PNB Housing Financing's Q4FY23 PAT jumps 65% YoY to Rs 279 cr; FY23 PAT grows 25% to Rs 1,046 cr

Net Interest Income (NII) for the quarter displayed a remarkable improvement of 57% year-on-year. However, it experienced a decline of 19% quarter-on-quarter, settling at Rs 593 crore. Excluding the one-off impact observed in Q3FY23, the net interest income decreased by 5% quarter-on-quarter.

Operating expenditure, which represents the company's operational costs, saw a notable rise of 23% year-on-year and 15% quarter-on-quarter, amounting to Rs 143 crore.

The pre-provision operating profit demonstrated positive growth of 32% year-on-year but experienced a decline of 22% quarter-on-quarter, reaching Rs 487 crore.

The spread on loans, which indicates the difference between the lending and borrowing rates, declined by 118 basis points to 2.65% in Q4 FY23 compared to 3.83% in Q3 FY23. It is worth noting that a one-off impact of Rs 104 crore influenced the spread in Q3 FY23.

After adjusting for this one-off, the spread decreased by 43 basis points.

In response, PNB Housing Financing implemented an increase of approximately 30 basis points in lending rates in April 2023 to mitigate the decline and stabilize the situation.

In terms of key financial ratios, the net interest margin stood at 3.74% and the gross margin (net of acquisition cost) at 3.83% in Q4 FY23, demonstrating the company's robust financial position.

The profit after tax for FY23 recorded a significant increase of 25% year-on-year, totaling Rs 1,046 crore compared to Rs 836 crore.

Net interest income for the last financial year also witnessed substantial growth, reaching Rs 2,346 crore, a notable increase of 26% from Rs 1,869 crore. Operating expenditure rose to Rs 520 crore, reflecting a 14% increase from Rs 457 crore.

The pre-provision operating profit displayed a positive growth of 24%, amounting to Rs 2,052 crore compared to Rs 1,660 crore.

The company maintained a provision coverage ratio (PCR) of 2.42% with ECL provision standing at Rs 1,433 crore as of March 31, 2023.

Furthermore, key financial ratios including a spread on loans, net interest margin, gross margin (net of acquisition cost), return on assets, gearing, and return on equity all demonstrated favorable improvements, highlighting the company's strong financial performance and stability.

Overall, PNB Housing Financing exhibited robust financial performance during the fourth quarter and fiscal year 2022-2023, positioning itself as a reliable and thriving financial institution in the market.

During FY23, PNB Housing witnessed significant growth in disbursements, with a year-on-year increase of 33% amounting to Rs 14,965 crore. In the fourth quarter of FY23, disbursements reached Rs 4,495 crore, marking a 22% YoY increase and a 31% QoQ increase.

Retail disbursements accounted for an impressive 99% of the total disbursements in FY23, demonstrating the company's focus on the retail segment.

The company's Asset Under Management (AUM) stood at Rs 66,617 crore as of March 31, 2023, compared to Rs 66,983 crore as of March 31, 2022.

The Loan Asset portfolio amounted to Rs 59,273 crore as of March 31, 2023, reflecting growth from Rs 57,895 crore as of March 31, 2022, and Rs 58,034 crore as of December 31, 2022.

Within the Loan Asset portfolio, retail loans accounted for Rs 55,471 crore as of March 31, 2023, showcasing a notable 10% increase compared to March 31, 2022. On the other hand, corporate loans decreased to Rs 3,802 crore as of March 31, 2023, representing a decline of 48% compared to March 31, 2022.

The company’s CRAR stood at 24.43% as on 31 st Mar 2023, of which Tier I capital was 22.04% and Tier II was 2.03% as compared to 23.40% as on 31 st Mar 2022, of which Tier I capital was 20.73% and Tier II capital was 2.67%.

Commenting on the performance, Managing Director & CEO Girish Kousgi, said, “After 13 quarters, we have achieved the highest retail disbursement and loan asset as an outcome of our ongoing efforts to build the retail business. We have also witnessed a remarkable improvement in the asset quality which reduced by 52% year-on-year.”

As another milestone we have successfully concluded our rights issue, which received an overwhelming response resulting in 1.21x subscription, he added.

“This demonstrates the investors' confidence in the company. The infusion of capital will enable us to capitalise on the available growth opportunities," he stated.

Other key highlights

In May 2023, PNB Housing successfully completed a Rights Issue, raising a substantial amount of RS 2,493.76 crore.

The company said that the issue received an overwhelming response, with a subscription rate of approximately 1.21 times. Notably, all the top four shareholders, along with other prominent domestic and foreign institutional investors, participated in the offering. The funds raised through the Rights Issue will be utilized to support the company's strategic growth plans and capitalize on available opportunities for expansion.

The company's retail loan assets showcased a commendable growth of 10% year-on-year, amounting to RS 55,471 crore as of March 31, 2023. This constituted a significant portion of the loan asset portfolio, accounting for 93.6% of the total. The overall loan asset value stood at RS 59,273 crore as of March 31, 2023, reflecting a modest increase compared to RS 58,034 crore as of December 31, 2022.

PNB Housing also demonstrated considerable progress in managing asset quality. The gross non-performing assets (GNPA) ratio declined significantly by 430 basis points to 3.83% as of March 31, 2023, in comparison to 8.13% as of March 31, 2022. Within the retail segment, the GNPA ratio improved by 133 basis points to 2.57% as of March 31, 2023, compared to 3.89% as of March 31, 2022. This reflects the company's diligent efforts in maintaining a healthy loan portfolio.

Furthermore, PNB Housing expanded its presence in the affordable segment by establishing 82 branches and outreaches as of March 31, 2023. This expansion allows the company to cater to the growing demand for affordable housing and serve a broader customer base.

The capital risk adequacy ratio, a measure of the company's financial strength, stood at a robust 24.4% as of March 31, 2023, with the Tier I capital ratio at 22.4%. This signifies the company's strong capital position and ability to manage risks effectively.

In terms of credit ratings, reputable agencies such as ICRA, CRISIL, and India Ratings upgraded the outlook for PNB Housing to 'Stable' from 'Negative' during FY23. This positive assessment reflects the company's improved financial performance and outlook for the future.