PNB Housing Finance is planning a cautious return to the corporate lending sector after a careful reduction of its portfolio over the past few years.
The mortgage lender, which was adversely affected by the real estate crash, intends to begin construction financing for residential projects in the second part of the current fiscal year, armed with the knowledge gained from previous endeavors. The real estate sector now has stricter monitoring.
‘We aimed to reduce the corporate loans book’s non-performing assets (NPA). After everything has been resolved, we want to resume financing to builders with retail connectivity. But we’re not in a rush. According to the managing director of PNB Housing Finance Girish Kousgi who talked to ET, ‘We are planning it for later in the year.
According to Kousgi, the lender wants to be selective in its corporate lending and would only provide loans up to Rs 125 crore. Unlike in the past, it will not use balance sheet financing.
At the finish of March, the lender’s corporate book had decreased by 49% to Rs 3,800 crore, making up around 6.5% of the whole portfolio of Rs 59,300 crore. A year ago, the proportion was 12.7%.
At the end of March, there were Rs 846 crore less non-performing assets from the corporate book than there were Rs 2,738 crore a year earlier. It was 22.3% in percentage terms, still high but down from 37.1% a year earlier.
According to Kousgi, a significant real estate developer with one project that is currently through corporate debt resolution is responsible for nearly 92% of the remaining NPA.
Gross NPA was 3.83% as a whole.
The company forecasted that the retail lending book will increase from Rs 55,500 crore at the end of March by about 18% in FY24. A focal segment would also be lending to the affordable housing segment, which it began doing last year, according to Kousgi.
Despite rising interest rates and home prices in the previous year, residential real estate developers in the top six U.S. cities are predicted to record 8–10% sales growth this fiscal year, according to rating agency Crisil. This growth will be supported by 4-6% volume growth and a 3-5% gain in capital values.
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