PNB Housing Finance may re-enter high-yield corporate loans segment at the opportune time

8 Aug 2022 , 08:40 AM

According to a top company official, PNB Housing Finance may have room to return to the high-yielding corporate loans it ceased two years ago if it issues an Rs2,500 crore rights issue and maintains a solid CRAR.

According to Hardayal Prasad, the managing director and chief executive officer of PNB Housing Finance, the corporate loan book size for the HFC, which is pushed by the bank, is currently Rs6,006 crore and may decrease by another Rs1,000 crore by December.

Due to sell-offs and accelerated prepayments, the loan book fell by 45% in the first quarter of 2022—2023 compared to the same period the previous year.

As of June 30, 2022, the company had a comfortable CRAR (capital to risk-weighted assets ratio) of 23.9%, up from 21.4% in the same time a year earlier (June 2021) and 23.4% in the quarter before that, which concluded in March 2022. In order to ensure an entity’s capacity to absorb losses, CRAR, an assessment of a company’s available capital, is essential.

The bank constantly increased its CRAR from 18% by the end of March 2020 and from 18.7% by the end of March 2021.

By December of this year, PNB is anticipated to contribute Rs500 crore of the rights issue, with other shareholders contributing the remaining funds.

In Q1FY23, it closed one corporate account worth Rs353 crore, sold one account to an asset reconstruction business for Rs187 crore, and wrote off two corporate accounts worth Rs425 crore.

The company is concentrating on speeding retail loan growth, with assets under management (AUM) expected to reach 91% by the end of the quarter ended in June 2022, up from 85% a year ago. It increased from 89% compared to the March 2022 quarter.

The April—June quarter of 2022—23 saw a modest dip in PNB Housing’s net profit after tax, from Rs243 crore to Rs235 crore, primarily due to a weaker-than-average quarter.

Prasad claimed that the organization fully focuses on the retail sector. From Rs1,652 crore in Q1FY22 to Rs3,395 crore in the June quarter, retail disbursements more than doubled.