Housing sector

The national housing sector is expected to grow over the next 5 years : PNB Housing Finance

The national housing sector is expected to grow over the next five years after a multi-year lull and housing finance companies are well placed to exploit this opportunity thanks to sector reforms such as RERA and GST which have brought transparency indispensable, PNB Housing Finance in its 2021-22 annual report.

India has shown resilience and recovered quickly from pandemic-induced challenges, becoming the fastest growing economy in the world, said Hardayal Prasad, Managing Director and CEO of PNB Housing Finance, in his speech to shareholders.

“After several years, the residential real estate market is expected to grow over the next five years. HFCs will be able to seize the opportunity. Consumers today are more convinced of their investments and we are convinced that the housing sector will housing offers excellent potential,” said Prasad.

Reforms in recent years, including the establishment of the Real Estate Regulatory Authority (RERA) and the Goods and Services Tax (TPS), have brought transparency to the housing sector.

Furthermore, with recent government policies and specific initiatives such as the Production Linked Incentives (PLI) scheme, India is well positioned to become a manufacturing hub.

“This, in turn, will impact all sectors and help the country emerge as a $5 trillion economy… Looking to the future, we believe the Indian economy is in much better shape to deal with external shocks,” said Prasad.

Highlighting the company’s business performance in FY22, he said PNB Housing Finance paid 97% of its total disbursements to the retail segment, in line with its retail-first strategy.

“In the retail segment, we continue to grow our affordable housing portfolio. We have opened 24 locations to respond to Unnati loans. Unnati loans should play an important role in driving our growth,” Prasad said.

Unnati is the vertical company dedicated to financing affordable housing.

“As per our stated policy, we reduced our corporate loan portfolio by 39% during the year through sales and accelerated repayments. We closed FY22 with assets under management (AUM) of Rs 65,977 crore, with the retail segment accounting for 89% of assets under management,” the official said.

In FY22, PNB Housing Finance disbursed Rs 11,246 million in loans, reflecting an annual growth of 8%.

The housing finance company said it would continue to grow its affordable housing portfolio and opened up to 24 locations during the year to improve Unnati loans.

Citing a report by Crisil, the company said real estate demand is expected to increase slightly by 5-10% in FY23-24.

“Given the expected improvements in the macroeconomic situation, a large number of people are expected to enter the home buying market. Affordable housing is expected to increase by 15-17% in FY23,” said said the company citing the rating agency.

Prasad said the strategic priorities adopted in the past fiscal year have become the foundation for the company’s growth in the years to come.

“We continued to focus more on growing the business and collections while accelerating digital interventions to boost efficiency. We made steady progress in this direction, preparing the business for the future.

“As we move forward in our growth journey, compliance and corporate governance remain important areas for us. We have a robust governance framework in place, which helps us maintain high compliance standards,” said added Prasad.

On the company’s capital increase plans, he said the board had approved a capital increase of up to Rs 2,500 crore through a rights issue, subject to necessary approvals.

PNB Housing Finance – promoted by the city-based state-owned Punjab National Bank (PNB) had to drop a Rs 4,000 crore capital raise plan from a group of investors including l existing investor Carlyle Group in FY22 as it encountered regulatory hurdles.

In the fiscal year ending March 2022, the company’s net interest income was Rs 1,868.92 crore compared to Rs 2,322.91 crore in FY21. Its profit Operating income decreased by 20% to Rs 1,660.32 crore, while net profit recorded a decrease of 10% to Rs 836.48 crore.