Ladies and gentlemen, good day and welcome to the PNB Housing Finance Limited Q2 and H1 FY 2025-2026 earnings call. 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 this conference, please signal an operator by pressing star and then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Chaitanya Yadav , National Head, Corporate Planning and Investor Relations. Thank you, and over to you, sir.
Thank you, Robin. Good evening and welcome, everyone. We sincerely thank you for your patience given the delay in starting the call, which was due to a technical issue while uploading the document to the stock exchange. We appreciate your understanding. We are here to discuss the PNB Housing Finance quarter two and first half results for financial year 2025-2026. You must have seen our business and financial numbers in the presentation and the press release shared with the Indian stock exchanges and are also available on our website. With me, we have our management team led by Mr. Jatul Anand, Executive Director of the company. We will begin this call with the performance update by the management team, followed by an interactive Q&A session. Please note that 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 statements to reflect future events or circumstances. A detailed disclaimer is on slide 44 of the investor presentation. With this, I will now hand over the call to Mr. Jatul Anand. Over to you, Jatul.
Good evening, everyone. I hope you all had a bright and cheerful day . Before we move into the performance update, I would like to briefly reflect on the business momentum. Despite the challenges we faced in quarter two, the business has continued to show steady progress, be it growth in loan book, disbursements, and improvement in asset quality. Guided by responsible leadership and a strong sense of ownership, our teams have delivered with consistency and focus, reaffirming the strong foundation and solidarity of PNB Housing Finance . Talking on the company's performance based on audited financials for Q2 and H1 of FY 2026, we have delivered yet another strong quarter with disbursements of almost INR 6,000 crore at a sequential growth of 20% versus quarter one FY 2026. The retail loan book grew by 17% year on year, reaching INR 79,439 crore as of September 30, 2025.
It now contributes 99.6% of the total loan book, which stands at INR 79,771 crore. A key highlight is the affordable and emerging market segments, which together grew 34% year on year and account for 38% of the retail loan book. This reflects our commitment to financial inclusion and penetration into high-potential geographies and demographics while maintaining strong asset quality and risk-adjusted returns. These segments not only diversify our portfolio but also position us to capture growth in India's expanding housing demand. Overall, collections remain strong with significant recoveries, leading to a credit cost reversal of 53 basis points during the quarter. The gross NPA continued to decline. We were at 1.04% as of quarter two FY 2026. With the seasoning of affordable housing business, we have observed a sequential uptick in delinquencies, which was expected at this stage of the business cycle.
Importantly, these levels remain well within the industry benchmarks for the affordable segment. Sharing that, we will cover the same in detail later, covering performance on affordable housing business. Our spread marginally improved to 2.26% in quarter two FY 2026 from 2.23% in quarter one FY 2026, while achieving a return on assets of 2.73% for quarter two FY 2026 and 2.65% for H1 2026 on an annualized basis. I would now like to delve deeper into the performance highlights achieved during the quarter. On disbursements, the company continued its focus on high-yielding business as a strategy. Disbursement in affordable and emerging segments grew year- on- year by 31% and 23% respectively, contributing around 50% of the total retail disbursements. The prime segment grew by 2% year- on- year, ensuring steady margins in a highly rate-sensitive market.
The overall retail segment disbursement grew 12% year- on- year during quarter two, INR 5,995 crore. We will continue prioritizing growth in the affordable and emerging market segments. On loan books, the retail loan book grew by 3% quarter- on- quarter and 17% year- on- year as of 30 September 2025. The loan book for emerging markets and affordable segments grew by 34% year- on- year, reinforcing our commitment and focus on these segments. As stated earlier, the company continues to focus on growth in these two segments that are emerging and affordable, which contribute 38% of the retail book. The corporate book now stands at INR 332 crore as of 30 September 2025, due to foreclosure of one of the corporate loans during the quarter. The total loan book stood at INR 79,779 crore, and assets under management is at INR 83,879 crore.
The total accounts serviced by the company crossed 3.5 lakh during the quarter. The growth in the affordable and emerging segments continues to remain strong in all the geographies. Our network today spans out 356 branches across the country, out of which 198 are in the affordable segment, 85 in the emerging markets, and 73 in prime. This reach gives us a strong foothold in the Tier 2 and Tier 3 cities, where we continue to see growing demand. We plan to steadily expand our presence by adding around 40- 50 branches each year in line with our growth strategy. On asset quality, as mentioned earlier, the gross NPA improved to 1.04% as of 30 September 2025, as compared to 1.06% on 30 June 2025 and 1.24% as of 30 September 2024. During the quarter, we recovered INR 59 crore from the overall written-off pool.
In our retail portfolio, we have seen remarkable progress on asset recovery. During quarter two, we successfully auctioned 178 repurchased properties, bringing the total disposals for the first half of FY 2026 to 276. This strong execution reflects our robust recovery strategy and our commitment to maintain asset quality. The company has a remaining written-off pool of around INR 1,000 crore, having INR 675 crore in corporate and balance in retail. On borrowing rates, our cost of borrowing declined by 7 basis points sequentially to 7.69% in quarter two of FY 2026, driven by ongoing negotiations with banks and the impact of repo rate cuts. On margins, the company was able to slightly improve the margin to 2.26% in quarter two FY 2026 from 2.23% in quarter one.
NIM remained range-bound at 3.67% for the quarter versus 3.74% in quarter one of FY 2026, and on an overall basis for H1 FY 2026, it remained at 3.7%. On profitability, all efforts across parameters aided in improving the profitability. Our return on assets improved to 2.73% in quarter two FY 2026, and H1 stood at 2.65%. Return on equity was at 13.14% annualized for quarter two FY 2026. Let me now share some highlights on our prime and emerging segments. Overall, prime and emerging business delivered growth of 10% year- on- year and 23% quarter- on- quarter. The emerging business recorded quarterly disbursement of INR 2,122 crore, up by 23% year- on- year, and prime business remained flat in line with our strategic approach to profitable growth. Emerging business now contributes 41% of overall prime and emerging segment, up from 37% in quarter two of last year.
The affordable housing business will be covered by Ms. Valli Sekar. To sum it up, as we look ahead to FY 2026, our strategic approach remains on accelerating retail growth and expanding our affordable housing footprint. We aim to enhance customer experience, reinforce risk framework, and sustain industry-leading asset quality while delivering consistent long-term value for all stakeholders. Backed by a strong leadership team and a resilient culture, we are well positioned for sustainable growth. With this, I would like to hand over the call to Valli to take through the update on the affordable business. Thank you.
Thank you, Jatul. Good evening, everyone. This is Valli Sekar. It is with great pleasure that I present the significant progress we have achieved in our Roshni business during this quarter. We closed the second quarter of this financial year with a robust loan book of INR 6,531 crore, marking an impressive 121% year-on-year growth from INR 2,959 crore in Q2 last year. This also represents a healthy 14% increase over the previous quarter, underscoring our continued momentum and strong execution. Our disbursement performance this quarter is equally noteworthy, reflecting strong growth and deepening market traction. In Q2 FY 2026, we disbursed INR 828 crore, a strong 31% increase over INR 630 crore in Q2 last year, reflecting sustained momentum and growing market acceptance. We also saw an improvement in incremental leads, which rose to 12.1% this quarter from 12% a year ago.
This uptick is driven by our strategic focus on higher yielding segments and deeper penetration into Tier 3 and Tier 4 geographies. Over the past year, we have expanded our footprint by adding 40 new branches, bringing our total to 198 branches across 130+ high-potential districts in 15 states. I am pleased to share with you that these branches are fully operational and already contributing meaningfully. We will continue to strengthen our presence in three newly added markets: Punjab, Chandigarh, and the Northeast, as a part of our strategic expansion plans for the upcoming fiscal. Our pan-India presence enables us to scale efficiency across regions. Our pan-India operations are well balanced across three zones: North Zone at 33%, West Zone at 35%, and South Zone at 32%. This geographical balance continues to be a key strength, ensuring both resilience and consistency in our growth.
Tamil Nadu leads our AEM, followed closely by Uttar Pradesh, Punjab, and Madhya Pradesh. Our customer profile continues to evolve positively. Self-employed customers now represent 43% of our base, up from 39% a year ago. Informal segment grew to 30%, up from 27% last year, forming a sizable portion of our portfolio. 72% of our portfolio is within the ticket size of INR 25 lakh . 35% of our portfolio remains non-housing loan. The yield is at 12.13%, marching towards 12.25% in the coming quarters. Importantly, our portfolio quality remains strong. The collection metrics are well within the predefined acceptance criteria. Bounce rates are well controlled at 11.4%, while 3.5% is due to technical reasons. Early reminders, omnichannel communications, customer segmentation, and diverse collection techniques, varying technical integration backed by human communication, have helped us towards collecting efficiently. The recent spike in NPA is attributed to the maturation of the portfolio.
However, it remains low at 0.51%, as against the affordable housing industry level of 1.3%. 30+ remains at 1.40%, as against the affordable housing industry standard of 3.7%. We have, however, proactively implemented loan amount based on tier levels on city levels to enhance quality and keep the future delinquency low with a low EC2 serve EMI. Further, we have identified specific markets for course corrections, which is a part of our standard operations model. We are deeply proud of the milestones we have achieved. With a solid foundation we have laid and the strong momentum we are building, we are entering the second half of the year with confidence and optimism. The road ahead is full of opportunity, and we are well positioned to close the financial year on a truly high note: stronger, bolder, and more impactful than ever. Thank you very much for your continued support.
I shall hand over the call to Vinay Gupta, the CFO of the company, to talk over the financial numbers. Thank you.
Thank you, Valli, and a very good evening to everyone. I am pleased to share that this quarter, again, we have delivered robust financial results across all key performance indicators. Revenue growth has been strong, margins have remained healthy, and our cost optimization initiatives have further strengthened profitability. Our total loan book as of 30 September stood at INR 79,771 crores, growing 15% year- on- year, and retail loan book grew 17% year- on- year to reach around INR 79,440 crores. Now I'll cover some of the key major P&L highlights. With respect to yield, we were able to, despite the 10 basis points rate to pass through during the quarter, there is a marginal decline at 9.95% versus 9.99% in the previous quarter. Cost of borrowing declined by 7 basis points sequentially to 7.69% in Q2, driven by all the ongoing negotiations and the impact of recent repo rate cuts.
The incremental cost of borrowing remains stable at 7.42% in Q2 as compared to 7.44% in previous quarters. Our net interest income grew during the quarter to INR 765 crores at a growth rate of around 14% year- on- year. Spread marginally improved to 2.26% versus 2.23%. NIM declined marginally from 3.74% to 3.67%. This is due to lower investment yield. The gross margin is stable at 4.05% in Q2 versus 4.06% in Q1. Similarly, OpEx to ATA is stable at around 1.02%. We maintain the guidance of around 1% to 1.1% going ahead. Our pre-provision operating profit has grown 16% to INR 646 crores, driven by positive operating leverage. Our credit cost stood at minus 53 basis points. This is due to recovery that we were able to do of around INR 60 crores from written-off pool during the quarter.
There is a release of ECL of INR 70 crores due to foreclosure of one corporate loan during the quarter. All this has led to profitable growth for us. Our PAT has grown to INR 582 crores at a growth rate of 24% year- on- year. ROA for Q2 stood at 2.73%, and ROE stands at 13.14% for Q2. With respect to capital, CRAR remains strong at 29.8%, and Tier 1 capital out of this is 29.2%. Our book value has moved to around INR 690 per share. I now hand over the call back to Chaitanya Yadav , who closed the call.
Thank you, Vinay. Now we can open for the 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 touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Derinkshah for an individual investment. Please go ahead.
Hello. Am I audible?
You are audible, sir. You may proceed.
Yeah. The first question is, what's the update on the new CEO who is coming on the ground? Is it from the internal, or you are going to get it from the external? I think the last date has been gone away.
The company is taking all necessary steps for filling up the vacancy. As per the protocol, the disclosures will be first raised to stock exchanges at an appropriate time, and then definitely, you know, it will be released. Only in the interim, we are managing. I am leading the team and accordingly reporting to the board. That is how we are managing.
No, sir, just want to know, it's already one and a half months back. Your CEO told, told like he's going updates from the internal or from the outer external. That's the simple question I'm asking.
You will appreciate that given the sensitivity and the process involved, it will be difficult to comment on that at the current time.
What we did, sir, then what are we doing from last one and a half months? We know that one person is going and leaving the company, and that's for sure. You have accepted the resignation. What the company did in 90 days? It affected the stock price. No, sir, it affected the stock price and the market cap.
There is a detailed process which has been followed. As I mentioned, we have traveled the distance, and the disclosures will first go to the stock markets and then will definitely be released. The company is mindful of the position and they're working very fast on closing the gap. Yes.
Another second question is, like, sir, what's the projected growth? Like, what we are expecting on the credit side? Like, if it's going on the credit side.
Sorry to interrupt, sir. You do have a disturbance on your line. If you could please check into the mode.
Can you hear me? Yeah, now it's okay.
Please go ahead. Let's check.
Yeah. Can I know what's the growth trajectory for the upcoming quarter? Like, is it on the loan side or the credit side? It's on the retail portion as well as on the big portion of the loan. What's the growth trajectory?
We have guided for the year to grow at around 18%, 17 to 18%. That remains. This quarter and last quarter, we have grown between 17 to 18%. That growth guidance remains intact.
Okay, that's fine.
Thank you. Our next question comes from the line of Praful Kumar from Dymon Asia. Please go ahead.
Congratulations, sir, on the very strong quarter. Just a couple of things. One, in terms of the previous participant asked the new CEO. Can you just give an update in terms of the process that you had? How many applicants came in, how many were from the private sector broadly? In terms of the process that was followed and when it was closed and by when we should expect. Should it be next week, 10 days, a month, a timeline to it? I'm not asking the sensitivity of the candidate here.
First of all, thank you for acknowledging the results. Thank you. Please appreciate that this is, again, given the sensitivity of the process. I would not be in position to share the details. This process was done by the Board directly and they are following a transparent search for the right candidate. Definitely, the results, as and when decided, will be, as I mentioned earlier, disclosed to stock exchanges first and will definitely reach to all of us.
Fair enough. What we understand is that the last date of the applications has gone, say, two to three weeks back, and whenever the process is concluded, the exchanges will get to know first. That's the way it is.
Yes.
Okay, sir. Many congratulations on standing up very tall. In spite of so-called leadership crisis, you guys have done a phenomenal job. Thank you, sir.
Thank you very much. Thank you.
Thank you. The next question comes from the line of Ramesh from ICICI. Please go ahead.
Yeah. Hi, sir. Congrats on a good set of numbers. Just two things. One on the spread and margin trajectory side. Obviously, this quarter, the incremental cost of borrowing has gone down materially. Obviously, NIM contracted a bit because of the incremental leads being lower in prime and emerging. How do you see NIM's sort of spelling out over the next two quarters? I mean, do you see the NIM have bottomed out in Q2 and then Q3, Q4 should see some improvement?
Ramesh, for this quarter, spread actually, if you see, we were able to maintain.
Correct.
NIM has gone down due to some impact on the investment yield. While we will continue to see some benefits coming in on the cost of borrowing, at the same time, due to the mix being in favor towards prime and emerging, this will continue to have some impact going forward also. We have given a guidance of 3.6% to 3.7% as a NIM guidance for this year. We expect it to remain range-bound between this particular range for the second half of this year as well.
Okay. Got it. The second question is on the affordable fees. Obviously, I heard early on, you know, we, let's say, though there is an increase in 30+ equivalent of NPA, and it is far below than the industry images. Can you throw some light on what has led to this spike in this quarter? I mean, is there any particular geography, sort of product segment in terms of whether it is labs, etc.? What is driving this higher delinquency in this quarter?
Yeah, Ramesh, you will appreciate that the portfolio is getting matured. You know, our portfolio, more than two years, itself is close to INR 2,500 crore plus . Now the portfolio is maturing, and we are in the affordable business of handling EWS, LID, and we are getting into Tier 3 and Tier 4 markets. We are getting into informal segments. We are getting into high-yield products, so this spike is going to be there. I would appreciate if we do not see affordable on a quarter-to-quarter basis because every quarter is going to be different. The first quarter in particular was cyclical also. We had some rain problem, and there were problems in one or two states because of the government ordinance coming into place. Everything is getting improved. From there, it'll, you know, it'll slightly hike up, and after a particular mark, it'll get stabilized.
Got it. Let me just relate with that. You know, as you said, now this book will get seasoned over the next, maybe, three, four quarters. When you see delinquencies going up, are we also looking to, let's say, recover yields accordingly to sort of price that risk? I mean, how one should see the asset yield moving in affordable segment?
Yes, we do. The first one and a half years of operation, we were more concentrating on salaried segment and formal segment. In the note I had read that the self-employed is significantly growing up, and even the informal has gone up to 30% from 27%. These are high-yield products. When we are talking about increase in this delinquency, we are also mindful of increasing the yield as well.
Should that start showing in numbers from next quarter, or might it take a few more quarters before it shows up in yield?
Periodically, quarter by quarter, you will see this happening.
Okay. That's it. Thank you and best of luck.
Thanks, Ramesh.
Thank you. Our next question comes from the line of Prithviraj Patil from Investec. Please go ahead.
Yeah. Hi. Thank you. Thank you for allowing this opportunity. The first question is a bookkeeping question. I just wanted to know what is a 1+ DPD on our affordable portfolio.
Just one minute.
1+ is around 2.5%.
Okay. A follow-up, that is, we have shown that 30+ DPD and 90+ DPD are below industry. 1+ DPD also, I'm assuming, is below industry level, right?
Yeah, yeah.
Yes.
That's right.
Okay. The second question is, what is the asset pool that is pending for recovery? I've seen that there are write-backs from corporate as well as the retail pool. I just wanted to know, how do we see credit costs going forward? What would be the write-off? What is the pool that's pending for right now?
See, the written-off pool, which is available, as I mentioned in the opening remarks, is close to INR 1,000 crore, out of which INR 675 crore is from corporate and the balance is retained. Recoveries have been steady so far, quarter- on- quarter, from this pool. We envisage this happening for some more quarters for now. Credit cost will definitely be, you know, the rainbound the way it is as well.
The third, the last question is on the cost of borrowing. I saw that the incremental cost of borrowing has also come down to 7.4%. Largely, the whole of 66% of our book has been repriced, right?
Yeah, that's right. This is more or less stable on incremental cost. We were at 7.44 last quarter. This quarter, we are at 7.42. This will keep adding up on the overall cost of borrowing as well from the benefit standpoint. We might have to look at passing on also some of the benefits.
Okay, thank you. Thank you.
Thank you. Our next question comes from the line of Harshit Toshniwal from Premji Invest. Please go ahead.
Hi, sir. First, congratulations for managing the transition so well. I think the question was more regarding the disbursement growth. I wanted to understand that if I look at the affordable segment, even though our disbursement growth by way looks north of 20%, at the same time, we have also expanded the branch count from 160 to 200. Basically, the disbursement per branch, despite branch easing, hasn't happened a lot this quarter. If you can just explain, is it because in the transition phase, we want to go slow and we should expect the disbursement growth in general to be a bit more moderate in the next few quarters till the management is fully transitioned? Or do you think that it's a reason of the maturity itself and then it's natural to expect a low disbursement growth because of the market's condition?
Yes, your second point is right. It is more to attribute with the monsoons continuing, where in affordable, we depend more on self-construction and plotless construction cases. Where in retail cases, the construction stage did not come because of the monsoons. You will appreciate that the first two quarters are slightly muted in terms of growth in affordable. Now that the festival season has come in, from here on, the numbers will start to come in.
Got it. I'm saying even on disbursement per branch, ma'am, on a by-way basis, the number didn't grow. I was more asking that since our branches are seasoned, shouldn't the disbursement per branch have shown a better result in affordable?
Correct. I'll explain it. Because the 40 new branches which have started up just now started to perform, they have not even reached their normal level. Optimum is very far off. When we take all the overall 198 into consideration, the total overall business seems to be flat. That is the reason. Once these 40 branches also start performing to a normal level, you will find the per branch productivity slightly higher.
Okay. That was one. The second one was on the corporate segment, ma'am, that I think we had some aspiration to restart the corporate segment. At present, how should we look at that business? I think if I'm not wrong, we were wanting to do an INR 500, 600 crore disbursal a year in 2026 if it goes over. At least as of now, how should we look at that segment? What are our plans for reentry? Have we halted that for now? If at all, what could be the aspirational disbursement with which we want to restart the corporate?
Yeah. Harshit, we have revamped the corporate credit policies, and there have been a couple of sanctions which should translate to disbursement in Q3 and Q4. Corporate is on the cards as already talked about. You will see some business happening on the corporate side. It is gradual and slow. It depends upon, you know, you will appreciate each case has their own nuances. The business is being done in a very thoughtful manner that disbursement will pick up.
Okay. I think if I remember correctly, we will be focusing more on the INR 50 crore, INR 60 crore ticket size because in our portfolio itself. For example, even if two, three cases, when you say it would be more around INR 100 crore, INR 150 crore disbursals at max, nothing lumpy yet.
Not necessary. That was that INR 50 to 60 crore will be the ticket size. It depends upon, as I said, that each case is different. On corporate in particular, the nuances are different. It could be more also.
You said that we have changed the corporate policies. Which is the segment then are we now planning to target? When we say the change in corporate policy, what are the guardrails in this segment which we want to adhere to while starting the segment?
See, when I say change in corporate policy, I meant the revamp in corporate policy because the earlier one was, in fact, pretty old when we used to do corporate business in a full-fledged manner. The guardrails largely remain the same, focusing on the right segment, right choice of the builders and the projects. The guardrails broadly are the same, but the policy is revamped given the current nuances.
The ticket sizes would be, let's say, up to INR 150 crore to INR 200 crore.
Yeah.
Okay. Okay. Sure. Okay, sir. Perfect. Thank you. Thanks a lot.
Thank you, Harshit.
Thank you. Our next question comes from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead.
Hi, Abhi. Good evening, everyone. Am I audible?
Yeah, Abhijit, please.
Yeah. Thank you so much. Sir, there's just two questions really. First things first, we've taken a PLR cut of 10 basis points until now. While if I look at some of our larger peers, LIC Housing, Bajaj, and even a smaller peer like Canton Home, they have taken a higher PLR cut than what we have taken. While I appreciate the fact that we've been able to maintain very healthy yields and margins, are we not seeing higher BT outs, particularly in the prime segment now? I remember Vinay sir saying that maybe at some point in time, we will look to pass on through some PLR cuts maybe in the subsequent quarters. How are we thinking about that? If you could just explain that. Are there more benefits expected in the cost of borrowings?
I ask this because I remember sir making that comment that even in the second half, margins will remain between that 2.6%- 3.7%. Are there more benefits which will be expected? From what I understand, yields will remain under pressure if we were to pass on more PLR cuts in the coming quarters.
That's right, Abhijit. If you see from Q4 till now, Q2, our cost of borrowing has gone down from 7.84% to around 7.7%. We have seen overall, if you see, a benefit of somewhere around 14 to 15 basis points, out of which 10 basis points we have passed on. We are monitoring it very closely. Once we see such sizable benefit coming in, we intend to pass it on to the customers. We would be watching the next monetary policy as well and then accordingly time it and see if we can align it with that change.
Got it, sir. In the opening remarks, we spoke about this corporate account, which has led to some ECL release. There are two subparts, more of a data-keeping question. One is how much exactly was the ECL release on this account? Also, if you can basically qualitatively speak a little bit about this corporate account, which corporate account, without naming it, of course, some details about this corporate account, how much was the total exposure?
This was a standard account, and they wanted to close the loan, and they did so. The ECL release was close to around INR 70 crore from the account.
Okay.
It was a standard performing account.
Understood. Understood. Basically, a stage one account, and the ECL release was about INR 70 crore. What was the total outstanding in this account?
Yeah, it was a stage one account. Yeah, around INR 330 crore, sir.
Got it, sir. Lastly, for money, ma'am, this thing has been asked by some previous participants. I'm just trying to kind of understand, while we are cognizant of the fact that we are moving towards more self-employed, more informal segment, which you shared is 30% now, don't you think the risk quotient at least is going up, right? Maybe going forward, if the yields increase is not commensurate with the risk increase, then probably we might have problems later. If you could just share some thoughts on this dynamic of risk-reward in the affordable segment given the fact that we are leaning more towards informal, more self-employed.
Yeah. See, now that PMAY 2 has come, there is a clear guideline of what are all the profiles we have to look in, and they have even mentioned the type of customers that we have to service in. This time, the circular is very, very explicit. When we are wanting to, you know, promote PMAY 2, the government initiative, we have to get into EWS and LIG. When we get into EWS and LIG, we have to enter into this, you know, self-employed and informal segment. While we are talking about that, we internally have kept in mind that we will not cross self-employed at any point of time more than 45%- 50%, which we have kept for ourselves. The same informal, we have kept in mind that we will not cross more than 35%- 40% at any point of time.
You have to appreciate that still in our portfolio, close to 52%- 53% is formal vanilla salary accounts. We are even servicing those customers. We are balancing it out because we will have to bring in yield as well. Now with the cost coming in, we will have to manage that as well. To promote PMAY 2, this is one measure we will have to take. We are very mindful and we are going ahead with that.
Got it, ma'am. Thank you for patiently answering all my questions, and I wish the PNB Housing Team the very best.
Thank you, Abhijit.
Thank you. Our next question comes from the line of Shravan from Sincere Syndication. Please go ahead.
Hello?
Sir, you are audible. You may proceed.
Yes, sir. My question was rather focused on the next CEO. As you've already given an answer, my follow-up question would be on credit growth. What is the credit growth this quarter, Q2?
You meant loan growth?
Yes, loan growth.
Loan growth is 17%, 16.9% for the year, year- on- year.
For the year on year. Okay, sir. Have you got any update, possible update on the CEO? This has been going on for a while and the stock price really took a dive. We would appreciate an effort and an announcement maybe. Are you any timeline that you can give in? Any information without leaking any sensitive material? I understand that and I can appreciate that. Any information on how long would it take or where are you in the process right now? Have you streamlined any of your candidates? Something like that would be helpful.
Shravan, I have already answered that. However, given the question from investors, let me say that leadership transitions are never easy, especially after a phase of success and momentum. Yet, what has stood out is shared resilience and responsibility of PNB Housing 's leadership team that the business remains steadfast and we have delivered on all the parameters as expected. We continue to remain the same and grow quarter by quarter, and the strategy remains the same. It is all about execution, as already talked about in various calls with the investors. While we appreciate the sensitivity of the process, meanwhile, patiently waiting for the new MD and CEO to take charge, the company remains responsible and accountable to grow the business in line with the expectation of the stakeholders.
Okay. Could you just answer this? This would be my last question. Will the new CEO being appointed follow the same strategy of you focusing higher on the higher yield segment, upping or doubling your affordable loan book? Would he stick with the strategies or would there be any changes, any shocks?
We have already spoken about, you will appreciate that the mortgage business is largely monoline what we do. Till March 2027, we have already laid out a strategy and are working towards the same. Most likely, the strategy should remain the same, plus minus little variation.
Okay, yeah. Thank you.
Thank you. The next question comes from the line of Kunal Shah from Citig roup. Please go ahead.
Yeah. Thanks for taking the question. Firstly, maybe particularly with respect to the lower provisioning when we look at it overall, when I look at cumulative provisioning, one is obviously, I would tend to believe that the entire momentum gross stage one, the entire coverage is purely on account of the release of the provisioning. I think you mentioned like INR 70 crore kind of a number. Otherwise, broadly, the coverage has been broadly sustained in the stage one assets.
Yeah, that's right, Kunal.
Okay. Secondly, on the consolidation part, on the branches side, we have seen maybe two branches being lower, say, in the affordable housing segment. Obviously, on the emerging side, it's still growing. On the prime side, it's been lower by maybe three odd branches or so. Do we expect to see this consolidation out there? What would be the branch expansion plans here on? If you can give the number of employees breakup across these three businesses.
I would say that two branches here and there is part of BAU, and it is more to do with increasing the operational efficiencies of the company. That is where it is, and it does not change the business plan per se. On employee numbers, I don't have the numbers handy as of now. However, having said that, out of 356 branches, the major number of branches are in affordable and emerging segments, which resonate with the company's strategy to grow these businesses faster. Prime continues to be a range-bound growth given the economic environment. It has to make some economic sense for the company to accelerate that business. Accordingly, we are overall maintaining the retail asset growth.
Okay. Has there been any exit with respect to the locations or not really? Maybe it's just the branches within a particular location, they have just got consolidated.
Yeah, Kunal. See, what we have done is, as a process, standard operating process, wherever we found that the branch is not profitable, we consolidated it. As per the guidance we have given already, we are in the process of opening more branches in this particular quarter. By the end of this year, we are talking about having 250 branches in affordable housing. That remains. This consolidation has happened as a part of our standard operation process, and it is BAU.
Yeah, this would be the net number. At the gross level, how much would have been the addition and the closure?
No, no. This is the gross only. The additions will come quickly. We are working on that.
Got it. Okay. Thanks. Thank you.
Thank you. Our next question is from the line of Sanket Chedha, an individual investor. Please go ahead.
Hello. Am I audible?
Sir, you are audible. You may proceed.
Yeah. Sir, I just wanted to ask on the account that you mentioned was a stage one account. Why was the provision cover on the same 20% to reverse the INR 70 crore amount that you just elaborated?
That was basically because of the past trends that happened during the COVID crisis. The provisioning has been kept at a slightly higher level. However, it was a standard account, has been paying regularly. It's more to do with the client that they had funds and they want to foreclose, and they foreclosed.
Sure, sir.
Thank you. The next question comes from the line of Siraj Khan from Ascendant Capital. Please go ahead.
Hi. Am I audible?
Yeah.
You are audible, sir. You may proceed.
Thank you for the opportunity and good set of numbers. Sir, first to clarify, the exit NIM for FY 2026 that you mentioned was 3.6% to 3.7%. Was that correct? Did I catch that right?
Yeah, that's right.
Okay. Also, another clarification, our guidance that we had given for FY 2027 that 15% of the portfolio, so approximately INR 15,000 crore will be the AUM for affordable, and 65% will be prime, and the balance will be emerging. Is that still holding true or will that change?
Yeah, that's still holding true. We are working on that strategy already.
Understood. A few questions of data keeping and qualitative. I'll get the data keeping ones out. What was the sanction amount during the quarter?
We are.
That could be said.
Sanctioned to disbursement ratio is around 70%.
Disbursement is close to.
Sanctioned to disbursement ratio was? Sorry.
68- 70%. You can calculate.
Okay. Okay. If the amount could be shared?
Sorry?
The amount, sanction amount, if that could be shared?
I don't have it handy, Siraj, but I think it will be upwards of INR 8,000 crore.
Okay. Next question was, what is the BT in and BT out rate specifically for the affordable segment, if you could share, and overall also?
For affordable, BT in is around 9%, and BT out is around 4%.
4%. Okay. Yes. Final one. I think Mazlee ma'am had said that with the branches that we have opened over the last few quarters, 40 new branches, they're still a bit away from their optimal level. What is the optimal level of business like with respect to amount, like how much amount of disbursements or the number of files that we consider that the branch is now optimal and it should run on its own two feet and should start to, you know, would be more productive? What is that level?
Yeah. You will appreciate that we have different types of branches. We don't have uniform types of branches. We have large branch, medium branch, and small branch, which we call as Ganga, Yamuna, and Cauvery. If a Ganga branch reaches close to 1.8, a Yamuna reaches close to 1.3, and a Cauvery starts doing close to INR 7o lakh, INR 8o lakh , which is basically in the Tier 4 and Tier 5, we feel it has reached its optimum level. From there, the takeoff happens.
Is this per month disbursement that you said? INR 1.8 lakh, INR 1.3 lakh, and INR 700,000 to INR 800,000?
Yes, this is the different branches' disbursement per month.
Understood. Finally, on the asset quality, yes, our asset quality is still much below our peers and everyone in the industry. Where do you see it settling, say, over by the FY 2027 target that we have placed? Where do you see it in that range? Some of our peers are showing some signs of, you know, in Q1, they said there was a little bit of an asset quality issue, also seasonal. There is a little bit of a thing with respect to the ordinance in the MFI space and the lower ticket size not having the best of the, you know, bounce rates, all that stuff. Could you give some color with respect to where you see the asset quality two years on, one and a half years on, and a bit of a commentary on the asset quality?
Siraj, this will be range-bound, and I think this should remain around 1% itself. We have been working very hard on asset quality over the last couple of quarters, and we tend to maintain the guardrails. It should be range-bound around 1%.
The GNP?
Yes.
Understood. Understood. Any commentary with respect to any product category or customer regions that you're seeing, say, early signs of warnings or anything of that sort?
Not really. It's like portfolio seasoning which is happening across.
Understood. Finally, on the asset pool, the INR 1,000 crore asset pool that is pending, I believe another four to six quarters would still continue to be on this negative credit cost trajectory. Is that understanding? Because that is directly helping our ROA and the profitability for the business as a whole. The negative credit cost episode will continue, maybe another four to five, six quarters, or can we see lumpy recoveries in the coming few quarters and this get extinguished maybe before the FY 2027 closure?
We have line of sight for next two to three quarters. That should happen. Thereafter, it depends, you know, on certain timing of certain corporate accounts, etc.
Great. That was helpful. Thank you very much.
Thank you. Our next question comes from the line of Chinmay Neema from Prashant Capital. Please go ahead.
Good evening. I hope I'm audible.
Yeah.
You are audible, sir. You may proceed.
Yes, my question is on the affordable side. I just wanted to understand, typically, what is the month on books after which you consider an account seasoned or do you see delinquency start doing it?
It's between 12- 24 months, somewhere around.
This is a line with the nursery mortgage loan cycles. I think generally, an account holds some maturity around 18 months- 24 months. That is when you see early signs of delinquency.
Sir, was it fair to say that the spike in 30+ that we've seen in this quarter and the DNP as well, this would primarily be from loans that were disbursed like between 12- 18 months prior? Would that be a right assumption?
Yes.
Yes. Yes. The maturity of the portfolio is attributing to the spike of this. As we told, please appreciate the factor in affordable housing. We cannot see quarter- on- quarter. Every quarter, there will be a slight increase. In the first quarter, there were some cyclical issues also. The monsoon, certain ordinance, parkways, state governments, and all also came and hit us. Generally, it is a right statement to say that the portfolio maturity attributed to the spike.
Got it. Ma'am, just lastly, in a steady state, what would be the 30+ and the 0+ numbers that you expect from this portfolio? I know you called out the 90+ number at 1%.
See, it will be as per the industry number. We don't have a number as such for that. We are only focusing on to keep the NPA less than 1% at the day. We would not actually have a number. You can take the industry guideline for that.
Okay, thank you.
Thank you.
Thank you. Ladies and gentlemen, we will take that as the last question. I would now like to hand the conference over to Mr. Chaitanya Yadav for closing comments. Over to you, sir.
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 of this call will be uploaded on our website, which is www.pnbhousing.com. Thank you all for your participation.
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.