Since our inception, PNB Housing Finance has helped millions of Indians in realising their aspiration of owning a home. With India soon to celebrate 75 years of Independence, we renew our commitment towards the ‘Housing for All' vision and are well positioned to catalytic growth in the real estate sector. At PNB Housing Finance, we are committed to India’s growth story
Since our inception, PNB Housing Finance has helped millions of Indians in realising their aspiration of owning a home. With India soon to celebrate 75 years of Independence, we renew our commitment towards the ‘Housing for All' vision and are well positioned to catalytic growth in the real estate sector. At PNB Housing Finance, we are committed to India’s growth story
Dear Shareholders,
It gives me immense pleasure to present to you our 34th Annual Report at a time when India, along with the world, is emerging out of the throes of the pandemic. India demonstrated its resilience to the pandemic and was quick to recover, emerging as the fastest-growing economy in the world. With the largest young population in the world and robust economic fundamentals, the country is poised for strong growth.
According to CRISIL, the real estate cycle that had witnessed contraction for a decade, is likely to see upcycle from FY22 onwards. CRISIL estimates housing demand to surpass pre-pandemic levels, indicating the beginning of a growth cycle. In both FY23 and FY24, CRISIL expects real estate demand to grow modestly at 5-10%. Considering the anticipated improvements in the macroeconomic situation, a large number of people are expected to enter the home purchase market. CRISIL further expects the portfolio of NBFCs/HFCs to grow by 13- 15% on account of improved affordability and pent-up demand. Affordable housing is expected to grow by 15-17% in FY23.
After a lapse of several years, the residential real estate market is expected to grow for the next five years. HFCs will be able to tap the opportunity. The reforms in the past few years, including the implementation of RERA and GST, have brought transparency in the housing sector. Consumers today are more convinced about their investments and we are confident that the housing sector offers great potential.
Since our inception, PNB Housing Finance has helped millions of Indians in realising their aspirational dream of owning a home. With India soon to celebrate 75 years of Independence, we renew our commitment towards the ‘Housing for All’ vision. We are well-positioned to catalytic growth in the real estate sector. At PNB Housing Finance, we remain committed to India’s growth story.
Estimated NBFCs/HFCs portfolio growth in FY23
Expected affordable housing segment growth in FY23
PERFORMANCE AT A GLANCE
The year FY22 had started on a sombre note, with the second wave of the pandemic overwhelming India’s healthcare infrastructure and leading to the reimposition of lockdowns. The government rightly focused on accelerating the nationwide vaccination drive while continuing to undertake measures to stabilise the economy. The lockdown resulted in loss of business in Q1 FY22. While the challenges were innumerable, the team displayed solid grit and determination, to put the business back on track, and remained steadfast in their commitment to grow our network and connect manifold.
In line with our retail first strategy, we disbursed 97% of our total disbursement to the retail segment. As per our stated policy, we reduced our corporate loan book by 39% during the year, through sell-down and accelerated re-payments. We closed FY22 with an AUM of ` 65,977 crore, with the retail segment accounting for 89% of AUM. During the year, we reported disbursements of ` 11,246 crore, reflecting a y-o-y growth of 8%.
Within the retail segment, we continue to build our affordable housing portfolio. We opened 24 locations to cater to Unnati loans. With our strong distribution network, underwriting capabilities and customer service, Unnati loans are expected to play a significant role in driving our growth. We closed our Unnati book AUM at ` 3,108 crore as on 31st March 2022.
During the year, the asset classification norms underwent changes and the COVID-19 waves had an impact on the HFC sector. This put our financial performance under pressure as well. Our gross NPA (as per Ind AS), as on 31st March 2022 stood at 8.12%. Our total provisions to total assets stood at 4.42% at the end of the financial year under review. Meanwhile, with sustained efforts, our cost of borrowing fell sequentially, with the incremental cost of borrowing during the year at 5.8% and overall at 7.3% at the close of the year. For FY22, net interest income stood at ` 1,868.92 crore against ` 2,322.91 crore in FY21. Operating profit declined 20% y-o-y to ` 1,660.32 crore, while net profit reported a degrowth of 10% to ` 836.48 crore.
With the renewed focus on retail business and reduction in corporate loans, our CRAR increased to 23.4% at the end of FY22 from 18.7% at the end of FY21. The Tier 1 stood at 20.7%. Our leverage fell to 5.4x from 6.7x. We maintained liquidity of around ` 6,260 crore with a Liquidity Coverage Ratio of 144%. With various internal measures undertaken, we witnessed a rating outlook upgrade to 'Stable' from Negative on our non-convertible debentures (NCDs) from ICRA on 12th April 2022. The Board has approved capital raise upto ` 2,500 crore through Rights Issue, subject to necessary approvals.
At PNB Housing Finance, our focus is to ensure speed, transparency, convenience and personalisation of the entire experience. Our digital onboarding tool ACE, helps contactless completion of our customers’ entire loan onboarding cycle
EASE OF ACCESS AND BETTER CUSTOMER EXPERIENCE
Owning a home is an important milestone in the life of an individual and home loan remains one of the biggest financial decisions in one’s life. At PNB Housing Finance, our focus is to ensure speed, transparency, convenience and personalisation of the entire experience. Our digital onboarding tool ACE, helps contactless completion of our customers’ entire loan onboarding cycle.
We are increasingly using digital tools in our processes to improve turnaround time and create a longlasting impression in the minds of our customers. Our Customer Relationship Management tool TALISMA, which is tightly coupled with our dialer AMEYO and the Core Banking ESS system, stitches all the processes together so that any customer request received through multiple channels is executed within the pre-defined TAT. Even during the pandemic, this digital service infrastructure allowed us to offer all the relief packages like moratorium, restructuring, GECL to our customers in a seamless and paperless manner, which they could access from the safety of their respective homes.
Our extended business hours, service through non-branch channels and social media connections have ensured that we remain on top of our customers’ mind, for servicing their financial needs, enabling us to create a consistent experience for them.
THE BUSINESS TRANSFORMATION
We started the year with the Business Process Re-engineering project and have reached a stage of maturity with interventions in our businesses. The outcomes of the transformation journey were higher logins through digital tools, strengthened underwriting and collection capabilities, and building of the high-yielding Unnati business while ensuring productivity and efficiency in operations.
CARING FOR THE COMMUNITY
We believe holistic community
development is key to our progress.
During the year, our CSR activities saw
us contribute
` 23.22 crore to improve
the lives of 3.5 lakh beneficiaries.
These initiatives extended from skilling
programmes, investments in healthcare
and access to formal education. As
part of our efforts to facilitate inclusive
growth, we worked with construction
workers, an important stakeholder
in our ecosystem whose well-being
and growth we are committed to. We
have dedicated programmes for water
conservation, research and development
for the betterment of lives. We were
agile in our response to the second
wave of the pandemic and contributed
by setting up ICU facilities and oxygen
regeneration plant, among others.
I am delighted to share that our CSR arm, Pehel Foundation, has commenced a long-term infrastructure project for water conservation in water-starved districts of Rajasthan among many other projects undertaken in our constant endeavour for environment protection and conservation.
CRAR at the end of FY22
CSR beneficiaries in FY22
FOCUSED ON VALUE CREATION
The strategic priorities adopted in the previous financial year have become the bedrock for our growth in the coming years. We have continued to sharpen our focus on business growth and collections while accelerating digital interventions to build efficiencies. We have made steadfast progress in this direction, making the organisation future-ready.
While we advance in our growth journey, compliance and corporate governance remain important areas for us. We have a robust governance framework in place, helping us maintain high compliance standards. This has helped us inculcate a strong sense of value across the organisation.
SIGNING OFF WITH OPTIMISM
Today, India is one of the youngest countries in the world and the demographic advantage sets us apart from the global economies which are aging fast.
As we look ahead, we feel that the Indian economy is in much better shape to tackle external shocks. With the government’s policies and specific initiatives like PLI schemes, the country is well-positioned to emerge as a manufacturing hub. This, in turn, will have a trickle-down impact across all the sectors and help the country emerge as US$ 5 trillion economy.
Having said that, I must conclude that the support of our stakeholders was critical in navigating through the challenges we have witnessed in the past few years. With shareholders’ continued faith in us, we will be able to unlock significant value for them going ahead.
On behalf of all the PNB Housing employees, I am thankful to the Board for being the beacon in guiding us through our difficult times. I thank all our regulators for continuously supporting us in our journey. We are optimistic that an exciting growth journey has just begun.
Our team and their families have been pivotal in driving our journey. I thank them for working relentlessly and building a strong value-based organisation.
Warm regards,
Hardayal Prasad
Managing Director and CEO
