Waiting for growth capital, PNB Housing could re-enter corporate lending when the time is right: MD&CEO Prasad

A rights issue of Rs 2,500 crore in the pipeline and a healthy CRAR could give PNB Housing Finance leeway to reinstate the high-yielding corporate loans it halted two years ago, said a senior company official.

The Housing Finance Company (HFC) promoted by the National Bank of Punjab currently has a portfolio of business loans of Rs 6,006 crore which could drop further by Rs 1,000 crore by December, Hardayal Prasad, Managing Director and Head of the management of PNB Housing Finance, said.

The loan portfolio decreased by 45% in the first quarter of 2022-2023 compared to the prior year period due to liquidations and accelerated prepayments.

On the CRAR (capital/risk-weighted assets ratio), the company sits comfortably at 23.9% as of June 30, 2022, compared to 21.4% a year ago (June 2021) and 23.4% as of previous quarter. completed March 2022. CRAR is a measure of a company’s available capital and is critical to ensuring an entity’s ability to absorb losses.

The company has consistently improved its CRAR by 18% at the end of March 2020 and 18.7% at the end of March 2021.

“My exposure to corporate loans is Rs 6,006 crore at the moment and these are strong loans other than NPAs. It could drop another Rs 1,000 crore by December.

“We haven’t decided yet whether to go ahead with corporate loans, but at some point we will decide. The reason I stopped this business is that these types of loans carry a weighting of 100% risk and if you have 100% risk, then I need more capital.

“If I start doing that, I’ll be consuming that capital that could have gone into retail lending. What we’re saying is that despite the fact that we’ve increased our CRAR, we wouldn’t want to do that unless get the capital,” Prasad told PTI in an interview.

The company is expected to get Rs 500 crore from the PNB rights issue by December this year and the rest from other shareholders.

He closed a corporate account worth Rs 353 crore in the first quarter of FY23, sold an account of Rs 187 crore to ARC (asset reconstruction company) and deregistered two corporate accounts of worth Rs 425 crore, among others.

PNB Housing Finance faced headwinds last year to raise much-needed growth capital when it had to abandon a Rs 4,000 crore equity capital injection from a group of investors, including current shareholder Carlyle Group and former HDFC Bank honcho Aditya Puri.

In addition, the Reserve Bank also refused permission for PNB to inject equity into the company, which was ultimately granted this time.

“We will need Sebi’s approval for the capital increase. The draft offer letter is in the final stages which we will submit to Sebi as soon as possible. And once we have the capital, we will be in able to move forward and start doing business where the risk weight is 100%, whether it is a business loan, loan against property (LAP) or others loans like this. That’s where we’re going to go…and all of those loans are high-yielding,” the official said.

The company’s goal is to accelerate growth in retail lending, with assets under management (AUM) standing at 91% at the end of the quarter ended June 2022, up from 85% from 85% a year ago. a year. It was up 89% from the March 2022 quarter.

The size of its retail lending assets stood at Rs 50,295 crore at the end of the first quarter of FY23, up 1.7% from a year earlier. While the overall AUM stands at Rs 64,850 crore.

PNB Housing saw a slight decline in net profit to Rs 235 crore in the April-June 2022-23 quarter, from Rs 243 crore a year ago, mainly due to a seasonally weak quarter.

Prasad said the company is fully focused on the retail segment. Retail payouts more than doubled to Rs 3,395 crore in the June quarter from Rs 1,652 crore in Q1FY22.

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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