PNB Housing Finance Targets Aggressive Growth in Emerging and Affordable Segments, Says MD

Carlyle-backed PNB Housing Finance is charting an ambitious growth path, with plans to significantly expand its presence in the emerging and affordable housing segments. The mortgage lender aims to close FY27 with an affordable category loan book of ₹15,000 crore, up from the current ₹2,500 crore, according to the company's Managing Director, Girish Kousgi.

Historically focused on the super-prime and prime loan categories, PNB Housing has shifted its strategy to concentrate on high-yielding segments such as emerging and affordable housing. The average loan ticket size in the emerging category is around ₹25 lakh, while in the affordable segment, it is ₹15 lakh.

"About a year ago, we made the strategic decision to exit the super-prime category completely and shift our focus to prime, emerging, and affordable categories," Kousgi told ET. "Our goal is to pivot towards affordable and emerging segments, as these offer higher yields. We've also reduced our exposure to prime loans due to lower margins in that segment. For our retail segment, we anticipate a growth rate of around 17%."

Over the past two years, PNB Housing Finance has built an affordable housing loan book of ₹2,500 crore, which the company plans to grow to ₹7,500 crore by the end of the current fiscal year. The yield on the affordable loan book currently stands at 12.6%, with expectations that it will surpass 13% in the next year.

As of June 30, 2024, the lender's total loan book was ₹65,170 crore. Kousgi projected an overall loan book growth of around 18% over the next three years.

In addition to its focus on retail loans, PNB Housing Finance is also preparing to re-enter the construction finance space, a segment it had previously vacated. The lender plans to resume lending to reputed developers in select cities. Currently, its corporate loan book stands at ₹1,800 crore, with no gross non-performing assets.

"We are planning to restart our corporate lending in the next few months," Kousgi said. "However, corporate loans will always constitute less than 10% of our overall portfolio. Our primary focus will remain on top-tier developers in select urban areas."

At present, the retail segment contributes a substantial 97.5% to the overall loan book, with corporate loans making up just 2.5%. The company operates 303 branches nationwide and plans to add 50 branches each year, predominantly in the affordable and emerging categories. Currently, 160 of these branches are primarily focused on affordable housing.

READ| Smaller Hospital Chains Outshine Larger Peers on the Stock Market

Punjab National Bank, the promoter, holds a 28.13% stake in PNB Housing Finance, while Carlyle, through Quality Investment Holdings PCC, holds 32.68%. In July, Carlyle Group sold a 12.8% stake in the mortgage lender for a total consideration of ₹2,642 crore.

[Disclaimer: This article is for informational purposes only and should not be construed as financial or investment advice. Please consult with a qualified financial advisor before making any investment decisions.]                                                                            Source: ET