lakhs. On the prime side, it will be INR 10 lakhs-INR 12 lakhs, more than affordable ticket size. In terms of customer segmentation, you know, top-notch customers, which is Cat A customers, and to a certain extent, Cat B customers, would form part of the prime and super prime. For affordable, it's going to be Cat C, both on, salaried and self-employed.
If you talk about salaried, somebody who's earning, let's say, a salary of between, let's say, INR 35,000-INR 50,000, INR 55,000 salary, who can afford to take a loan of about, let's say, INR 17 lakhs, that is our affordable segment. On the self-employed side, somebody you know who's earning a income of, let's say, between INR 3 crore-INR 4 crore of tax per annum, that is our segment. In terms of geography, a prime business would be not at the city center, slightly away. When it comes to affordable, it will be in the outskirt. It will be in the periphery of the given town or the cities. There is a very clear segmentation of prime and affordable. In terms of, you know, branch, we have dedicated branches for prime and dedicated branches for affordable. The customer segment is different.
The channel, you know, set of channel partners are different. The entire team is different, whether it's a sales team, credit team, collection team, the entire team is different.
Sure, sure. This explanation really helps. Secondly, whenever we look at affordable housing players in a similar risk profile, they tend to operate with a very low, materially lower leverage than what you are guiding for a 5.5x or 6x. I mean, if you also sort of take that route, are you saying that your leverage for the prime business will be slightly higher than that?
As I told you, basically, when we talk about affordable, there are two segments within affordable. One is income and one is informal. Largely, our focus is going to be on affordable income base.
Mm-hmm.
What you're saying is true, you know, for set of companies, you know, which focuses largely on affordable informal. If you have to look at the asset quality difference between, let's say, prime and affordable, it's about 10-15 bits.
Okay.
To answer your question, leverage obviously on the affordable would be slightly lower compared to leverage on the prime. Today, we have a book of about INR 60,000 crores. Out of that, retail is about INR 55,000 crores, right? It's about INR 57,000 crores. I, what I'm saying is that it will take some time for us to build the affordable book, because we just started affordable. Right? It will take some time. Incrementally, we'll be able to reach about. This year, it will be about 10%-11%, and in next two years, we might reach to about 20%-25%. At a book level, it's incrementally. At a book level, it will take time to get there.
I think given the mix of prime and affordable, I am saying around 6-6.5 leverage is to be comfortable.
Very much. Thank you very much. Lastly, on the corporate side, what would be a security cover for the 92% GNPA account that you talked about? How much would that be? Is there any real account which is there on the Stage two right now, which can, you know, sort of slip in the likely to slip in the next, say, two to three quarters? Should we expect that this is the asset quality as more down in the possible? Is there anything additional that can come out in the next quarters?
Normally, we don't talk about any individual accounts, but I think just to answer your question, our coverage is more than two times. We, I think, corporate is more or less sorted. And we have a lot of, we're doing a lot of work on resolution and to run down the book as soon as possible. At the same time, we would also have some right backs in next few quarters.
Thank you very much.
Thank you. The next question is from the line of Kushan Parikh from Morgan Stanley. Please go ahead.
Thank you for taking my question. I had primarily two questions. The first question is around the write back factory that you mentioned just now in the previous question. We have taken write-offs to the tune of more than INR 2,000 odd crores over the last six quarters, both corporate and retail combined. Just wanted to understand what is the kind of or the quantum of write-back that we expect, and over what period of time do we expect that write-back to come back?
See, these are corporate accounts, so the nature of accounts are such that, you know, would, I think nobody would be in a position to predict. Having said that, in next few quarters, definitely we are expecting some write back.
It would be helpful if you could share some sort of estimate that we would have.
At this point in time, it will be difficult. Maybe in future, if we are very sure of that doing, but we're doing a lot of work on resolution, and we are using multiple tools. You know, so in certain accounts, we are working, you know, where a new developer would come in. In certain accounts, we are, you know, we are fast-tracked legally. Multiple tools are being used to try and resolve this account. Given the nature, it will be very difficult to give a definitive timeline, but definitely, yes, you know, we are really pretty aggressive on the resolution, especially on the corporate side. In next few quarters, definitely there will be a result. It will be difficult to quantify how many accounts, what amount, it will be difficult to quantify. You know, the amounts are large, these are corporate accounts. Definitely, there will be a result back.
understood. Just, also on the retail written off accounts, I mean, any guidance on that in terms of write-back?
There is no guidance on it, but it happens every month. I think that's part of our GNPA plan and also our profitability plan. We've said that in next four to five quarters, our GNPA at the enterprise level, at a company level, will be comparable, you know, with one of the best in the industry.
Uh-
Given the mix of time and effort.
Sure. That's quite helpful. My second question was around the cost of funds. I mean, we're currently at a book cost of 8%, incremental cost of 8%. Right? What is the sort of reduction that we see in cost of funds, given that now our rights issue is completed and, I mean, this should help in position. Just trying to understand what is the sort of reduction and over the next several months?
Definitely, I think we also see some improvement on the cost of funds side. As I had mentioned in the earlier earnings call, now we will have access to NHB funds, which will come at a, you know, lower cost. That is number one. Number two, we are engaging with all the banks, and few banks have already passed on the interest rate benefit to us, considering, you know, company performance improvement and also, you know, capital positions mentoring. This also we expect going forward, and we are engaging with other rating agencies, you know, for outlook change for upgradation. We're working closely with all of them. Definitely, we should see, you know, a few bits.
Today, if you see the difference in cost between the best managed, in terms of cost and as it's about 50 bits. Right, I think we'll be able to easily cover 50%-68% of that, we should be able to cover in next few quarters.
You're saying this point, 50 basis point gap, you should be able to cover 50%-60% in the next two quarters?
Yes.
Understood. Just one last clarification related question, if you can squeeze it in.
Sure.
Just on the loan growth guidance, the 17%-18% loan growth that we are speaking of, is that on the retail loan?
Yes, that's on retail.
That would involve about 25% disbursement growth. Is that the right understanding?
No, disbursement will be 22%.
Okay. Okay. Okay, understood. That's really helpful. Thank you. That's all from my end.
Thank you. The next question is from the line of Manish Maheshwari from Manu Group and Family Office. Please go ahead.
Sir, what is our total deposit base as on thirtieth June?
It's around INR 17,000 crores.
Sorry?
It's around INR 17,000 crores.
I'm sorry, I can't hear you. Come again.
INR 17,000 crores.
Okay. INR 17,000 crores.
Yeah, around 30% of our total borrowings.
30% of total? Borrows.
Borrowings.
Okay. What is the guidance on, credit cost for the whole of FY 2024? 60 basis points. 60 basis points?
Yes.
Gross NPA, net NPA?
There's no guidance on GNP and net NPA. As I've told in next few four to five quarters, we would be comparable in the industry.
Sir, we are being very aggressive on on affordable housing per se. If you look at affordable housing, affordable housing demand has been shrinking, right? In the recent past.
Sir, we started affordable business this financial year. In the first, you know, part of the quarter when we started, we did about INR 1 crore-INR 7 crores and in quarter one, we did INR 228 crores, and this is very small. This year we said the mix is going to be about 10%-11%.
Mix of the total.
Disbursement. Disbursement between prime and affordable.
10%-11%.
Which is not at all aggressive.
Sorry?
Current year disbursement mix, prime between prime and affordable is going to be about 10%-90%, 10% or 8% and 11%.
You have kept your NIM guidance also a little low, right? I mean, the NIMs that we have, NIMs for this, the current quarter is 3.85%.
Sir, normally, when we give guidance, we give guidance, you know, keeping in mind the long term on a steady state. There could be fluctuations in the short term, but on a long-term basis, on a steady state, this is the guidance.
Loan growth, I mean, one of the previous participants was perhaps alluded to this particular thing. Loan growth guidance you have given for 17%-18% on the retail side.
Yes, right.
Which would, I mean, which would percolate down to what sort of disbursement for FY 2024?
Sir, I think, every company, you know, would have their own, you know, math. As far as we are concerned, sir, disbursement growth will be about 22%, and book growth would be between 18%. It is a combination of what mix we are going to have and what is the run-off. You know, there are so many things, you know, which get into this. As an outcome, we would be able to deliver, 17%-18% of book growth and 22% of disbursement growth. Given, given the industry growth rate, this is. See, for us, I said this before, again, I'll be saying this: for us, asset quality is the starting point. We are back to basics now.
We are talking about increasing our salary within the society, increasing home within products, between home and non-home. We want to ideally reach to an ideal mix of, you know, between prime and affordable. Disbursement of growth of 17%-18%, if you look at the industry so far last few years, they've been growing at about 13%-14%, and we are talking about 18%. Asset quality is the starting point. Our asset quality in next four to five quarters will be comparable. The growth rate of 17%-18%, given, you know, strong demand in this sector for a few years, next few years, 17%-18% for us is good.
Thank you. Manish, you may very please to join the queue for any follow-ups, as we have several participants waiting for their turn. In order to ensure that the management is able to address questions from all participants in the conference, please limit your question to one per participant with time permit, we will try to keep for any follow-up. The next question is from the line of Shweta Daptardar from Elara Capital. Please go ahead.
Thank you, sir, for the opportunity.
Shweta, your voice is not very clear.
Yeah.
Please use the handset.
Sure. Is it better now?
Yeah, better now.
Okay, sorry for that. If I look at the retail top share, top five state share, then, and if I try to get the composition of 2.49% of retail GNPA, then are they in line with your top five state spread?
Sorry, didn't get your answer.
Okay.
Sorry.
Top five state share in retail loan assets, which is topped by Maharashtra, Delhi, and Tamil Nadu. Is your retail GNPA geography-wise breakup also on similar lines?
It's, it's almost similar.
Okay. Okay, thanks for that. Again, you have been reiterating the fact that there is incremental focus on salaried segment. If I look at one year mix between self-employed versus salaried, that has not sort of changed materially. What is the target next year and the timelines for the same?
Here there are a few things. See, when we talk about, you know, the portfolio, what we are going to build. We are talking about few things. one is customer segment, two is the profile, three is the collateral, and four is the ticket size. As I had mentioned in the past, we are now back to basics. If you always look at portfolio, obviously, you know, will take some time to correct. If you look at incrementally, I think we are in the right direction. That's our focus. Our pricing strategy, our geography strategy, everything is aligned, you know, to our goal, which is basically to change the profile mix, product mix, focus on low ticket. I spoke about focusing on up to INR 1 crore.
I spoke about, you know, especially within LAP, there are some of the high-value cases which we had in our portfolio in the past, which we are doing in the past. Now we have come out of that. This is a journey, it takes time. While we have a portfolio to deal with it, we are dealing with it. The portfolio, what we are going to build, I think this is the direction in which we want to go. I mentioned about we would ideally want to get to salaried and self-employed to top 65 and 35. It takes time, so we are on the right track, and it will take time for us to get there.
Sure. That's helpful, sir. Thank you.
The next question is from the line of Franklin Moraes from Equentis Wealth Advisory. Please go ahead.
Yeah. Congratulations on a good set of numbers and having been able to achieve multiple milestones in this quarter. My question is on the recovery, you alluded to the fact that there could be certain recoveries that we can expect in the coming quarters. Does your credit cost factor in these recovery?
See, I had... Again, I want to say the same thing. Last year, if you see our credit cost was 1.15%, and this year we said it is 0.6%. If you look at Q1, it is 0.36%, right? This 0.36%, significant portion of that is towards, you know, building up ECR, right? On the corporate side, the write backs are not factored into this.
Got it. Got it. Secondly, you also mentioned in your opening remarks that you have increased the share of south. Now, traditionally, we have been a player who have operated in the north and, you know, in the West. Is this going to be directional, or is this just a one-off?
No, it's like this: so we are a national player, and we want to present in most of the states which are good for us from, A, business point of view, B, recruitment culture point of view. We have done, you know, little tweaks. Otherwise, if you look at between south, north, and West, largely three, these three zones, I think all the three would be 30%+. I think it's going to be almost equal, and we are not largely present in east. I think the tweaks are going to be very, very marginal. Yes, you know, even at a portfolio, 1% or 2% would mean a lot to do good for the portfolio.
Yeah. thanks a lot.
Thank you.
Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference back to the management for their closing comments. Thank you, and over to you.
Thank you everyone for joining us on the call. If you have any questions unanswered, feel free to get in touch with the investor relations team. Transcript of this call will be uploaded on our website as well as the audio. Thank you.
Thank you very much. Ladies and gentlemen, on behalf of PNB Housing Finance Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your line.