Ladies and gentlemen, good day and welcome to the Q2 and H1 FY 2022/2023 conference call of PNB Housing Finance Limited. As a reminder, all parties on the lines will be in the listen-only mode, and there'll be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during our conference call, 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.
Thank you, Mike. Good evening and welcome everyone. We are here to discuss PNB Housing Finance Q2 and H1 FY 2022/2023 results. You must have seen our business and financial numbers in the presentation and press release shared with the Indian stock exchanges and is also available on our website. With me we have our management team across verticals led by Mr. Girish Kousgi, our Managing Director and CEO. Mr. Girish Kousgi joins us as MD and CEO effective 21st October 2022. He's a seasoned banker with vast experience across a variety of loan products, including housing loans, business loans, LAP, personal loans, among others. Prior to joining PNB Housing Finance, he was the MD and CEO of Can Fin Homes Limited. We are also joined by Mr. Vinay Gupta, who joins us as CFO effective 26th October 2022.
He has extensive experience of over 20 years in financial management, financial planning, accounting, treasury operations and MIS. He was previously associated with SBI Cards and Payment Services Limited. We'll begin this call with the performance update by MD and CEO, followed by an interactive Q&A session. Please note, this call may contain certain 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 statements to reflect future events or circumstances. A detailed disclaimer is on slide 25 of the investor presentation. With that, I will now hand over the call to Mr. Girish Kousgi. Over to you, sir.
Good evening to all the investors. Welcome to Q2 and H1 earnings call of PNB Housing. I'll give you a, you know, context with respect to market and outlook. Housing industry is really doing very well. The entire industry is in sweet spot, and so is PNB Housing. Demand is quite robust. Demand which started after Covid FY 2021/2022, Q3 onwards, and to be specific, October onwards, demand has been quite robust. In spite of, you know, intermittently disruptions by a Q2 because of Covid second wave and third wave, I think demand has been quite robust. Real estate as a space has revived, which more than one and a half years, and this cycle would last for next four to five years.
Interest rate, you know, even though the rates have gone up in the last, little over a year's time, still the affordability is pretty high. Demand is quite robust across all geography, across all segments. If you look at the industry, I think industry will be able to post a growth of about 12% to 13%, this year over last year. This is about the industry and the outlook. Coming to PNB Housing, let me give you numbers, some data points on three parameters. One is Q2 YOY, and number two, H1 this year compared to H1 of last year and of course,Q2 over Q1 , that is sequential. I think, we need to very clearly segregate retail and corporate.
To start with, I'll give you consolidated numbers, and then I'll get into retail and corporate separately. If you look at Q2 performance on a YOY basis, there has been a growth of disbursement by 21%. The book on a consolidated basis has de-grown by 4%, but if you look at retail, there is a growth of 4%. In terms of revenue, the growth is about 6%. PAT is close to 12%. Yield, of course, is not comparable on a YOY. Of course, we have to compare yield on a sequential basis. Yield for Q2 at a book level is 10.7%. Cost was 7.32%. Spread of 3.38%. NIM of 4.14%. GNPA 6.06%.
Net NPA of 3.59%. CAR at 24%. Leverage of 5x. Now talking about retail quarter YOY, disbursement growth of 24.5%. Book has grown by 4%. If I have to talk about retail GNPA, it is 3.39%, down from 3.53%. For corporate, the book has, I think disbursement growth is negative 48% because we are de-growing corporate book. Book has de-grown by 44%. It was INR 10,250 crores, now it is INR 5,780 crores. GNPA, I've given you for the overall numbers. If you look at GNPA numbers, nothing much change in terms of the amount. Of course, the NPA stands at about INR 1,734 crores, which in turn amounts to 30 point...
It's about 30%. Talking about H1, disbursement growth is 49%. Book has, of course, de-grown by 4%. Revenue is -5.6%. PAT growth by 5%. Yield is at 9.96%. I think some of these numbers are common for both, so I'll not get into that. In terms of strategy, going forward, we would focus on retail. I think the story is going to be around retail, and within retail we have two segments. One is affordable and one is non-affordable. I think there's going to be a very good focus on non-affordable, and we are going to be very aggressive on affordable. For H2, we plan to open more than 25 branches, largely in affordable space.
Today, if you look at retail book, which is about INR 52,000 crore, affordable is about INR 3,000 crore. We want to grow that book very aggressively because we've seen that market is conducive and we'll be able to build book at a higher yield and with very low delinquency. We've seen that many companies in the industry, they're doing very well in affordable. We were primarily focusing on the non-affordable segment, you know, within the entire housing space. Going forward, our focus will also be on affordable. In terms of mix going forward, we would want to maintain non-affordable 75% and affordable 25%. This is more on the incremental. Over next two to three years time, I think at a portfolio, we will start building the affordable book.
In terms of HL and non-HL, we want to reach to a stage where our HL is 75 and non-HL is 25. Today, if you look at a portfolio level, our non-HL is about 28% odd. We are trying to change our entire IT infrastructure, which might take about 15 to 18 months time, so this will help us in better delivery to our customers in terms of TATs, in terms of you know, trying to integrate with various APIs so that we can fast-track our decision process. We had a challenge of book depletion, so we have a very strong retention team. If we have to compare the Q2 vis-a-vis Q1 of this year, we were able to arrest BT out.
In Q1, BT out was about INR 1,350 crore, and in Q1 this number is about INR 1,100 crore. Going forward this number is likely to come down. In terms of total closure, Q1 was about INR 3,450 crore and Q2 is about INR 3,150 crore, and this is on a growing book. Now this being my first earnings call, I thought I should give more time, you know, for all of you to ask questions because you'll have a lot of questions to ask. Before I open the forum for Q&A, there's one thing which I want to clarify on the provisioning, because there has been a significant increase in provisioning compared to Q1 . Q1 was INR 49 crore and Q2 is INR 243 crore.
This INR 243 crores has three parts. One is ARC, second is write-off, and the third is we have provided INR 60 crores additional. This apart, I think there has been slight you know increase in the ECL provisioning. This INR 243 crore actually has four components. You should read you know from INR 49 crores, the number in Q2 has gone up to INR 80 crores, and the rest is write-off, ARC, and additional provisioning. In terms of credit cost, for Q2 it is slightly on the higher side, it's 1.54%, H1 is 0.94%, and for the whole year we are expecting credit cost to be around 1%. I would request to open the floor for Q&A.
Thank you. We will now begin the question answer session. Anyone who wishes to ask a question may press star and one on the 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'll wait for a moment while the question queue assembles. We have the first question from the line of R avi Naredi from Naredi Investment . Please go ahead.
Thank you. Mr. Girish Kousgi, welcome to this new company. It is bigger than 5x Can Fin Homes. Sir, what will be your priority to run this company, top priority to run this company? To raise the fund, to raise the AUM, or to bring down the NPA level? Second, company AUM is INR 66,000 crore. Market cap, INR 7,000 crore. Sir, with due regards to all of you PSU employees, I say if this company was in private sector, its market cap may be INR 50,000 crore to INR 70,000 crore. Where we have challenges and how you overcome from them? These are my questions.
Sure. Thank you. Thanks for the question. See, we are pretty aggressive on growth. You will see in next few quarters we'll be growing by a healthy percentage, which will be much above the industry growth rate, both on disbursement and book. First the growth will start on disbursement, and then it'll catch up with the book growth. Now, why we say that we want to grow, so we want to grow in non-affordable space and also in affordable. We are now getting into affordable in a big way. That's going to aid our growth story along with non-affordable segment, A. B, we will definitely bring down our NPA, GNPA and NPA. Going forward, A, we'll work on growth. That's both disbursement and book. B, we will bring down our delinquencies. Our GNPA will come down, net NPA will come down.
Number three, we will also ensure that while we do these two things, we are profitable. In terms of margins, you know, we will ensure that we have a base threshold which we will maintain. I'm sure, you know, if we can get back to basics and grow with profitability, with lower delinquency, I'm sure I think market will reward. I think that's the expectation.
Thank you, Girish. Will you bring the new people to the company as per your convenience or you will run with existing employees?
See, I'll tell you, we have a very good team. PNB Housing team is excellent.
Okay.
While I say that, we will always, you know, be open to hire talent from market. Whenever there is a need and when there is an opportunity, we will also try to hire talent from market. Largely, I think the existing team is going to deliver.
Okay. Thank you very much for your reply. Thank you.
Thank you. We have the next question on the line of Simran from Omkara Capital. Please go ahead.
Sure. Thank you for taking my questions. First of all, congratulations for the good set of numbers you have posted.
Thank you.
You know, all the best for your new journey in the PNB Housing Finance.
Thank you.
Now, sir. Yeah. Sir, I have three questions. First, what's the company focus on the gross NPAs going forward? Second, and second question is on the loan growth front, because we are seeing the, you know, very, you know, flattish sort of loan growth over the quarters. Third, where you see the cost of borrowings of the PNB Housing Finance is going to be on the peak in the upcoming quarters? Yes. Three questions, sir.
Yeah. In terms of growth, I mentioned that, you know, if you look at H1, I think we've grown by about 49% is the growth. I'm talking about disbursements. Book will catch up. Probably, you know, this year we'll see growth in book by about maybe close to 10%, right? One year from now or maybe, you know, five quarters from now, we should be able to see growth in book of over 15%.
Okay.
In a steady state in the long run, our disbursement growth, at least for next few years, is going to be 25% and book growth will be 18%, A.
Okay.
B., we are working on to bring down our GNPA. As I told you, the story is going to be on retail because corporate book we are de-growing the book and obviously on a depleting book, you know, the NPAs would look on the higher side. We have a plan for resolution on the corporate book. Having said that, our focus will be to try and bring down GNPA on the retail book. You will see that, progressively going forward from, you know, from this quarter onwards, there will be improvement in GNPA. It might take some time, but definitely you will see the GNPA coming down quarter and quarter from this quarter.
Great. Sir, my third question was that where you see the cost of borrowing is going to be peak for the PNB Housing Finance in the upcoming quarters?
See, we are part of the system.
Yes.
Therefore we'd have to, you know, operate within the system. Today, given the context of where our company stands, definitely, you know, our cost is going to be slightly high. Today, we are talking about cost of 7.32%. When we get our growth story on, when we see that the delinquencies are coming down, I'm talking about GNPA, anyway we are high on liquidity. You know, once we improve our quality from, you know, from now onwards, we will also get the cost advantage. As of now, the cost of borrowing is 7.32%. I expect in next two to three quarters' time, there could be increase in cost in the industry by about 0.5% to 0.6%.
To that extent, you know, we will also try to pass on that to our customers. As I mentioned earlier, we will definitely maintain profitability. To that extent, for me, the starting point is profitability, margins, because we have very less control on cost and therefore we would get fixated on the margins and then accordingly try to adjust the yield. We are focusing largely on affordable from now onwards. There we have a, you know, higher yield opportunity. Even, we'll be able to grow the book because we see less competition in tier two, three and four cities vis-à-vis compared to large cities and tier one cities. We have an opportunity of building book at a higher yield. Therefore, we'll be able to maintain margins. I think all these things will happen parallelly. It's not sequential.
Okay.
On the cost front, it might go by another 50 basis points or 60 basis points in next two to three quarter time, and we are ready to absorb that and still grow at a healthy rate.
Great, sir. Great. Your focus is primarily driven on the affordable going forward, if I'm right?
Today, our focus is retail. If you look at my retail book, it is INR 52,000 crores. Out of INR 52,000 crores, INR 3,000 crores is affordable. We see opportunity in both affordable and non-affordable. Today, if you see, our concentration is on non-affordable, which is about, you know, INR 49,000 out of INR 50,000. We want to grow non-affordable space. At the same time, we want to get aggressive on the affordable space as well. Because we don't see too much of a difference in the portfolio quality between affordable and non-affordable, and therefore, we want to get into affordable. I'm talking about the industry. We will get very aggressive on affordable, and we will continue to be aggressive on non-affordable. Our focus is going to be on retail, two segments, affordable and non-affordable.
Great, sir. Great. Nice to hear this. Sir, all the best for the upcoming quarters and the upcoming years. Wish you all the best.
Thank you, sir. Thank you.
Thank you. Thank you. Thank you.
Thank you. Participants who wish to ask a question may press star and one on your touchtone telephone. Participants who wish to ask a question may press star and one on your touchtone telephone. We have the next question on the line of Dipti Kothari from Kothari Securities. Please go ahead.
Hi, sir. Thank you for the opportunity. Sir, my question was on that, do we have any significant update on corporate resolution?
We have an update, but at this point in time, you know, you know, let me be honest with you, our corporate book is depleting. Every quarter there is a runoff, and this book is now INR 5,700 crores. If you look at my overall book, I think it's less than 10%. Going forward, we are going to grow very aggressively on the retail side. On the corporate side, we are working on some of the accounts. Only thing is, since considering the nature of these accounts, the resolution might, may take slightly longer time. I won't be in a position to give you a definitive, you know, timeframe as to what would be the resolution, let's say, in next Q2 , Q3 , Q4 .
We are working on resolution, so we will see that coming through in next three to four quarter time time. In next Q2 , I won't be able to commit on that because we are still working on some of the accounts.
Okay, sir. Have you taken any write-off in this quarter?
I mentioned that out of total provision of INR 243 crore, you know, INR 80 crore is ECL, and the balance has three components. One is write-off, one is ARCC, and we have provided INR 60 crore additional.
Do you have further questions?
Hello?
Yes, ma'am. Please go ahead.
Ms. Deepti, can you hear us? Ms. Deepti, your audio is not coming through. Can you hear us?
Mike, we can move to the next question.
Sure. We have the next question from the line of Himanshu Taluja from Aditya Birla Mutual Fund. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity.
Mr. Himanshu, your voice is very low. Request you to kindly go off the speaker phone.
Yeah. Hello. Hi, sir. Thanks for the opportunity.
Thank you.
I just have one question. I just missed your initial commentary, but as I have heard that your endeavor is to bring down the gross NPAs or the asset quality improvement on a quarter-on-quarter . What sort of a credit cost we should expect over the next few quarters, and when you think our normalized credit cost will likely to be visible?
Okay. This year, credit cost will be around 1%. From next year onwards, we can, you know, say that we'll reach a level where we can talk about normalized credit cost.
Okay.
This is for retail.
This is on the retail. Would you like to also build up, like, on the corporate portfolio, would you like to build any contingent buffer to provision buffer?
I think internally we're working on that. Only thing is, you know, on resolution, I won't be able to give you a definitive timeline. You know, while we are working on the corporate book, of course, now the pool has come down drastically. On the retail side, definitely we can expect normalized credit cost from coming FY onwards.
Okay. Sure, sir. That's the question from my end.
Thank you. We have the next question on the line of Ashwini Agarwal from Demeter Advisors. Please go ahead.
Hi. Good afternoon. Thank you for the opportunity. You know, two questions kind of along the lines asked by previous participants. The first question is on spread. If I look at your Q2 spread, excluding securitization income, that's at about 2.6%, which is kind of a little bit on the higher side, compared to the previous two quarters. Given that now, you know, obviously with banks and prime borrowers like HDFC, et cetera, are rising very rapidly, do you think this number of 2.6%, as a spread, is sustainable?
Yeah. Spread of 2.2% is sustainable.
Okay. A spread of 2.2% excluding securitization is sustainable in your view.
2.2% is sustainable, yeah.
Yes. Okay. The second thing is that, you know, on your corporate book, while you've, you know, you've made some additional provisions during Q2, you still have a fairly large NPA pool on your corporate book, and you're talking about, you know, some resolution. There's INR 1,730 crores worth of corporate GNPA. I just wanted to ask, what is the provisioning level on this corporate GNPA? And as this book is resolved, how much more write-off or pain do you need to take on this?
On the corporate book, the book is about INR 5,700 crore. GNPA is about INR 1,734 crore.
Yeah, yeah. I know, I see that.
Yeah. No, I get your point. I would say that the coverage is close to, you know, almost about 51% on the corporate NPA.
Okay. What's your estimate? How much more do you need to kind of wash through the P&L over the next couple
No, it'll be with what I told you, it'll be very difficult, you know, for me to give an estimate, you know, for next couple of quarters because, knowing the nature of these accounts, sometimes it'll take a longer time, sometimes you see resolution coming through. Therefore, I can only say that we are adequately covered. We are constantly working on resolution because number of cases obviously in corporate would be less. PCR is close to 50, as I mentioned. We'll constantly work to ensure that, you know, we are adequately covered at any given point in time, and we expedite resolution.
You, earlier in your conversation you said that for the full year the credit cost should be in the vicinity of 1%.
Yeah.
Next year.
This is at a consolidated stage.
Sorry?
This is both retail and corporate put together.
Correct. Yes. Yes. I get that.
Yeah.
You had also said that fiscal 2024, which is the next financial year, we should expect to see normalized credit costs.
On the retail book.
On the retail book. What would be your estimate of normalized credit costs on the retail book?
See, given the fact that you know what you have seen credit cost on the retail for last few quarters, it should be in the range of 40 basis points to 50 basis points on retail.
40 basis points to 50 basis points on retail. If you work with a 2.2% spread, and I'm assuming your leverage will remain around 5x because, you know, your rating sort of needs to be maintained or improved. If your cost to income ratios remain under control and 40 basis points to 50 basis points of credit costs. What kind of normalized ROA and ROE do you think you could expect, say, one to two , Q3 to Q4 down the line?
See, I mentioned 2.2% spread as a threshold.
Okay.
It could be higher. 2.2% is something which we will maintain at any given point in time. This is the threshold. Let me also talk about NIM. NIM of 3.2%. Spread of 2.2% and NIM of 3.2% is something which we will always maintain. This is the threshold. Now, having said that, even today if you look at our spread, it is much higher than 2.2%. Going forward, our spread will be 2.2% upwards of 2.2%. Threshold is 2.2%. You will see that every quarter, you know, there will be definitely improvement on all the metrics which I mentioned, you know, in last few minutes. Today we are talking about today's situation.
Next three to four quarters , you know, down the line, you will see most of the parameters improving. Even the return ratios will improve.
Sir, the last question is that, you know, let's talk about the retail NPA. You're saying that your retail GNPA ratio will also decline, and it has been declining. We have seen GNPA on the retail side peaked at about whatever, INR 2,600 crores, and it's now down to INR 769 crores, so it's been coming off. What are you doing, or can you help me understand what's driving this? Is it just the economic situation where people are feeling more positive and are paying up as some of your restructured loans are coming back? Or is there a change in the way you are pursuing retail GNPA?
The resolution in retail on the GNPA would be much faster vis-à-vis compared to corporate, number one. Within retail, we work on pre-delinquency management and post-delinquency. Pre-delinquency, we use business intelligence to identify customers who would get into stress, and we cure them before they could become delinquent, A. B, all the delinquent accounts, we start from X bucket. We have a call center strategy. You know, there we use self cure, tele calls then field, right? For each bucket, whether it is, you know, 0 to 30, 1 to 30, 31 to 60 or 61 to 90 or 90+ , which is basically NPA or recovery. For each of these categories we have a strategy.
Largely, you know, for you know, SMA2, if it flips to NPA, our strategy is to first try and collect, right? Now, after November twelfth, RBI circular, once the account flows into NPA, now we have to collect the entire overdue, not just two EMIs, the way it was prior to November twelfth of last year, right? That's the strategy. Now, suppose if the account flips into NPA, it gets into slightly deeper bucket, then we take the legal route. Largely, the recourse for us is through SARFAESI. We use OTS as a very effective, you know, tool to try and collect. We have different strategy for different buckets, whether it is in, you know, NPA or early buckets.
In retail, you know, we have a very clear strategy on collection, starting from X bucket right up to recovery, which is in stages.
Sir, last question from me. I mean, what do you think will be your corporate loan strategy once you've cleaned up, you know, recurrent stress that you're dealing with? I mean, would you be a pure retail lender, or would you say that a 15% to 20% corporate book as an overall part of the book would still be desirable from a NIM and spread management perspective?
See, there are two things here. Talking about corporate, now we are very keen to A, run down the book, B, resolve sticky accounts. Once we reach a comfortable level of GNPA, then we may restart, but on a very small scale. The proportion of corporate may not be substantial or it will be very less. We will be pick and choosy in terms of, you know, doing corporate loans, A. B, within retail, especially on the affordable space, we see lot of, you know, lift in the yield. We see very good opportunity and therefore, you know, we will focus on retail primarily, both affordable and non-affordable.
Affordable is basically, you know, the growth in book could be much lower compared to non-affordable given the ticket size, but there we have an opportunity of growing the book at a higher yield, so we get better margins. On the non-affordable, we can grow the book faster, but the margins will be slightly lower compared to affordable. It's a fine balance between affordable and non-affordable, right? You know, we also have a good proportion of non-home, which can get us better yields, basically focusing on LAP, NRV and LRD. I'm talking all about retail.
All I'm saying is that without focusing on growing the corporate book from the time where we feel comfortable start doing corporate business, in spite of focusing only on retail, we have the wherewithal to maintain spread, grow the book faster and be relevant in the market space.
Good. All right. Okay. Thank you so much for answering my questions. All the best.
Thank you.
Thank you. We have the next question from the line of Nitesh from Investec. Please go ahead.
Thanks for the opportunity, sir. Just two questions. Firstly, any update on the capital raise that we have been planning to do?
Yeah. We are planning for rights issue. We will file before the calendar year.
The quantum of the rights issue will be around INR 2,500 crore?
Yes.
Okay, secondly, sir, if I look at one of the shortcomings that PNB Housing had is the cost of funds. Cost of funds is almost 100 basis points to 150 basis points higher than the peers who are operating in the same segment. How do you plan to bridge that gap over a period of time? What are the steps that you think are required to bridge this gap of cost of funds differential?
See, basically it's a journey. According to me in mortgage business, the starting point is portfolio quality, right? I think once we get our GNPA on track, and when we show growth with decent profitability, I think everything will fall in its place. Cost of funds, which today for PNB Housing is slightly on the higher side, I think over a period of time it will come down. Maybe a few quarters down the line we'll be able to raise from the market, you know, at a much better rates. It's a journey, so we need to take this course. We need to go through the journey and ensure that we get all our pieces right. Few quarters from now, we won't be talking about high cost of funds for PNB Housing.
Okay. The focus is on asset quality, and if asset quality improves, we will automatically see.
Our focus is very clear. Our focus is on growth, asset quality and profitability with high liquidity. This is our mantra. These are not sequential. Everything is parallel.
Okay, sure. That's it from my side, sir. Thank you.
Thank you.
Thank you. We have the next question on line from Kriti Jiwarka from Labyrinth Capital. Please go ahead.
I, some of my questions around the fundraise have already been asked. Just one follow-up on, timing the fundraise and the cost of funds. Of course, the asset quality and the growth will help, but I think one of the outcomes of the rights issue could be a rating upgrade.
Sorry, your voice is breaking.
Can you hear me clearly now?
Yeah, it's better.
I would say one of the outcomes of the rights issue could probably be a rating upgrade, which would automatically give us a cost to funds advantage. That could come much sooner than, let's say, GNPA going down and a lot of other long-term structural issues. Do you think that will be enough to mitigate this 50 basis points to 60 basis points increase that you are anticipating this year to sort of get a net-net zero increase in cost to funds?
Yeah, you are partly right, but I think we need to work on all the pieces because recently, you know, we got a rating upgrade, you know. Outlook upgrade. All these things, I think, according to me, would have to run parallelly. Yes, definitely raising capital is a big plus for the company. It will definitely help us to raise funds at a much lower rate than what it is currently. Yes, if we can work on growth strategy, profitability and asset quality, I think the cost will be much lower, and we will be able to compete with some of the best HFCs in the country in terms of cost leadership.
Okay. Second question is, when you talk about affordable, you mean the Unnati kind of loans that PNB was already doing, right? You don't mean the sub-INR 10 lakh loans that, let's say, [inaudible] would be doing.
See, affordable means up to INR 35 lakh. That will be a focus in the affordable space.
No, can you narrow that down? Because it's a very wide range and you-
Okay. Let me.
You start building different verticals and capabilities in loans because, you know, you don't have too many examples of one HFC doing a INR 6 lakh loan well and a INR 40 lakh loan well.
No, no, I think we have quite a few HFCs, you know, who are focusing on both affordable and non-affordable space. I think as far as PNB is concerned, we are building capability. It's already on course. We will have a separate team to manage affordable business. While we are already there in the non-affordable space, we see lot of opportunities. We'll build a team to manage affordable. In terms of the difference between affordable and unaffordable, one in terms of ticket size. I think more than ticket size, you know, in terms of profile, probably, I'll give you just one example. Affordable would be basically, you know, focusing on tier two, tier three, tier four and urban outskirts pocket, A, in terms of geography. B, in terms of profile, Cat B corporates and Cat C corporates.
In terms of builder, Cat B and Cat C developer. When we talk about non-affordable, it will be focusing on Cat A corporates, Cat A builders, and focusing on top cities and metro. I think these are the three, four differences. Of course, there are many more. I just thought, let me give you a flavor of affordable and non-affordable. We see opportunity in both, and we don't see too much of a difference in the book quality at a industry level. For PNB Housing, it's a journey. For us, we need to definitely bring down a GNPA. We are working on that. The book we are going to build henceforth would definitely be, you know, at a far lower, you know, delinquency.
Okay. Got it. Thank you so much.
Thank you.
Thank you. We have the next question on line of Ameya Gawande from Metaverse Equity Fund. Please go ahead.
Yeah. Hello. First of all, congratulations, sir, and best wishes for the future endeavors. I just have a couple of questions. First is with respect to Unnati segment. What were the disbursement numbers, and were there any run-offs for the quarter?
I think at this point in time, talking about Unnati. Because we are just starting that now. We just started, so we want to scale it up. Today, if you look at the numbers, it'll be, you know, very less. If we look at our total disbursement, I think Unnati would be close to about 11% to 12% of the total loan disbursement. Going forward, incrementally, we want to scale affordable or Unnati to, you know, up to 25% incrementally.
Sir, about the run-offs?
We don't see too much of a difference between affordable and non-affordable at this point in time.
Okay, sir. Sir, second question is with respect to the growth you will be chasing for next three years.
Yeah.
If you could just give some numbers.
I think in the opening remarks I mentioned about this. We'll be focusing this year the growth on disbursement will be about 40% odd, and growth in book would be about 8%, close to 10%. Now, from next year onwards, industry would grow at about 12%, 13%. On book, we would grow at about 18% and disbursement 25%.
Yes. Thank you.
Thank you.
Thank you. Participants who wish to ask a question may press star and one on your touchtone telephone. Participants who wish to ask a question may press star and one on your touchtone telephone. We have the next question from the line of Franklin Moraes from Equentis Wealth Advisory. Please go ahead.
Yeah, thanks for taking my question. So in terms of, you know, the assets sold to ARC, what would have been the gross book value and the net book value on the sale?
I will have to come back to you on that. I think specific, no data. I'll come back to you.
Okay. Like, you know, would some provisions have been reversed because of, you know, the sale?
Not in the ARC.
Okay. I also wanted to understand if we add the, you know, ARC sales and the write-offs, if we adjust for both of these things, you know, in absolute levels, would the gross NPA levels have been the same or would it have, you know, still reduced?
Yeah. The I think it will be on the lower side, but slightly. There's a marginal improvement. Net of, you know, write-off and ECL.
Okay. We have been doing a lot of, you know, ARC sales also, you know, recently. Just wanted to understand the pipeline, in terms of the quantum. What is the quantum of ARC sales that, you know, we are likely to do maybe in the next two or three quarters?
No, the company has not done too many ARC deals. It is the second deal. The first was done on the SR structure, which was one large, corporate account. This is the second one in retail portfolio, which was on a cash basis. As such, as of now, there is no new confirmed pipeline. Thank you.
Okay. On the credit cost, you had mentioned, you know, the normalized credit cost, you know, just on the retail aspect. Is there some concern still on the corporate book, which, because of which we are a little bit hesitant to give a credit cost guidance?
No, for this year I've given the numbers. Credit cost is going to be around 1%.
Correct.
No, no. There is no concern on the corporate book. I think the only challenge in the corporate book is that given the nature of the account, the resolution, you know, we can't predict the resolution timeline. See, in retail, I can say, suppose if the account gets into NPA within five months, six months, I can either get into OTS with the customer, or I can get into SARFAESI, even more so foreclose, sell the asset and realize. So I have a definite timeline. I can say within six to seven months I will be able to crack. In corporate we'll not be able to give that kind of timeline. That's all. I think but for giving the timeline, there is no other concern.
Yeah, of course, the concern is that we have quite a, you know, large NPA pool, but in terms of resolution, there is no concern. There is. Only thing is we're not able to give you the exact timeline. That's all.
Lastly, on the capital raise, you had mentioned that, you know, you'll be filing the rights issue proposal by this calendar year. Would it be safe to assume by the end of this financial year at least, you know, we would have the rights issue in place in terms of getting the money?
It depends. It might get concluded before the financial year or it may slip to quarter one of next financial year.
Q1 is kind of the outer deadline, at least.
Yeah. I would say, I think before close of Q1 probably it would get concluded.
Okay. Fair enough. Thanks and all the best.
Thank you.
Thank you.
Thank you.
That was the last question. I would now like to hand over to the management for closing comments.
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 the audio of this call will be uploaded on our website. Thank you.
Thank you very much.
Thank you.
Thank you.
On behalf of PNB Housing Finance Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.