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    PNB Housing

    PNBHOUSING
    Financial Services·27 Jan 2026
    Management Summary

    PNB Housing Finance reported a robust Q3 FY26 with strong retail loan book growth of 16% YoY, driven by significant expansion in Affordable and Emerging Market segments. Asset quality improved with GNPA at 1.04%, and cost of borrowing declined. However, the affordable segment faced disbursement challenges due to strategic recalibration, and yields saw a decline partly due to a corporate account foreclosure. The company plans to launch Construction Finance and Emerging Developer Finance to improve yields and NIMs.

    Highlights

    5

    • Retail loan book grew by 16% YoY to INR 81,931 crores as on 31st December 2025.

    • Affordable and Emerging Market segments grew 31% YoY, now constituting 39% of retail loan book.

    • Gross NPA improved to 1.04% as on 31st December 2025 from 1.19% on 31st December 2024.

    • Cost of borrowing improved by 19 bps sequentially to 7.50% in Q3 FY26.

    • PAT stood at INR 520 crores, up 7.7% YoY.

    Concerns

    3

    • Affordable segment disbursement saw a 15% Y-o-Y drop and 4.5% QoQ decline due to strategic recalibration in challenging geographies.

    • Yield declined to 9.72% in Q3 FY26 versus 9.95% in Q2 FY26, partly due to a large corporate account foreclosure impacting 10 bps.

    • Operating expenses grew 16.7% YoY and 10.5% QoQ, including a one-time expense of INR 6 crores for new labour codes.

    Key financials

    Metrics

    14

    Periods

    2

    Headline

    12
    • Retail Loan Book
      ₹81,931 Cr
      YoY+16%
    • Total Loan Book
      ₹82,203 Cr
      YoY+14.0%
    • Asset Under Management
      ₹86,048 Cr
    • Gross NPA
      1.0%
    • NIM
      3.6%

    Annualised 9M FY26

    2
    • ROA
      2.6%
    • ROE
      12.3%

    Segment breakdown

    Affordable and Emerging Market
    39% Share of Retail Loan Book31% YoY Growth (Loan Book)
    Affordable Segment
    -15% YoY Disbursement Growth-4.5% QoQ Disbursement Growth
    Emerging Markets Segment
    25% YoY Disbursement Growth
    Prime Segment
    20% YoY Disbursement Growth
    Corporate Book
    ₹272 Cr Loan Book
    List

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Debt

    Debt disclosed

    Cost 7.5%

    Guidance & targets

    10
    CategoryTargetPriority
    Volume
    Retail book growth
    17% to 18%
    		High
    Volume
    Construction Finance and Emerging Developer portfolio share of total book
    8% to 10%
    		High
    Volume
    New branches added annually
    40 to 50
    		High
    Volume
    Total branches
    75 to 80
    		High
    Volume
    Affordable housing growth
    20% to 25%
    		High
    Volume
    Construction Finance growth cap
    5% to 7%
    		High
    Asset Quality
    GNPA
    1% to 1.1%
    		High
    Margin
    NIM
    3.6% to 3.7%
    		High
    Market Share
    Affordable and Emerging Market share of retail book
    45% to 50%
    		High
    Profitability
    Credit cost (normalized)
    20 to 25 bps
    		High

    What to watch in Q4 FY26

    5

    Affordable Segment Disbursement Growth

    Q4 FY26
    Current15% Y-o-Y drop, 4.5% QoQ decline
    TargetRevert back to growth trajectory (20-25% QoQ)

    Why it matters

    Indicates successful recalibration of strategy and recovery in a key growth segment.

    As this impacted pocket stabilises, we expect affordable disbursement to revert back to growth trajectory of Q4 FY26.

    Risks & concerns

    4
    RiskSeverity

    Impact of MFI ordinance and recalibration in affordable segment

    Government ordinance in southern markets led to a 15% YoY drop in affordable disbursements, requiring strategic adjustments. — Management acknowledged

    medium

    Competition and pricing pressure

    Industry-wide competition, especially in Prime segment due to rate cuts, but PNB Housing maintains margins through risk-based pricing and focus on self-employed. — Analyst acknowledged

    medium

    Higher risk profile from Construction Finance and Emerging Developer Finance

    These segments are inherently riskier, but the company plans to grow them in a calibrated way (5-7% of total book) with strong policies. — Analyst acknowledged

    medium

    Run-off pressure and BT outs

    Higher BT outs due to softening interest rates, an industry-wide challenge, impacting repayment rates. — Management acknowledged

    medium

    Q&A highlights

    8

    “As far as Affordable book is concerned, we saw some challenges especially in some part of southern market. It was not all across India. So, we recalibrated our strategy in those markets. This was primarily because of some government ordinance and that is already out.”

    Explains the 15% YoY drop in affordable disbursements and outlines the company's adaptive strategy to regulatory changes (MFI ordinance) in specific geographies like Tamil Nadu.

    asked by Abhijit Tibrewal

    2 min read6 chapters

    Detailed Narrative

    01

    Q3 FY26 Performance Overview

    PNB Housing Finance reported a total loan book of INR 82,203 crores as of December 31, 2025, marking a 14% YoY growth. The retail loan book, a key focus, grew by 16% YoY to INR 81,931 crores. Asset Under Management stood at INR 86,048 crores, and the company now services over 3.6 lakh accounts.

    02

    Asset Quality and Profitability

    The company demonstrated improved asset quality with Gross NPA declining to 1.04% as of December 31, 2025, from 1.19% a year prior. Net Interest Margin (NIM) remained stable at 3.63% for the quarter, while Return on Asset (ROA) improved to 2.57% (annualized for 9M FY26) and Return on Equity (ROE) reached 12.31% (annualized for 9M FY26). PAT for the quarter was INR 520 crores, up 7.7% YoY.

    03

    Disbursement Trends and Segment Focus

    Overall retail segment disbursement grew by 16% YoY to INR 6,217 crores in Q3 FY26. While the Affordable segment saw a 15% YoY drop in disbursements due to strategic recalibration in certain geographies impacted by government ordinances, the Emerging Markets segment showed strong growth of 25% YoY. The Prime segment also grew by 20% YoY. The company aims to revert affordable disbursements to growth trajectory in Q4 FY26.

    04

    Cost of Funds and Yield Dynamics

    The cost of borrowing improved by 19 basis points sequentially to 7.50% in Q3 FY26, with incremental cost at 7.2%, driven by negotiations with banks and repo rate cuts. However, the overall yield declined to 9.72% from 9.95% in Q2 FY26, primarily due to the foreclosure of a large corporate account (impacting 10 bps) and lower disbursement yields.

    05

    Strategic Expansion into New Segments and Branch Network

    PNB Housing plans to diversify its portfolio by launching Construction Finance and Emerging Developer Finance. These new segments are expected to contribute 8-10% of the total book, with average ticket sizes of INR 25-30 crores for Emerging Developer Finance, aiming to improve overall yield and NIM. The company also plans to add 40-50 new branches annually, focusing on Tier 2 and Tier 3 cities, with 35-40 new branches expected to be operational in Q1 FY27.

    06

    Impact of MFI Ordinance and PMAY 2.0

    The MFI ordinance in southern markets, particularly Tamil Nadu, led to a temporary recalibration of the affordable business strategy, causing a dip in disbursements. However, the situation is stabilizing, and the company expects to resume growth. PMAY 2.0 is currently in its early stages, with limited impact on disbursement volumes (INR 7-8 crores in subsidies given so far), but is seen as a long-term growth driver.

    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.