With our retail focus and especially on Affordable Housing Segment, we remain steadfast in supporting PM’s Mission of ‘Housing for All’. The current scenario highlights the urgent need to accelerate a sustainable business environment and PNB Housing Finance is committed and prepared to lead the change and build a healthy and progressive housing finance company.
Chairman
It gives me immense pleasure to write to you as the Chairman of your Company, and present the 33rd Annual Report and consolidated financial statements of PNB Housing Finance Limited (PNB Housing) for the financial year ended March 31, 2021.
The COVID-19 led pandemic, which unfolded during the last quarter of FY 2019-20, had unprecedented impact on the human life as well as economies across the globe. The complete lockdown witnessed during the first quarter had a deep impact on the economy and led to steep fall in the domestic output. A series of measures taken following the unlock phase helped the economy recover in the second half of the year. However, the pace of recovery was impacted again by the second wave which resulted in localized restrictions in movement and economic activities.
The healthcare and the frontline workers have been the pillars of support during these challenging times, and we are forever grateful to them for their unconditional services.
At PNB Housing, we supported the government’s initiatives to help individuals and businesses by implementing measures like moratorium, Partial Credit Guarantee Scheme 2.0, Emergency Credit Line Guarantee Scheme; and also participating in Special Refinance Facility, Targeted Long-Term Repo Operations, deferment of interest on working capital facilities, among others.
The RBI took decisive steps to ease the monetary policy to help the economy recover from this unprecedented shock. There have been subsequent cuts in repo rates to support liquidity. The RBI pushed more than ₹ 2.7 lakh crores through Open Market Operation (OMO) purchases between February 6 and December 04, 2020. Targeted long-term repo operations (TLTROs) of up to three years’ tenure of a total amount of ₹ 1.13 lakh crores for investment in corporate bonds, commercial papers (CP), and non-convertible debentures (NCDs), in addition to injection of ₹ 1.25 lakh crores through Long-Term Repo Operations (LTROs) were conducted in February-March 2020.
While housing demand was deeply impacted during the first half of FY 2020-21, the situation improved in the second half owing to the pent-up demand, falling interest rates and the extension of the credit subvention scheme or the affordable housing segment. Post-pandemic, there has been an incremental need for owning home rather than renting out.
The cumulative growth in on-book portfolio of HFCs for 9M FY 2021 (December 2020 vs. March 2020) stood at 2%. However, the second half of the year witnessed recovery in demand leading to a gradual increase in disbursements, nearing the pre-covid levels. The total housing credit increased from ₹ 21.1 lakh crores as on March 31, 2020 to ₹ 22.1 lakh crores as on December 31, 2020. The disbursements started picking up from Q2 FY 2021 onwards and the overall on-book housing loan portfolio of NBFCs/HFCs and banks is estimated to have reached ₹ 22.1 trillion as on December 31, 2020. Supported by portfolio buyout, banks continued to outpace the disbursement growth. The overall HFC credit in India is estimated at ₹ 11.3 lakh crores as on December 31, 2020, with exposures across home loans (HL), loan against property (LAP), construction finance (CF), and lease rental discounting (LRD).
Driven by robust demand and liquidity support from its bankers, depositors, debenture holders and the National Housing Bank, the portfolio growth in the affordable segment remained higher at 8% in 9M FY 2021, following the growth of 18% in FY 2019-20. With unwavering demand, the segment is expected to continue growing at a faster pace than the overall industry.
The second wave has slowed down the recovery for the overall economy including the real estate sector. However, with accelerated vaccination program to inoculate the population is driving the hope for a faster turnaround with major global rating agencies and experts anticipating a double-digit growth for the economy.
While we remained cautious during the year under review in terms of new business, we utilized this time to chalk out a new strategic roadmap which help bolster our position in the industry in the coming years. We have accelerated our digital journey and embarked on contactless customer onboarding and disbursal, one of the firsts in our sector to do so. We have sharpened our focus around the affordable housing segment and created a dedicated product and infrastructure to help strengthen our presence. We are leveraging the power of digital and analytical tools to strengthen our processes including recovery and risk management and to create a much stronger institution going forward. We will continue to service our customers and help fulfilling the dreams and aspirations of owning a house for millions of Indians.
Even with the contraction in the economy in the same fiscal year, your company has focussed on retail business, portfolio quality, recorded a decent income which translated into 44% year-on-year growth in Profit after Tax. This became possible due to the efforts of all the stakeholders and efforts of employees of the Company, who have worked throughout the year in COVID cyclone.
Distribution Strategy, Technology, Customer Centricity & Corporate Social Responsibility are your company’s key strengths. The company has pivoted its distribution strategy around an array of products that helps to drive sustainable growth in business. The hallmark of our product bouquet is Innovation, Affordability and Flexibility. With the changing paradigm in the housing sector, our strength lies in our efficiency to underwrite all categories of customers and nurture strong relationships with our business partners and stakeholders.
With our retail focus and especially on Affordable Housing Segment, we remain steadfast in supporting PM’s Mission of ‘Housing for All’. The current scenario highlights the urgent need to accelerate a sustainable business environment and PNB Housing Finance is committed and prepared to lead the change and build a healthy and progressive housing finance company.
I take this opportunity to thank our fellow Board Members for their unflinching support, the leadership team and strong team of employees for their efforts to steer through the challenges and create a stronger PNB Housing Finance for tomorrow. I also wish to thank the Reserve Bank of India, the National Housing Bank, the Securities and Exchange Board of India and the Stock Exchanges for their continued support.
I am also thankful to the shareholders for their overwhelming support during thick and thin. I expect that we are building a stronger PNB Housing Finance which will add significant value in the coming years.