DEAR SHAREHOLDERS,
I am thrilled to present our
35th Annual Report, arriving
at a crucial juncture when
the global economy continues
to face umpteen challenges
since FY22, such as persistent
inflation, geo-political conflicts
and financial sector issues. In
the face of these formidable
obstacles, it is remarkable to
observe India’s resilience as it
continues to outperform many
developed economies. With its
substantial young population
and strong economic
foundations, our country is
primed for robust growth.
Having gained a profound
understanding of the real
estate sector, it is poised for
a period of steady growth
following a decade-long
contraction. The sector has
already begun its journey
towards recovery, which
is expected to persist and
further advance. According
to CRISIL, housing demand is
projected to exceed the levels
observed before the pandemic,
indicating the commencement
of a growth cycle.
The affordable housing segment
has emerged as the key driver of
incremental growth, with a remarkable
44%* year-on-year increase in lowticket housing loan disbursements
during FY23. This growth is primarily
witnessed in tier II cities and beyond,
reflecting the expanding demand in
these regions.
Although the asset quality, as measured
by the Gross Non-Performing Loan
ratios, reached its peak in FY23, there
has been a gradual and encouraging
trend of improvement since then. This
positive development signifies the
resilience and stability of the housing
finance sector.
Looking ahead, the future prospects for
the housing finance industry appear
promising. By FY30(E), outstanding
housing loans are expected to reach
an impressive value of `72 trillion,
reflecting a compounded annual growth
rate (CAGR) of 14% over the period from
FY22 to FY30E*. This growth trajectory
is projected to enable the financing of
approximately 23 million new housing
units across India.
These figures highlight the immense
potential and opportunities within the
housing finance sector, particularly in
the affordable housing segment. As
the industry continues to evolve and
expand, it is poised to play a vital role in
meeting the housing needs of millions
of individuals and contributing to the
overall growth and development of
the nation
Ever since the inception of PNB
Housing Finance, we have been playing
a pivotal role in making home ownership
dreams a reality for countless Indians.
With our commitment to the vision of
‘Housing for All’, we have positioned
ourselves as a catalyst for growth in
the real estate sector. As we enter a
new phase of our growth, we proudly
showcase our achievements and the
blueprint for seizing the opportunities
that lie before us. Going ahead, our
focus will be on driving quality growth,
enhancing profitability, maintaining
asset quality and liquidity and ensuring
the highest governance standards.
The affordable housing
segment has emerged
as the key driver of
incremental growth,
with a remarkable 44%
year-on-year increase in
low-ticket housing loan
disbursements during
FY23. This growth is
primarily witnessed in
tier II cities and beyond,
reflecting the expanding
demand in these regions.
OUR PERFORMANCE IN FY23
In FY23, our retail business experienced
an impressive surge, with 94% of our
loan book coming from this segment.
This highlights our strong presence and
success in the retail market.
Aligned with our retail-first strategy,
the business comprised `14,750 crore
of our total disbursements. As per
our stated policy, we reduced our
corporate loan portfolio by 48.5%
through resolutions and accelerated
repayments. By the end of FY23, our
AUM reached `66,617 crore, with the
retail segment accounting for 94% of
the AUM. Disbursements for the year
amounted to `14,965 crore, representing
a 33% year-on-year growth.
Within the retail segment, we continued
to prioritise the development of
our affordable housing portfolio.
We expanded our presence with 82
branches dedicated to Roshni loans.
Leveraging our robust distribution
network, underwriting capabilities, and
customer service, Roshni as a segment
is expected to play a significant role in
driving our growth. We disbursed `137
crore under Roshni in the fourth quarter
of FY23.
As of 31st March, 2023, our gross
Non-Performing Assets (as per Ind
AS) stood at 3.83%, down from 8.13%
as on 31st March 2022. We maintained
total provisions to total assets at
2.42%. In FY23, net interest income
amounted to `2,345.54 crore, compared
to `1,868.92 crore in FY22. Operating
profit increased by 23.6% year-on-year
to `2,052.19 crore, while net profit
experienced a growth of 25%, reaching
`1,046 crore.
Through our renewed focus on
the retail business and reduction
in corporate loans, our Capital to
Risk-Weighted Assets Ratio (CRAR)
increased to 24.43% by the end of FY23,
up from 23.40% in FY22. Our Tier 1
ratio stood at 22.40%, and our leverage
decreased from 5.37x to 4.87x. We
maintained a liquidity position of over
`4,000 crore with a Liquidity Coverage
Ratio of 112%.
HOW WE SERVE OUR
CUSTOMERS TO MAKE IT AN
EXPERIENCE
We understand that owning a home
is a significant milestone in every
individual’s life, which makes securing
a home loan a crucial financial decision
for them. At PNB Housing Finance,
we strive to make this process
seamless, convenient, transparent
and personalised.
Keeping up with the rapid pace of
global technological developments
accompanied by a growing demand
for home loans, we have also made
our internal processes robust and
highly efficient.
Through the implementation of digital
solutions, such as our ACE onboarding
tool, we can offer a contactless loan
onboarding process. By leveraging the
power of technology, we have enhanced
our efficiency and made a lasting
impact on our valued customers with
significantly reduced turnaround times.
Our integrated CRM tool, TALISMA,
along with AMEYO and Core Banking ESS, ensures efficient coordination
and execution of customer requests
across multiple channels. Even during
challenging times like the pandemic, our
robust digital infrastructure allowed us
to deliver relief packages seamlessly
and by going paperless, prioritizing the
well-being of our customers. Further,
we have straight-through processing
for our salaried customers, accelerating
the primary approval process with the
implementation of a robust business
rule engine.
We are expanding our presence both
online and offline to enhance customer
accessibility. On the online front, we
utilise blogs, affiliate marketing, SEO,
video marketing, display advertising,
and email campaigns to engage with a
wider audience. Offline, we leverage
multimedia campaigns such as TV, print,
radio, out-of-home (OOH) advertising,
property expos, and market activations.
Our goal is to make it easier for
customers to connect with us. By
expanding our presence both online
and offline, we create a comprehensive
and immersive experience for
our customers.
REMAINING RELEVANT
WITH PACE
We are confident that our journey
towards change will yield positive
outcomes, as we now have sharpened
our business focus, enhanced our
digital capabilities, strengthened our
underwriting and collection processes,
and successfully forayed into the
affordable housing sector with Roshni.
These initiatives will not only improve
productivity and efficiency but also
position us as a leading player for
future growth.
As we continue to grow, we have
redefined our strategy to focus more
on improving our key performance
areas like business growth in the retail
segment including affordable, asset
quality, collections and recoveries,
and diversified sources of borrowing.
We have already reduced our focus on
the corporate segment and are seeing
better opportunities in the salaried
segment within the retail sector to drive
our portfolio quality. Our relentless
efforts towards early identification of
delinquency and recoveries have helped
significantly improve asset quality.
Further, continuous focus on growing
the retail segment and engagement
with our customers have helped arrest
portfolio churns and allowed our retail
AUM to grow. We will continue to make
headways in creating an enhanced
experience for our customers to drive
business growth.
We ensure to remain relevant with
pace by leveraging key strategic pillars.
Our focus will be on retail lending,
expanding our offering of affordable
housing loans. Additionally, we will
enhance underwriting and collection
efficiencies to elevate the credit quality
of our portfolio. To drive growth, we
will embrace digitalisation, ensuring
superior customer engagement.
Simultaneously, we will fortify our
capital position and strengthen our risk
management capabilities.
Furthermore, in our organisation, we
are committed to cultivating a culture
for the future. We strive to become the
preferred employer by embodying a
“People First” attitude, one of our core
values. This principle ensures that we
provide equal opportunities and foster
inclusive growth for all our employees.
By nurturing a supportive and inclusive
environment, we aim to attract and
retain top talent, creating a workplace
where everyone can thrive and
contribute to our collective success.
CREATING A
CHEST FOR GROWTH
I am elated to inform you that as a postbalance sheet development, we have
successfully completed the Rights Issue
of `2,493.76 crore in May 2023. The
issue was subscribed approximately
1.21 times. The capital raise will further
strengthen our balance sheet and act
as a catalyst for growth in FY2023-24
as we see robust opportunities in the
prime, as well as affordable housing
finance segments.
LASTLY,
Having firmly established our
foundation for growth, we now forge
ahead, poised to seize new market
opportunities and emerge even stronger
than today.
I would like to extend my heartfelt
appreciation to our esteemed
customers, shareholders, industry
regulators, Board and employees
for their trust and support. With the
Company’s effective recovery in FY23
and our steadfast commitment, we are
dedicated to delivering value, fostering
growth, and upholding the highest
standards of corporate governance.
Together, we will navigate the path
ahead, seizing opportunities and
creating a prosperous future for our
shareholders, maintaining a strong
relationship with industry regulators,
and fostering a thriving environment for
our valued employees.
In conclusion, I am looking forward to
building upon our strong foundation and
believe that an exciting growth journey
lies ahead as we remain optimistic
about making India a place where every
person owns a home.
Warm regards
GIRISH KOUSGI
Managing Director and CEO
