PNB Housing Finance Net Interest Margin Likely To Expand After Three Quarters, CEO Says

PNB Housing Finance Ltd.'s net interest margin is expected to rise after the next three quarters, riding on the change in its loan portfolio mix, according to Chief Executive Officer Girish Kousgi.

The lender's net interest margin in the September quarter of the current financial year stood at 3.68% against 3.65% in the preceding three months. 

Speaking to NDTV Profit, Kousgi said that the home loan provider is not looking to update its NIM guidance for the current financial year and things will start improving only after three–four quarters.

"After three quarters, because of the change in the mix of our loan portfolio (and) more towards the high-yielding segments like affordable housing, the margins will start inching up. At this point, we will stick to our guidance," the managing director said.

The top executive went on to explain the rationale behind his prediction of improvements in margins. "This is because the story on the affordable housing loan book is very good. We started this 22 months back. The first month was Rs 5 crore. We have crossed Rs 3,000 crore on the affordable side," he said.

In the second quarter of the current fiscal, PNB Housing Finance's net profit rose 23% year-on-year to Rs 469.7 crore from Rs 383 crore recorded for a similar period a year ago. Its total income rose over 5% YoY to Rs 1,879.7 crore in Q2 from Rs 1,779.4 crore a year ago. 

Betting on the prospects of PNB Housing Finance's retail loan book, Kousgi said: "If you look at the last quarter, Q1 for us, was very good (for PNB Housing Finance’s retail loan book). Given the cyclical trend we witness in a year, Q1 is generally muted for us. Q2 is obviously a lot better than Q1, and Q3 will be even better compared to them."

While PNB Housing Finance will increase its corporate loan book portfolio, it will always remain a low-focus area for the company, the CEO said. He added that of the Rs 69,500-crore loan book of the lender, Rs 1,500 crore is corporate and the rest is retail.

"We will be starting to focus on our corporate loan book perhaps in Q3, and that should help us with growth and margins. Corporate will always be low-focus for us. In terms of portfolio mix, it will be less than 10%,” he said, adding that the scenario will continue for the next three–four years.

"It will be yield-accretive and we would stick to a very safe and sound book-building process," he said.

Shares of PNB Housing Finance closed 1.24% higher at Rs 946 apiece on the NSE against the benchmark index's decline of 0.9%.