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Ladies and gentlemen, good day, and welcome to the Q1 FY 2023/'24 Earnings Conference Call of PNB Housing Finance Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Deepika Gupta Padhi, Head Investor Relations and Treasury. Thank you, and over to you, ma'am.
Thank you, Aman. Good evening, and welcome, everyone. We are happy to discuss the PNB Housing Finance Q1 FY '24 results. You must have seen our business and financial numbers in the presentation and press release shared with the Indian Stock Exchanges and is also available on our website.
With me, we have our entire management team across verticals sitting over here, led by Mr. Girish Kousgi, Managing Director and CEO. We'll begin this call with the performance update by the Managing Director and CEO, followed by an interactive Q&A session. Please note, this call may contain forward-looking statements, which exemplify our judgment and future expectations concerning the development of our business. These forward-looking statements involve risks and uncertainties that may cause actual development and results to differ materially from our expectations. PNB Housing Finance undertakes no obligation to publicly revise any forward-looking statements to reflect future events or circumstances. A detailed disclaimer is on Slide 28 of the investor presentation. With that, I will now hand over the call to Mr. Girish Kousgi.
Good afternoon. and welcome to all the investors to quarter 1 earnings call. First of all, thank you very much. We completed a rights issue in quarter 1 to the extent of INR 2,494 crores. And thank you so much for long-standing support to the company. Issue was subscribed 1.21x. All the 4 top shareholders namely PNB, Carlyle, Ares, SSG and General Atlantic, they participated in the rights issue. And this apart, I think a lot of institutional investors, they participated. Proceeds of the rights issue are being utilized for this business. Quarter 1 was very, very eventful for us. And as a company, we've done well on most of the parameters and disbursements on a Y-o-Y, we've shown a growth of 8%. Market is quite robust. There was a bit of cyclical aspect in quarter 1. But yes, we have been trying to do a lot of things to derisk the book what we're going to build in the future. For example, our focus was more on salary. Our focus was more on home. Our focus was also more on low ticket size in terms of our incremental disbursements.
On a quarter-on-quarter compared to quarter 4, there was a drop in disbursement. This is in line with market a trend in the industry. And we saw a lot of traction in Affordable space. We were able to grow our disbursement by 66%. In quarter 1, we did INR 228 crores and the previous quarter was INR 137 crores. We see a lot of traction, and that was really, really good for us. And if you have to look at the log-in number, just to give you a data point, log-in numbers on a Y-o-Y grew by 11% and [function] value by 15%. On the loan book, on the retail side, we were able to grow by 11%, and this happens to be the highest ever book growth in last 15 quarters. Overall, loan book grew by 5% on a Y-o-Y basis and retail book 11% Sequentially, loan book grew by 2% and retail loan book grew by 3%. We are on track in terms of our guidance for book growth, which is about 17% to 18% and disbursement growth of 22 plus percent for year. In spite of our conscious strategy in terms of the growing corporate book, the loan book crossed INR 60,000 crores. So as of 30th June, the book was INR 60,395 crores, and this again is highest in last 7 quarters. in terms of customer retention, I think there has been a significant improvement on a Y-o-Y basis. Last year, quarter 1, the book runoff was 23%. Am I audible? I think there's some disturbance. Yes. So last year, quarter 1, the book runoff was 23% which is down to 16.58% this quarter. The book runoff has reduced by over 600 bps per YoY. In terms of asset quality, there has been a lot of traction. We are pretty aggressive on [indiscernible] and legal actions. There is significant focus on cash collections and settlements. We have a good pool of retail loans, which is ready for auction. For the remainder of the year, we should see good traction in terms of GNPA reduction. So typically, when you see quarter 1, whatever will be muted in terms of growth; b, in terms of asset quality improvement generally, there is a slight increase. I think given our book and the challenges, what I had discussed in the past, we were able to still bring down GNPA on the retail book. I think the traction is pretty good. I think in the next few quarters, we will see this number coming down quarter of the quarter. With respect to corporate GNPA, we have 2 accounts. There has been no addition at all. Only thing is because of IndAS, the percentage looks higher and also the good to grew compared to March. If you have to talk about credit cost for the quarter, it is 0.36%. I think for us largely, we had said in the past that we will build up ECL , we will increase the PCR, I think to a large extent of 0.36%. It was only to true up ECL or especially on the retail and to a certain extent in corporate. Otherwise, credit cost has been very, very less for the quarter. So I was talking to you about our focus on getting the profile mix right. I think we are online in terms of what we had stated earlier. So our salary is increasing. If you have to look at year-on-year, there has been a consistent increase in salaries and the self employed share is going down. This is true even incrementally as well. Just to give you some data points, if you have to look at less than INR 1 crore, it was 4.3% last year quarter 1, and we have to see that number now, it is [Technical Difficulty]
Sir, you are connected to the call. Please go ahead.
If you have to look at less than INR 1 crore, it was 81% last year quarter 1 and this year quarter, this number has increased to 85.3%, which means our focus is, A on retail , B in terms of up to INR 1 crore. So our focus is up to INR 1 crore, even though we have a cut off at INR 3 crore, we really do any case beyond INR 3 crore our total is effect up to INR 1 crore. So we are seeing that there's a lot of concentration of the loans what we do up to INR 1 crore. So this is good for the portfolio in the long run. This same trend we've seen even incrementally outside. And when we have -- when we saw this data a couple of quarters back in terms of geographical mix, we were quite low in South. So we consciously try to increase our business from South. If you have to look at, let's say, quarter 4 of last year, it was 32.5% and quarter 1 was this year, which is just after a quarter, we are close to about 36% in south. So the mix in quarter 4 on disbursement was north of 34.3% this was 33.2% and South was 32.5%, quarter 1, north of 35.3%, west is 29% and south is 35.8%. So we are slowly trying to increase our business from South, which was pretty low, given the mix what works for this industry. And same trend we see in incremental as well. Total branches expanded to 198 as on 30th of June, which was 189 as on 30th of March 2023. Affordable branches expanded to 88 as on 30 of june and only in Tier 2 and Tier 3 cities. On the Affordable, we would reach 100 branches in a quarter or 2. Currently, we are at 88 , and we will reach about 100 branches in the quarter or 2. On the corporate book, we had 2 NPAs last quarter, this year as well this quarter as relates to NPA, total amount is INR 854 crores. Out of this one account constitutes to 92%, which is back by year large developer. The increase in corporate percentage is because of its effect. There has been no little Stage 2 have been corporate because I think the last few quarters, there has been 0 account in Stage 2. On a Y-o-Y basis, the corporate book has degrown by about 45%, and sequentially, the book has gone down by 10%.
A little bit on the financials. On revenue on a value basis, we've shown a growth of [21%]. Net interest income. There is growth of 70%, [Pre Top ] is 41% and PAT drive growth of 48% from INR 235 crores to INR 347 crores. Yield has improved even sequentially from 10.41% to 10.59%. Cost, there was a marginal increase in cost. Last quarter, the cost was 7.76% and now at the 7.97%. So now the cost on portfolio and incremental both are around 8%. Spread, we were able to -- Spread is flat. We are at a 2.62% last quarter was 2.65%. NIM slightly improved from 3.74% to 3.86%. Gross margin improved from 3.82% to 3.91%. Credit cost, as guided for the year is 0.6% quarter 1 was 0.3% as I mentioned, 0.36% was largely this was due to true-up in ECL, both in retail as well as corporate since we wanted to increase our PCR. ROE, which was 1.71% last quarter for the whole year of 1.61%, now rise 2.07%. ROE has improved to 11.18% Capital adequacy now we are at almost 30% and the leverage is 3.82%. A couple of -- I think a couple of points on the outlook. I think demand is quite robust. We are seeing a lot of traction across markets. So we are pretty -- we see a lot of demand on the Prime side and more so on the Affordable side. Even I am preview to announce the reports which talked about further demand going down, but we have not dismissed that year with a base is very small . We started a few months back, but we are seeing a little good traction on the Affordable piece. So there will be a lot of traction in the coming quarters on the Affordable side. ROE of 2.07%, which is the highest in almost a decade for the company. And in terms of guidance, I think we had mentioned the spread of 2.5 NIM of 3.5 and credit cost for this year it will be 0.6%, and from next year onwards it will be 0.4%. We're happy to inform that Care rating has revised the rating outlook to positive from stable. The credit rating of the company on Care is now double with profit outlook. And we are engaging with operating agencies for positive outlook change or an upgradation.
Yes, Aman, we can go ahead and take this -- go for the Q&A.
[Operator Instructions] The first question is from the line of Ashwini Agarwal from Demeter Advisors LLP.
Congratulation..
[Technical Difficulty]
Sure. The next question is from the line of Renish from ICICI.
Congress on a good set of numbers. Sir, just one question on the margin side, okay? So now considering that we have raised capital to the tune of INR 25 billion in May. So of course, there will be a positive impact on the borrowing side in coming quarters given this quarter, there is an impact of only 1 month. And when the portfolio mix is going to shift towards Affordable and Prime, which is a higher lending book. So what is the reason we are still guiding for a lower NIM in coming quarters when you say like full year NIM will be at 3.5% versus more than 3.8% now?
Actually, in terms of guidance, Spread and NIM this is the threshold. So we'll be able to sustain what NIM [indiscernible] 3.7%. But I think the guidance on a long-term steady state is going to be 3.5%. 'that is the pressure, what I mentioned.
And so maybe next couple of quarters, there is a fair amount of change that NIM could sustain at around this level, considering the fundraising and the book mix change.
Yes.
The next question is from the line of Ashwini Agarwal from Demeter Advisors LLP.
Congratulations to the team for pretty good numbers. So 2, 3 questions. One is, how do you feel about the retail GNPL numbers considering the kind of mix you're pursuing. Do you think in a couple of years, we should be looking at industry level NPL, which are GNPL ratio somewhere in the handle of 1.2, to 1.4 and credit costs in the ratio of 20 to 30 basis points. I know you have 40 basis points guidance for fiscal '25. But how do you feel about this?
GNPL, I think 2 years is too long a time. So we are looking at being comparably best in the industry in the next 4 to 5 quarters. The numbers, what you mentioned in terms of credit cost, I think I would want to stick to 1.4% because this will be mix of both Prime and Affordable. So typically, if you look at credit cost for a company which is focusing only on Database super Prime and Prime, credit cost will be around 0.2 . hopefully 2 or 3 bps more or less. But it is a combination of Prime and Affordable and the every passing quarter, the mix of upward in keeping because that is where we see a lot of value, of course, coupled with Prime segment . And before, we would like to guide a credit cost of 1.4. So we can't take the call maybe after 3 or 4 quarters. At this point in time, we see that 0.4 given the mix of Prime and Affordable which will emerge over a period of time. I think that is what we deal with confidence.
Okay. And sir, over the next 2 years, what kind of gearing do you think is achievable I know you have an eye on credit rating as well. But unless the gearing goes to at least 5x or 6x, the ROE handle will not go to mid-teens, at least that's what I think -- but how do you feel about gearing and the ROE versus the credit rating balance?
So we are at 3.83 now. So we have -- we would -- we will be comfortable between 6 to 6.5x. So that's our plan. And we also have ambition to grow big to a level of INR 100,000 crores.
And we would, therefore, translate into an ROE, say, 2.5, 3 years out in the handle of 16%, 17%. Would that be fair?
Yes. I mean it will take 3 to 4 years to reach to a level of 5% plus, and then it should further increase from the gross level.
Okay. And do you plan to return to paying dividends at some point?
We will take an appropriate call at the appropriate time, but yes, so the idea is to grow a profitable book keeping in mind all the return ratios into as far as Yield is concerned, I think we will take an appropriate cost in consultation with all the stakeholders.
And sir, the last question is the large corporate loan account. Do you have any sense on when it will get resolved either by way of a sale or a settlement or something?
See, at this speed, we are working on with all the corporate accounts. Today, if you see the lookouts come down to almost about INR 3,000 crores, right? So we really don't see stress in the existing book. And if you look at our book for last few quarters, we don't have anything in Stage 2, and we have these 2 accounts at NPA out of 2 accounts we are on a constant stable at 92%, and we have been constantly working on revolution. And we have done some regulation in the last few quarters. So naturally, if you see, I think the book should run down maybe in the next 3 years and or, but we are trying to accelerate the repayment, it could be positive resolution in terms of settlement We are looking at various options. So I think the book could definitely runoff but not the tantrum is not over 3 years in the [indiscernible].
Okay. No, my question was more relating to this 1 large NPL INR 800-odd crore number. I mean, is there any visibility on that getting resolved?
We are working on resolutions and it is through multiple channels. So I would not be able to dive in more details on that. But I can only see that we are pretty comfortable.
The next question is from the line of [ Ravi Naredi ] from [ Naredi Investments ]. .
Sir, your investor presentation Page #10, you have shown INR 2,762 crores reduced from corporate loan book. Will you tell how much we have received and how much we have write-off?
So if you can see in the same table, we have also given below that what all has been through our sell-down natural runoff as well as write-off. So if you can see from March till June, which is 5 quarters we have a natural runoff of around INR 1,100 crores, INR 1,400 crores of sell down and INR 1,500 crores of approximate as the write-off. .
No. Can you give the bifurcation of INR 2,762 systematically INR 11,400 crore and INR 1,500 crore, how I can reconcile this?
Look, yes, we will share. So it's basically from March because that's where the year we have taken and then...
The problem is from March to June whatever you want to tell please say how much we have write-off and how much we have listed. Two figures I want, how much we write off and how much listed?
So write-off is there, around INR 1,500 crores, and the balance will be a part of the either runoff or the sell down.
What is the meaning of runoffs?
Accelerated repayment.
Yes. Okay. And this now balance payment is INR 3,416 crores right? And you are telling one is 80% is 1 -- in 1 group only, right? Real Estate large developers?
No , The book is now INR 3,400 crores we have ADP of about INR 850 crores. Out of INR 850 crores, There are 2 accounts , 2 LPaccounts, out of 2, one account constitutes to 92% of the NPA.
Okay. 92% of NPA. And we are hoping it will settle in this current year, current financial year or maybe next year?
I think we have been pretty aggressive on resolution. So we are pretty positive that this should get resolved in the next 3 quarters. .
Okay. Sir, secondly, after right issue, PNB Holding comes at the second number after Carlyle. Carlyle is having 32.7%, PNB 28.2%. So what will happen now is PNB lose as a promoter soon? Or will you -- will you change the name PNB housing ?
So I think I would not be able to answer that as of now, PNB is a promoter and they intend to continue as promoter.
So as for companies act now PNB has not promoter at all because Carlyle has more state than the PNB. Carlyle has given you the proposal in the next board meeting, please change the NIM, you have to change?
No, sir. It is not. No, no, sir. It is not like that even under the regulation, it is not like that. PNB will continue to be the promoter. We have also -- if you can see that there's a press release they have issued that will continue to be the promoter. They currently will -- 28.2% stake in the company. And even our trademark agreement is very clear on that front that we continue to use the brand name of PNB.
Because as a PNB, the company has in total mass till you remove the name of PNB, it can't be right future. So my opinion, how do you change the name, it will be more better for investor and you?
The next question is from the line of [indiscernible] from [ Shri Investments ].
In the investor presentation, which you have uploaded, you have mentioned and in the conference call just now you mentioned that you are targeting around 17% to 18% of loan book and disbursement of 20%, 21%. So for this quarter, it is -- I mean, who's difference. It's around 5%, 6% growth and 3%, 4% growth. I mean how will you manage that for the whole year if you're targeting 17%, 18% and 20%, 21% kind of growth?
Yes, correct. So if you see quarter 1 is always cyclical. So I think this is true for the industry. for all the [indiscernible] , we can see this trend. So for us, there are 2, 3 reasons, one, of course, will be cyclical and #2 quarter 1 of this year quarter of last year is not comparable. Now having said that, if you look at our last couple of quarter performance on either book growth on the retail side or disbursement growth, we will pre as good as on that. So our 17% to 18% book growth and disbursement growth of 21% is intact, and we will be able to achieve that.
But in order to compensate this low growth of this current quarter will have to do significantly better for the rest of the -- yes, right? 9 months. So is it possible to do that?
Pretty much possible to do. I just want to touch upon the earlier point, I think if this is done. See, PNB is a promoter and they're very clearly confirmed that they are holding is now 28.2% they are a promoters, and the mean continues and PNB as a parent and as a promoter, they have been really supported to us -- at the same time, we also have a few large investors like Carlyle , Ares SSG and GA so they are all supportive and nothing changes just because the shareholder Mischieves.
Okay. The second question -- My second question is on the fact that you mentioned that, if I heard that correctly, the gearing is currently 3.8 and it will take around 4 to 5 years to reach gearing at 5 level. Is that correct?
That 3 to 4 years is what we are expecting, we should reach somewhere around 5 plus. And again, depending on the growth and the overall target that we are down like the road. It might be tougher also, but I mean, this is what seems likely a scenario right now.
Okay. So in 3 to 4 years, 5-plus gearing? And like what kind of ROE we can achieve?
Should be mid-teens. That's what we are looking at. ROA or ROE?
ROA, I'm talking about .
ROA, See we have way in GL now what 2.07. I think this every quarter and the mix changes, obviously, there will be [indiscernible] On profitability. -- given the group, what we have guided. So definitely, I think it should improve. We'll not be able to give you a number at this point enter, but definitely, it will improve.
Okay. So ROE, you are targeting mid-teens, right, in the next 3 to 4 years, correct?
Yes, 3 years.
Okay, next 3 years. And assuming that you are saying that INR 100,000 crore book, that is also for next 3 years from current INR 60,000 crore?
Yes, right, 3 and 3.5 years.
3.5 years from INR 60,000 crore to INR 100,000 crore, right?
And just a point on the other one, if you look at a few quarters back, our overall book was negative and retail also was flat. So last year, we closed the retail group at about 10% and overall book at 2%. And quarter 1 is got to do with the cyclical nature of the industry. So next 3 quarters we will be able to [indiscernible] we have seen at least for many, many years, at least for a little over 2 decades in this industry.
The next question is from the line of Pratik Chheda from Guardian Capital Partners.
So my question is more on the strategic part. When we say that we want to sort of grow aggressively in Affordable housing. So what is the strategy here? Because this is anyway a very crowded space and there are players who would get the niche or somebody in the maybe 20-kilometer radius of the cities . somebody in the 50-kilometers radius of the city. So what is our strategy, where are we placed? What are the ticket sizes that we will be targeting and how much sort of infrastructure in terms of physical branches and employees are we likely to put in place in the coming 12 months or so?
So basically, Affordable let me take one minute to explain about the market segmentation. There are basically 4 segment . Super Prime, Prime , Affordable income, Affordable assessment based. So as of now, our focus is on Prime and Affordable income base. So we are not into Affordable assessment to at hardly anything. So we don't cater to super Prime, and we don't cater to Affordable informal segment. We focus on the second and third bucket. Our Prime business is focused on second segment that which is called Prime. And our Affordable caters to Affordable income based. Now today, if you look at any organization, be it buying Whether it is private or PSU, very HFC, large size are small or even NBFC. They -- all of them they focused on at least 2 or 3 bucket. So if you look at HFCs, some of the midsized HFCs and small HFCs, they focus on Prime segment and Affordable income segment.
So this space is not really crowded. What is really crowded is the Affordable informal segment, which is a high-risk business. So when I -- When we say that we want to grow Affordable business aggressively. So my definition of aggressively overall, both Prime and Affordable put together is about 17%, 18% book. If you talk about Affordable because the base is very small, we might grow at maybe another 7% to 8% more than the overall growth.
So when we say aggressively, that is the definition of the everything. It's not 40%, 50%, we will not get there. For the simple reason, our focus is on asset quality, whether it's a Prime business or Affordable business. Now there is a very clear segmentation , A in terms of customers; b, in terms of geographies, c, in terms of type of properties, 4 in what is the ticket size in focus, In Affordable, we have ticket size will be about INR 16 lakhs to 17 lakhs.
On the Prime side, it will be INR 10 lakh to 12 lakh more than Affordable ticket price. In terms of customer segmentation, top-notch customers, which is Cat A customers and to a certain extent Carlyle customers, would form part of the Prime and super Prime. For Affordable segment be Cat C or both on salaries and self employed. If you talk about salaries, somebody who's earning lateral salaries between, let's say, INR 35,000, INR 50,000, INR 55,000 salary, who can afford to take a loan of our lets say INR 17 lakh that is an Affordable segment.
On the Self employed side, somebody who know who is earning the income of metric between INR 3 lakh to 4, 4.5 lakhs per annum, that is our segment. In terms of geography, Prime business would be not at the citizen slightly away when it comes to Affordability [indiscernible] . It will be in the [indiscernible] offer given town or city. This is a very clear segmentation of Prime and Affordable . in terms of branch, we have dedicated branches for Prime and dedicated settle branches were Affordable. The customer segment is different. The channel -- set of channel partners service rate. The entire team is different, whether it's a sales team, credit team, collection team, the entire team is different.
Secondly, sir, whenever we talk about -- we look at Affordable housing players in a similar risk profile, they tend to operate with a very low -- materially lower levels than what you are guiding for of 5.5 to 6x. So I mean, if you also sort of take that route, are you saying that your leverage for the Prime business will be slightly higher than that?
So as I told you, basically, when you talk about Affordable, there are 2 segments within Affordable. One is income and one is informal. So largely, our focus is going to be an Affordable income based. So what you're seeing is true for a set of companies which focuses largely on Affordable business income. So if you have to look at the asset quality difference between, let us say, Prime and Affordable, it's about 10 to 15 bps.
So yes, to answer your question, leverage obviously, on the Affordable, it will be slightly lower compared to leverage on the Prime. But for us, today, we have a book of about INR 60,000 crores. Out of that, retail is about INR 55,000 crores , right? So let about INR 57,000 crores. So what I'm saying is that it will take some time for us to build the Affordable book. because we geared add an opportunity right? It will take some time. Incrementally will be able to reach about this year, it will be about 10% to 11%.
And in the next 2 years, we might reach to about 20% to 25%. But at a book level it is incremental at a book level, it will take time to catch up. So I think given the mix of Prime and Affordable, I'm saying around 6 to 6.5 leverage is pretty comfortable.
Fair enough. Lastly, on the corporate side, what would be a security cover for the 92% GNPA account that you talked about? How much would that be? And is there any real account which is there in the Stage 2 right now which can sort of slipped in the -- likely to slip in the next, say, 2, 3 quarters? Or should we expect that this is no asset quantity as in line in the [indiscernible]. Is there anything additional that will come out next quarter ?
Normally, we don't talk about any individual accounts, but I think just to answer your question, our coverage is more than 2x. B, I think corporate is more or less started -- and we have a lot of -- we do a lot of work on resolution and to run down the book as soon as possible . At the same time, we would also have certain write-backs in the next few quarters.
The next question is from the line of Kushan Parikh from Morgan Stanley.
I had primarily 2 questions. The first question is around the write-back factory that you mentioned just now in the previous question. So we have taken write-offs to the tune of more than INR 2,000-odd crores over the last 6 quarters. This is both corporate and the retail combined. I just wanted to understand what is the kind of -- are the quantum of write-back that we expect and over what period of time do we expect that right back to come back to us?
See these are corporation firms. So the nature of account as such that I think [indiscernible] be in a portion to predict. But having said that, in the next few quarters, definitely, we are expecting some guidelines.
It would be helpful if you could share some sort of estimate that we would have for this.
At this point in time, it will be difficult. Maybe in future, if we are very sure on that But we did a lot of work on resolution, and we are using multiple tools. And so in certain accounts, we are working where new developers come in certain accounts, we are fast tracked as legal. So multiple tools are being used to try and dissolve this account . Given the nature, it will be very difficult to give a definitive timeline. But definitely, yes, we are really pretty aggressive on the resolution, especially on the corporate side. And in next few quarters, definitely will be recognizable, it will be difficult to quantify how many accounts? What amount, it would be difficult to quantitate because the amounts are large, these are corporate accounts, definitely a delivering that.
Understood. And just also on the retail return of accounts, I mean, any guidance on that in terms of price line?
There is no guidance, but it happens every month. So I think that's part of our GNPA plan and also a profitable decline. So we said that the next 4 to 5 quarters are GNPA at an enterprise level, at a company level would be comparable with one of the best in the industry...
That's quite helpful, sir. And my second question was around the cost of fund. So I mean we are currently at a book cost of 8%, incremental cost of 8% like -- so what is the core cost reduction that we see in cost of funds, given that now our rights issue is completed and I mean that is -- that should help our capital position. So just trying to understand what is the scope of reduction in cost of funds that we see over the next 12 odd year?
Yes. So definitely, I think we also see some improvements on the cost of fund side. So as I had mentioned in the earlier earnings call, so now we will have access to [indiscernible] fund which will come at a lower cost. That is number one. And number two, we are engaging the bank. And few banks have already passed on more interest rate listed to us considering the company performance improvement and also capital position strengthening.
So this also be extent going forward. And we are engaging with operating agencies for outlook change for upgradation. So we will be starting with all of them. So definitely, we should see a few bits today to see the different in cost between the best managed in terms of cost and assets about 15 bps, right? I think we'll be able to move 50% to 68% of what should be -- We should be able to cover in the next few quarters.
Okay. So you're saying this 15 bps on GAAP, we should be able to cover 50% to 60% in the next quarter?
Yes.
Understood. Just one last clarification related question, if I can squeeze it in?
Sure.
So just on the loan growth guidance, the 17% to 18% loan growth that we are speaking of, is that on the retail loan asset?
Yes, yes. That's one way.
And that would be -- that would involve about 25% disbursement growth. Is that the right understanding?
Yes, 22%...
No, Disbursement will be 22%.
The next question is from the line of [ Manish Maheshwari ] from Manu Group Family Office.
Sir, what is the total deposit base as on 30th June?
It's around INR 17,000 crores.
Sorry?
It's around INR 17,000 crores.
I'm sorry, I can't hear you. Come again?
INR 17,000 crores.
Okay. INR 17,000 crores.
Yes around 30% of our total borrowings.
30% of total?
Borrowings.
Borrowing.
Sir, what is the guidance on credit costs for the whole of FY '24?
60 basis points.
60 basis points?
Yes.
And gross NPA and net NPA?
There's no guidance on GNPA and net NPA. So as I've told in the next few 4 to 5 quarters, this would be quite compatible in the industry.
Sir, we are going very aggressive on Affordable housing per se. So if you look at Affordable housing, Affordable housing demand has been shrinking, right, in the recent past?
We started Affordable business this human staff. So in a First part of the quarter, when we started, we did above [INR 154 crores] And in quarter 1, we did INR 228 crores. The base is very small. And this year, we said the mix is going to be about 10% to 11%.
Mix of the total disbursement.
Disbursement within Prime and Affordable .
10% to 11%?
Yes. So this is methodology.
Sorry?
Current year disbursement mix between Prime and Affordable is going to be about, let's say, [ 90 , 10 or 89 level. ]
And you have kept your NIM guidance also a little low, right? I mean, the NIMs that we have -- NIMS for this -- for the current quarter is 3.85, right?
Normally, when we do guidance, we do guidance, keeping in mind long term on a steady state. So there will be [ substitution ] in the short term, but on a long-term basis, on a steady state, this is the guidance.
And loan growth, I mean one of the previous participants was perhaps alluded to this particular thing. Loan growth guidance we have given for 17% to 18% on the retail side?
Yes. Right.
And which would percolate down to what sort of disbursement for FY '24?
Sir, I think every company would have their own math. So as far as we are concerned, as for disbursement growth we positive affair and the growth over 17 to 18%. Because it is a combination of what mix we are going have and what is the runoff. There are so many things we will get into this. But as an outcome, we would be able to deliver 17% to 18% of growth. and 22% of disbursement growth. Given the industry growth rate, this is -- for us I have said this before, again, and we see this for us asset quality is the starting point. We are back to basics now. we are talking about increasing our -- we are talking about increasing the salaries within the profile, increasing home within products between home and nonhome.
And we want to idle reach to Idle looks of Prime and Affordable and disbursement of growth of 17%, 18%. If you look at the industry, industry so far last few years, we've been growing at about 13%, 14%, and we are talking about 17%, 18%. And asset quality is the starting point. Our asset quality in the next 4 to 5 quarters would be comparable. So the growth rate of 17%, 18%, given strong demand in the sector for next few years, 17%, 18% for us is [indiscernible].
Thank you. Manish, we request to join the queue for any follow-ups as we have ever participant for waiting for their turn. [Operator Instructions] The next question is from the line of Shweta Daptardar from Elara Capital.
[indiscernible] ....
Please use the handset.
Sure. Is it better now?
Yes, better now.
Okay. So if I look at the retail top share , top 5 state shares, then and if I try to get the composition of 2.49% of retail GNPAs. And are they in line with your top 5 State Spread?
Sorry, we will get you answer ...
The Top 5 state share in retail loan assets, which is dropped by Maharashtra, Delhi and Tamil Nadu . is your retail GNPA geography-wise breakup also on similar lines?
It's almost similar.
Okay. Sir, secondly, you have been reiterating the fact that there is incremental focus on salaried segment. But if I look at 1 year mix between self-employed versus salaries and that has not sort of changed materially. So what is the target mix here and the time lines for the same?
See, we are there are a few things. When we talk about the portfolio of what we're going to build. So we are talking about few things. One is the customer segment Second is the profile. Third is the collateral and four is the ticket size. So as I have mentioned in the past, we are now back to basics. So if you always retract portfolio, portfolio, obviously, will take some time to correct. If you look at incrementally, I think we are in the right direction. So that's our focus. So our pricing strategy, our geographic strategy Everything is aligned to our goal, which is basically to change the profile mix, product mix, focus on low ticket. I spoke about focusing on up to INR 1 crore. I spoke about especially within LAP, there are some of these high-value cases which we had in the portfolio in the past, which we have done in the past.
So now we have come out of that. So this is a journey, it takes time. While we have a portfolio to deal with it, we are dealing with it, the portfolio of what we're going to build. I think this is the direction in which we want to go. I mentioned about ideally want to get to salaried and self employed which of 65% and 35%. It will take time. So we are on the right track, and it will take time for us to get there.
The next question is from the line of Franklin Moraes from EQUENTIS WEALTH ADVISORY.
Congratulations on a good set of numbers and having been able to achieve multiple milestones in this quarter. So my question is on the recovery. You alluded to the fact that there could be certain recoveries that you can expect in the coming quarters. So does your credit cost factor in the recoveries?
I see, I had -- again, I want to say the same thing. So last year, if you see a credit cost was 1.15. And this year, we reduced 0.6. If you look at quarter 1, it is 0.36, right? and this 0.36 is significant portion of that is towards building up PCR, right? So on the corporate side, the write-backs are not factored into those.
Got it. And secondly, you also mentioning or opening renew that you have increased the share of South. And now traditionally, we have been a player who have operated in the north and in the West. So is this going to be directional? Or is this as a one-off?
No, it's like this. So we are a national player, and we want to present in most of the trades, which is good for us. From a, business point of view , b, the repayment culture point of view. So we have done little tweets. Otherwise, if you look at between South, North and west largely these 3 zones. I think only 3 would be 40-plus percent. So I think it's going to be almost equal . And we are not largely present in East. So I think the fix are going to be very, very marginal. But yes, even at a portfolio in the no been a lot. -- to do good for the first quarter.
Ladies and gentlemen, that would be our last question for today. I now hand the conference back to the management for their closing comments. Thank you, and over to you.
Thank you, everyone, for joining us on the call. If you have any questions unanswered, please feel free to get in touch with the Investor Relations team. The transcript of this call will be uploaded on our website as well as the audio. Thank you.
Thank you very much. Ladies and gentlemen, on behalf of PNB Housing Finance Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.