PNB Housing Finance eyes retail loan book of ₹1 tn, boost affordable mortgages
- Of the ₹1 trillion estimated portfolio by FY27, the mortgage lender plans to have about 15% in affordable housing loans. While the loan size in the affordable housing segment is ₹13-14 lakh, the emerging and prime segments have ticket sizes of ₹25 lakh and ₹35 lakh, respectively.
Mumbai: PNB Housing Finance Ltd expects to grow its retail loan book to ₹1 trillion by FY27, chief executive Girish Kousgi said on Tuesday, as the non-bank lender doubles down on the affordable housing segment in search of better profitability.
Of the ₹1 trillion estimated portfolio, the mortgage lender plans to have about 15% in affordable housing loans, 25% to the emerging segment and the remaining 60% to prime customers. While the loan size in the affordable housing segment is ₹13-14 lakh, the emerging and prime segments have ticket sizes of ₹25 lakh and ₹35 lakh, respectively.
Also read | Clean-up of bad loans frees PNB Housing to focus more on growth
Lenders classify borrowers on the basis of their credit scores and those at the top of the pyramid are termed super-prime while those a notch below are called prime. Since super-prime customers are seen to have the lowest chance of defaulting on loans, they can bargain for a finer (cheaper interest) rate from lenders than those with lower credit scores. A finer pricing means limited income for lenders when compared to lending to riskier segments.
Exited two years back
At present, of its ₹68,000 crore retail loan book, about ₹3,000 crore (4.4%) is affordable, ₹12,000 crore (17.6%) is to the emerging segment, and the remaining is in prime housing loans.
“We exited the super-prime segment two years ago because of profitability reasons and now we are trying to slowly scale down prime as well because even though the yields are better than super prime, it is still very thin,” said Kousgi.
Also read | PNB Housing’s affordable loans drive pushes it to revive commercial mortgage biz
The lender entered the affordable segment in the last quarter of FY23 and had an affordable housing loan book of ₹1,790 crore at the end of FY24, crossing ₹2,000 crore in Q1FY25 and ₹3,000 crore in October. According to a statement issued on Monday, it has widened its presence in the affordable segment from 82 branches in FY23 to 160 branches in FY24, and plans to take it to 200 branches by the end of FY25.
“Predominantly, PNB Housing was known to focus on corporates, super-prime and prime borrowers. We changed the strategy and entered the affordable business and exited the super-prime segment,” said Kousgi. “Then we started reducing our exposure to the prime segment and started getting into a slightly riskier category within the affordable segment. This year we also started a new vertical called emerging segment.”
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First Published:3 Dec 2024, 07:33 PM IST
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