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    PNB Housing

    PNBHOUSINGGood
    Financial Services·22 Jan 2026
    Management Summary

    PNB Housing delivered a steady Q3 FY26 performance characterized by robust retail growth and significant improvements in asset quality. The company is successfully pivoting towards high-yield Affordable and Emerging Market segments, which now make up nearly 40% of the book. While yields faced pressure from corporate foreclosures and industry-wide run-offs, management successfully offset this through lower borrowing costs and a focus on self-employed segments.

    Highlights

    8

    • Retail loan book grew by 16% YoY to ₹81,931 crores, with the total loan book reaching ₹82,203 crores.

    • Gross NPA improved to 1.04% as of Dec 31, 2025, compared to 1.19% in the previous year.

    • Net Interest Margin (NIM) remained stable at 3.63% despite yield pressures from rate cuts.

    • Profit After Tax (PAT) stood at ₹520 crores, marking a 7.7% YoY increase.

    • Affordable and Emerging Market segments now constitute 39% of the retail loan book, up from previous levels.

    • Credit cost remained negative at -19 bps due to significant recoveries from written-off pools.

    • Return on Assets (RoA) for 9M FY26 stood at 2.57% on an annualized basis.

    • Cost of borrowing improved by 19 bps sequentially to 7.50%.

    Concerns

    1

    • High Run-off/BT-out Rates

    Key financials

    Metrics

    6

    Periods

    2

    Headline

    5
    • Retail Loan Book
      ₹81,931 Cr
      YoY+16%
    • NIM
      3.6%
      QoQ-1.1%
    • Gross NPA
      1.0%
      YoY-12.6%QoQ0%
    • PAT
      ₹520 Cr
      YoY+7.7%
    • Cost of Borrowing
      7.5%
      QoQ-2.5%

    9M Annualized

    1
    • RoA
      2.6%
      YoY+3.6%

    Segment breakdown

    Affordable & Emerging Markets
    39% Share of Retail Book31% Loan Book Growth25% Emerging Segment Disbursement Growth
    Prime Segment
    20% Disbursement Growth
    Corporate Book
    ₹272 Cr Outstanding Book
    List

    Guidance & targets

    6
    CategoryTargetPriority
    Volume
    Retail Book Growth
    17% to 18%
    		High
    Margin
    NIM Band
    3.6% to 3.7%
    		Medium
    Profitability
    RoA
    2.5% to 2.6%
    		Medium
    Market Share
    Affordable & Emerging Mix
    45% to 50%
    		High
    Other
    GNPA Target
    1% to 1.1%
    		High
    Capacity
    Branch Addition
    40 to 50
    		High

    Risks & concerns

    4
    RiskSeverity

    Yield Compression and Pricing Pressure

    New disbursement yields are running lower than the existing portfolio yield, creating downward pressure on overall yields. — Both acknowledged

    medium

    High Run-off/BT-out Rates

    Repayment/prepayment rates have spiked to ~19% (from 15-16%) as customers seek lower rates following RBI cuts. — Analyst acknowledged

    high

    Affordable Segment Delinquencies

    Management noted some 'heat' in early delinquencies in the affordable book as it seasons, particularly in southern markets. — Management acknowledged

    medium

    Areas of Evasion(1)

    • Specific vintage delinquency data (6 MOB/12 MOB) for the affordable book was deferred to a separate offline discussion.

    Q&A highlights

    3

    “This was primarily because of some government ordinance... for example, Tamil Nadu, we saw some challenge. Because of that, we decided to re-evaluate our strategy in the TN market.”

    Explains the temporary 15% YoY drop in Affordable segment disbursements due to regulatory headwinds in a key market (Tamil Nadu).

    asked by Abhijit Tibrewal, Motilal Oswal

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Pivot to High-Yield Segments

    PNB Housing is aggressively shifting its portfolio mix toward Affordable and Emerging Market segments, which now account for 39% of the retail book. Management has raised the medium-term target for this combined segment to 45-50% of the total book. This shift is intended to protect margins as the Prime segment faces intense competition from nationalized banks. The Emerging Market segment, in particular, showed strong momentum with 25% YoY growth in disbursements.

    02

    Yield Dynamics and NIM Sustainability

    The company's yield declined to 9.72% this quarter from 9.95% in Q2 FY26. This was driven by a 10 bps impact from a large corporate foreclosure (₹340 crores) and 12-15 bps from lower incremental yields and higher run-offs. Despite this, NIM remained resilient at 3.63% as the cost of borrowing improved by 19 bps to 7.50%. Management expects to maintain NIMs in the 3.6% to 3.7% range by leveraging lower borrowing costs and launching new high-yield verticals like Construction Finance.

    03

    Asset Quality and Recovery Momentum

    Gross NPA improved to 1.04%, nearing the company's long-term target of 1.0%. Asset quality was bolstered by a negative credit cost of 19 bps, driven by ₹49 crores in recoveries from written-off pools. The company still holds a significant written-off pool of approximately ₹1,000 crores (₹650 cr corporate, ₹350 cr retail), which management expects will continue to provide recovery tailwinds for the next 4-5 quarters.

    04

    Southern Market Recalibration

    Disbursements in the Affordable segment saw a 15% YoY drop, primarily due to a strategic decision to recalibrate in southern markets like Tamil Nadu. This was a proactive response to a government ordinance (MFI ordinance) that impacted local credit sentiment and led to early delinquency 'heat.' Management indicated that the situation has now stabilized, and they expect affordable disbursements to revert to a growth trajectory in Q4 FY26.

    05

    Expansion into Developer Finance

    To further enhance yields, PNB Housing is re-entering the Construction Finance and Emerging Developer Finance segments in a calibrated manner. The company plans to cap this exposure at 8-10% of the total book. These segments are expected to offer yields in the 11-14% range, providing a significant cushion to overall portfolio margins as the interest rate cycle turns.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.