PNB Housing Finance targets ₹3,000 crore corporate loan book by FY27-end
PNB Housing Finance Ltd aims to expand its corporate lending book to ₹3,000 crore by the end of the current financial year from about ₹700 crore currently as it diversifies its lending portfolio while maintaining its 18-20% growth guidance, managing director and chief executive officer Ajai Kumar Shukla said in an interview with Mint.
The corporate lending portfolio is expected to account for about 3% of the company's overall loan book. The segment has no non-performing assets (NPAs), Shukla said.
The housing finance company seeks to grow profitably amid intensifying competition and higher funding costs. The company’s recent AAA rating upgrade is expected to improve its ability to negotiate more favourable borrowing terms with lenders, while a greater contribution from affordable housing and emerging-market loans is expected to support margins.
Even though the rating upgrade will help reduce borrowing costs, the company is maintaining its growth guidance and expects its assets under management to cross ₹1 trillion by the end of the current quarter, Shukla said.
PNB Housing has budgeted disbursements of ₹32,000 crore for FY27. The second half of the year is expected to be stronger than the first half, in line with historical trends, he said.
The company is also targeting a higher contribution from affordable housing and emerging markets, which together accounted for 41% of its business. Their share is expected to increase to 45% this financial year and to 48-50% next year, Shukla said.
These segments are important to the company's strategy because of their contribution to net interest margins (NIMs). PNB Housing Finance will continue lending across prime, emerging, affordable and micro-housing categories rather than concentrating on a single borrower segment, he said.
The company expects to pass on 10-15 basis points of the Reserve Bank of India's recent 25 bps repo rate increase to customers, effective 1 November, Shukla said. The limited pass-through is intended to balance higher funding costs with the need to remain competitive.
Loan disbursements, assets
The company reported total disbursements of ₹9,600 crore in the second quarter, including retail disbursements of ₹9,200 crore, which grew 54%. Loan assets increased 19%, while net profit rose 6%.
Explaining the difference between strong disbursement growth and the more modest increase in profit, Shukla pointed to a reduction in negative credit costs and lower recoveries, which meant there were fewer reversals of past provisions to help improve earnings. Negative credit costs declined from 0.53% in the second quarter of FY26 to 0.19% in the second quarter of FY27, while recoveries fell from ₹34 crore to ₹21 crore, he said.
The company reported an NIM of 3.67% in the second quarter, which improved from the first quarter partly because of a one-off transaction. Shukla said the company generally operates at about 3.5% and expects the changing portfolio mix, along with the rating upgrade, to support an improvement.
Following the recent interest rate increase, housing demand remains strong, Shukla said. However, he acknowledged that growth in the sector had slowed, moderating from 13-15% at one point to 11-12%.
Shukla said technology and operational efficiency will remain the other priorities. Over the past 10 months, the company has focused on employee productivity, distribution reach, customer grievance redressal and better utilization of technology platforms. It plans to expand digital and paperless processes by retrieving and validating documents directly from their original sources.
Shukla said the company would continue to focus on asset quality and productivity while expanding its reach. He noted that affordability varies significantly across cities because property prices and household incomes differ, adding that discussions on redefining affordable housing could take these differences into account.