PNB Housing Finance is targeting to reduce its corporate loan book to below Rs 10,000 crore by the end of this fiscal as it seeks to focus more on retail lending activities, according to a top company official. The company's corporate lending stood at Rs 10,989 crore at the end of the first quarter of 2021-22, accounting for 15 per cent of its Asset Under Management (AUM) and the latter touched Rs 71,828 crore during the same period.
However, PNB Housing Finance's loan assets declined to Rs 60,438 crore at the end of June this year compared to Rs 68,009 crore in the year-ago period.
The business of the company, promoted by state-owned, Punjab National Bank (PNB), has been hit by the second COVID wave.
"This quarter (June 2021) itself, we have been able to reduce the book by about Rs 800 crore in terms of corporate (lending). And we would like to bring it down to below Rs 10,000 crore (by March 2022)," Hardayal Prasad, Managing Director & CEO of PNB Housing Finance, told in an interview.
The company has reduced its corporate book by 25 per cent since March 2020.
At some stage, the company would like to take a decision on the size of corporate lending, Prasad said, adding that it was essential to have some amount of builder finance.
"It (corporate book) was about Rs 11,800 crore (by end of FY21). Now, it is about Rs 10,900-10,800 crore. So, we are definitely targeting to bring it down below Rs 10,000 crore and going forward, we will see what kind of portfolio we would like to hold and what kind of to let go," Prasad said.
He said the company has taken a massive initiative for its retail book and there is a focus on granular book, resulting in higher proportion of less than Rs 2 crore loans.
In January, the company rolled out a strategy for expanding its retail book.
"So we continue to monitor those deliverables that we have promised. And in that strategy, we have very clearly mentioned that we would be going for a retail-focussed organisation," Prasad said.
According to PNB Housing Finance, retail is going to be its engine of growth and it will leverage expertise in mass housing and merchant category.
In the affordable housing segment, the lender will grow its 'Unnati' portfolio, focussing on average ticket size of Rs 15 lakh. It will also strengthen the distribution network with increased presence in tier II and III cities.
PNB Housing Finance saw a 5 per cent in its net profit at Rs 243 crore in the latest June quarter.
Noting that the company has done "a reasonably good job", Prasad said net profit has jumped by almost 90 per cent sequentially.
"There is a marginal decline if you look at year-on-year (profits). But one has to factor in that we actually have a depleting book, that is one part. The second part is that we will not build on the corporate (book), and we will only scale down the operations on the corporate side, which we have done significantly.
"So if you look at the profit, I think it is reasonably good," he added.
Nearly 45 days of lockdown during April-June period of this fiscal due to the second COVID wave and legal directions hurt the company's business as well as recovery process, Prasad said while adding that collection efficiency has improved now.
In July, the collection efficiency went up from 95 per cent to almost 98 per cent.
"During the quarter, there was 45 days of lockdown, so there was hardly any activity in this period. We expect to manage these better from this month onwards as we have managed to pullback some NPAs. We have pulled back about Rs 80 crore of NPA in July itself," Prasad said.
Besides, the company has launched project 'IGNITE' that is aimed at boosting efficiency by bringing down the cost.
"This project has finished its diagnostic study. For running this project, we have brought-in one transformational leader who has a proven (track) record. He is driving this project IGNITE, which will actually take care of almost everything.
"This is going to help us significantly in terms of how we are going to do our business because once we have a very-very good and a strong IT infrastructure and digital products, we can ramp up the numbers very quickly," Prasad said.
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