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PNB Housing Finance to use capital for growth, provisions: CEO Hardayal Prasad


PNB Housing Finance reported a decline in its loan book for the eighth quarter in a row, with its assets under management slipping for a seventh straight quarter. CNBC-TV18 spoke to PNB Housing Finance CEO and Managing Director Hardayal Prasad.

PNB Housing Finance on Tuesday reported a 25 percent decline in net profit to Rs 235 crore for the quarter ended September. The housing finance company had posted a net profit of Rs 313 crore for the corresponding period a year ago.
The company's net interest margin (NIM) -- a key metric for lenders -- stood at 3 percent in the second quarter of the current financial year, as against 3.5 percent in the year-ago period. Net interest income (NII) -- the difference between interest earned and interest paid -- came in at Rs 503 crore in the September quarter, as against Rs 651 crore in the year-ago period.
During the September quarter, there was a net income reversal of Rs 61 crore on derecognised loans due to the unwinding impact of spread contraction. In the year-ago period, there was a net positive impact of Rs 105 crore on derecognised loans due to a fall in buying banks' MCLR.
Speaking on the lender's loan book, CEO and Managing Director Hardayal Prasad said, “It has been eight quarters that we have had negative growth in terms of our asset under management as well as on loan asset but that is a very conscious decision that the company took in 2019 that it is not going to actually do any of the corporate book. The corporate book since 2019 has been degrowing.”
"Our company decides that they need to get out of a book, it is going to take time because corporate is one which is a long gestation loans that we have given. There has been a 44 percent decline in the book from Rs 18,000 crore almost we are down to almost about Rs 10,000 crore. I think that is one of the primary reasons that actually has resulted into this kind of negative progress," he said.
Speaking on the retail side, Prasad said: “If you really look at the disbursements, and you look on the retail side, we have had almost a flat growth. Ninety six percent of the disbursements going only to the retail and a flat book, we have reached an inflection point. So we are going to talk to you when we go forward on two things. One is our consciously depleting corporate book that is there and then you have a book which is the retail book.”
He also said the bank will start to see growth, as it is taking up transformation. "The company is in a rebuilding process and going forward, it will start showing some growth on the retail side.”
It will use the capital for growth, provisions and IT-related expenses, he said.
The company's board of directors on October 14 decided not to proceed with the preferential issue of Rs 4,000 crore, which was approved on May 31. The company has filed an application to withdraw its appeal to the Securities Appellate Tribunal (SAT).
“If you really look at it, the degrowth that we have seen on the corporate books allows you massive amount of capital, which you can use it for the retail. So my ability to grow becomes three times more and that is one reason why there is improvement in our capital adequacy at almost 20 percent-plus," he added.
For full management commentary, watch the video.
-With inputs from PTI
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