PNB Housing Finance Ltd
NSE:PNBHOUSING
PNB Housing Finance Ltd
NSE:PNBHOUSING
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Ladies and gentlemen, good day, and welcome to the PNB Housing Finance Limited Q3 and 9 Months FY 2024/'25 Earnings Conference Call.
[Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Deepika from PNB Housing Finance Limited. Thank you, and over to you.
Thank you, Yashashree. Good evening, and welcome, everyone. We are here to discuss PNB Housing Finance Q3 and 9 months FY '25 results. You must have seen our business and financial performance in the presentation and the press release, which was shared on the Indian stock exchanges and is also available on our website.
With me, we have our management team led by Mr. Girish Kousgi, our Managing Director and CEO. We'll begin this call with the performance update by the team, 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 developments 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 51 of the investor presentation.
With that, I will now hand over the call to Mr. Girish Kousgi. Over to you, sir.
Good evening to all the investors. Thank you for joining us late evening. When we started this financial year, we shared our long-term vision of achieving 17% retail loan book growth, increase in sourcing from affordable and emerging market segments to drive profitable growth, and to be one of the best in the industry with respect to asset quality. Today, I will talk about all these parameters and what we have achieved so far.
During the quarter, the company surpassed its retail book growth guidance of 17% Y-o-Y and registered a growth of 17.5%. This is the highest retail book growth in the last 22 quarters. The retail book increased by over INR 10,000 crores in last one year and crossed INR 70,000 crores to INR 70,676 crores as on 31st December 2024. This is the highest retail book ever for the company. This is despite [indiscernible] business headwinds in markets like Karnataka and MP, impact of Hydra in Hyderabad, elections in Maharashtra and certain weather-related events in Andhra Pradesh.
As we made a growth in affordable segment, we have doubled the book in the last 9 months from INR 1,790 crores in March '24 to INR 3,838 crores in December '24. With a focused approach, we aim to take this book to INR 5,000 crores by end of this financial year.
Our another segment is Emerging Market is also ramping up well and has shown a book growth of 23% Y-o-Y at INR 13,169 crores. Seeing this growth we are confident to achieve our stated target of INR 1 lakh crores retail book by end of FY '27, with Affordable segments contributing 15%, that is INR 15,000 crores. Emerging Markets 25% that is INR 25,000 crores and the remaining from prime business.
Retail disbursement grew by 31% Y-o-Y to INR 5,380 crores during quarter 3 FY '25. Affordable and Emerging Markets segment contributed 38% to total retail disbursements in quarter 3 as compared to 29% in quarter 3 of last year. The company registered decline in gross NPA quarter-on-quarter, which stood at 1.19% as on 31st December 2024 as compared to 1.24% on 30th September 2024 and 1.73% as on 31st December 2023.
As per ICRA estimate, the GNPA of HFCs is expected to remain stable at 2.1% to 2.3% as of March '25, with the overall resolution approach of the company, that is recoveries, write-offs, et cetera. Our gross NPA is expected to stay much below the industry average. The company worked with multiple vendors and received NHP sanction of INR 5,000 crores and ECB sanctions of USD 350 million during the first 9 months of the year, these sanctions are partially drawn.
Despite tight liquidity conditions in the market, we maintained all book liquidity of INR 6,400 crores and has additional sanctions, but undrawn lines of INR 8,000 crores as on 31st December 2024. In quarter 3, FY '25 PAT stood at INR 483 crores, registering a growth of 43% Y-o-Y. NIM improved to 3.7% during quarter 3 FY '25 in comparison to 3.68% in the previous quarter.
ROE stood at 2.51% annualized in quarter 3 FY '25 and 2.48% annualized for the first 9 months. On loan book, as on 31st December 2024, the retail book is at INR 70,676 crores. In Affordable and Emerging Market segment share is at 24% compared to 20% in the previous year. On the back of industry growth and the company performance, we maintained a guidance of 17% retail loan book growth for FY '25, which might surpass 17%.
The corporate loan book now stands at INR 1,241 crores. The total loan book stood at INR 71,917 crores. And assets under management is at INR 76,840 crores. During the quarter, disbursements grew by 30% on a Y-o-Y basis to INR 5,380 crores. On Incremental Yield, we will continue to work on improving yield in all the 3 verticals. The Incremental Yield in the Affordable segment increased to 12.14% in quarter 3 FY '25 as compared to 11.6% in quarter 3 of last year. This is in line with our guidance of getting close to 12.5% on Incremental Yield for this year.
The Incremental Yield in Emerging Market segment is at 9.8% in quarter 3 FY '25, which is 41 bps more than the prime segment. We currently have a strong network of 305 branches across 20 states, and we plan to open 50 branches in quarter 4. Taking affordable branches to 200 from current 161. With this large presence, we are ready to capitalize the opportunity available in Affordable and Emerging Market segment in Tier 2 and Tier 3 cities.
On Asset Quality, our overall collection remained strong during the quarter, and we recovered INR 53 crores from retail written of accounts contributing to reversal in credit cost of minus 19 bps. The company has a written off pool of around INR 1,250 crores in corporate and around INR 450 crores in retail.
The recent extension of PMAY 2.0 reflects the government's broader vision of housing for all. We have signed a memorial with National Housing Bank and the Pradhan Mantri Awas Yojana Urban 2.0 to support the intimal beneficiaries under interest subsidy scheme. It is an opportunity for players like us in pan-India presence and special focus on Affordable and Emerging Market segment.
The scheme is applicable from 1st September 2024. And in the last four months, the company has sourced close to 5,000 applications amounting to about INR 675 crores of disbursement, which are eligible under PMAY scheme.
On the borrowing mix, our cost of borrowing during the quarter is at 7.83% as compared to 7.84% in the previous quarter and reduced by 24 bps Y-o-Y from quarter 3 of last year. The incremental cost of borrowing is at 7.82% during the quarter. Return on equity is at 11.81%, annualized for 9 months FY '25, and capital adequacy is at 28.8% as on 31st December 2024. Overall, the company has achieved key milestones targeted for the year and continues to perform on the same.
I will now request Vinay, our CFO, to talk about the financial performance.
Thank you, Deepika. Good evening to all the participants. I am happy to report another strong financial performance during Q3, led by a robust growth in business. As mentioned by MD sir, our retail loan book has grown by 17.5% year-on-year and disbursements grew by 31% year-on-year during the quarter. Now 38% of disbursements are contributed by Roshni and Emerging verticals.
Driven by strong growth in retail book, our net interest income for the quarter has grown by 17% year-on-year to INR 696 crores. Cost of borrowing has further come down by 1 bps and is now stabilized at around 7.83%. Most of the benefit due to rating upgrade has now been realized in the borrowing cost.
During the quarter, company received NHP sanction of INR 5,000 crores, which we have drawn partially and plan to draw down the balance in Q4. The company also received ECB sanctions of around USD 350 million in 9 months FY '25, which is also partially drawn. Spreads have improved sequentially from 2.2% to 2.29% during Q3. NIM has also improved to 3.7% during Q3 in comparison to 3.68% in the previous quarter. Gross margin is stable at around 4.07% in Q3 versus 4.09% in Q2 FY '25.
In Q3, FY '25, operating expenses grew by 22% to INR 203 crores versus INR 199 crores. This includes cost of 100 branches opened at the end of last financial year. Our cost to ATA remains stable between 1% to 1.1% as per our guidance.
Led by strong revenue growth in this quarter, our pre-provision operating profit has grown in double digits, that is 16% rate year-on-year now even on an overall basis. Operating profit for retail segment has also grown at around 17% year-on-year. We have also given a split of retail and corporate P&L in the presentation on Page 35.
Credit costs remains benign even during Q3 due to recovery of INR 53 crores from written-off book. The credit cost after considering the recovery is a negative 19 bps for Q3. PAT grew 43% year-on-year to INR 43 crores. ROA stood at 2.5% in Q3 and ROE is at 11.8% analyzed for 9 months FY '25.
Company has maintained average daily NCR of 193% for Q3 FY '25 against the regulatory requirement of 100%. We have maintained SLR of 15% of public deposits as of December '24 against the regulatory requirement of 13%, the SLR requirement has changed to 14% from 1st Jan '25. Capital adequacy stayed strong at 28.8%, with Tier 1 at 28%. With this all-around robust performance during Q3, we are on track to deliver on our business and profitability guidance for the current financial year. Thank you.
I'll now request Dilip, our Chief Sales Officer, for Prime and Emerging business and deposits to give a performance update.
Thank you, Deepika, and good evening, friends. I appreciate you taking the time out late in the evening. I'm delighted to share with you that we had another good quarter in the Prime and Emerging markets businesses for the company across disbursals, runoffs, asset quality and margins. Like Vinay and Mr. Kousgi explained, our disbursals grew by 30-plus percent Y-o-Y. The good thing is in line with our strategy. The margin accretive businesses grew at a larger pace. So in the businesses that I'm speaking about, the emerging markets and the NHL businesses grew at a better pace. Now this is despite some challenges faced in markets like Karnataka and Hyderabad, on account of Hydra, in AP on account of rails, Maharashtra, et cetera.
I'll go into detail on Prime and Emerging Markets businesses on how they have fared this quarter and start with Emerging Markets first. Just to reiterate, we started off this business with 50 branches in April 2024. We believe that these markets can grow at a faster pace and also give us better yield on incremental disbursements. These are the branches in nonmetro locations outside of the top 15, 20 cities. The portfolio here in terms of asset quality is also on par with the prime markets.
We are very pleased to report how business is faring in this business after 9 months of performance. Disbursals in these markets grew at 7% quarter-on-quarter sequentially, 39% Y-o-Y. This growth rate in the previous quarter was 31%. So not only has the quarter gone well, the growth rate has actually improved. The book in this side of the market has grown by 23%, is now at almost INR 13,000 crores. This business generates a yield premium or an incremental yield of 40 to 45 basis points over the Prime business. This is expected to go up in the quarters to come.
Additionally, higher yield in businesses like NHL, they're consistently going up. They form about 35% of incremental disbursements in these markets, up from 25% last year. Again, NHL is a business which fetches us 80 to 100 bps of premium over home loans. In these markets, 60% of business is sourced by our internal team and about close to 40% is sourced by our third-party distribution which is [ BMS ].
At the end of 9 months of this financial year, we are very pleased to have started off this business with a separate focus. Like Mr. Kousgi explained, the Roshni and Emerging markets business put together may form 23%, 24% of the portfolio, but are now 38% of the incremental disbursements. So you can see that the shift is towards the higher-margin business. This will only increase in the times to come.
Now coming to Prime markets. Most larger cities of the country, the metropolitan cities like MMR, NCR, Bangalore, Chennai, Hyderabad, Pune, Lucknow, et cetera, they fall into the Prime market for us. Since these are larger markets with larger real estate sales and volumes, so we witnessed more pricing pressure here also.
The yield on incremental disbursement is a little lower here than the Emerging Markets. However, they contribute more to growth for us in absolute volumes like they do for most peers as well.
On the Prime markets also, we had a good quarter on disbursals, runoffs and margin improvement. Our disbursals grew by 15% in these markets. The book grew by about 11% to INR 53,700 plus crores. We managed to maintain our runoff there. The runoffs across Prime and Emerging Markets are below 17% on an annualized basis. This is a good 100-plus basis point improvement as compared to the last year.
We are also working here on increasing our yield on incremental disbursements. So in 9 months of this financial year, the yield has gone up in these markets by almost 20 basis points. Sequentially, within the quarter, the yield went up here by 5 basis points.
We made an investment in new branches across both these businesses. We opened about 35 new branches in Q4 of FY '24. I'm happy to share that these branches are auguring well. They contributed about 12% of disbursements in the third quarter of FY '25. That number was 10% in the previous quarter and 6% in the first quarter. So clearly, they are shaping up and contributing more to our growth. Since this investment has paid off well for us. We have desired to open 10 more branches in the Emerging Markets business. So we will be at 60 branches by the end of this financial year in the Emerging Market side and about 100 locations in the Prime market side.
So to summarize, growth in business is auguring well, thanks to our investment in geographies, markets and technology. The growth in the margin aggressive businesses, emerging markets, nonhousing loans, is happening as per our expectations. The shift in the customer segment and the geography mix is also happening as planned. For the first time, 53% of incremental disbursements across Prime and Emerging Markets put together came from nonmetro locations. Again, this number was about 50% last year. So the shift is happening quarter-on-quarter. And the asset quality for these businesses continues to improve quarter-on-quarter.
So we believe that this quarter also, our performance is a testimony to the fact that we are on the right path and we will only move forward in these businesses on all three vectors: growth, margins and asset quality. Thank you, and back to you, Deepika.
Thank you, Dilip. We'll request Anujai, our Business Head for Affordable business to update on the performance of Affordable.
Thank you, Deepika. Good evening, everyone. It is my pleasure to take you through the excellent outcomes that we have achieved in the last quarter in our Roshni business. We have ended the last quarter at a loan book of INR 3,838 crores, with a year-on-year growth of 234% from INR 1,149 crores in Q3 of last year and a 30% growth over the previous quarter. I'm happy to share that we have doubled our loan book in the last 9 months from INR 1,790 crores in March '24 to INR 3,838 crores in December '24.
Roshni disbursements have been witnessing a robust growth. Our disbursements in Q3 '25 stood at INR 920 crores and year-on-year growth of 127% as we have disbursed INR 406 crores in Q3 of last financial year. Disbursements have grown 46% from the previous quarter, wherein we had disbursed INR 630 crores.
Our journey in the Affordable housing finance space started in January '23, with Roshni business disbursing INR 5 crores of loan for that month. Executing well on our strategic plan, we reached a monthly disbursal run rate of around INR 100 crores per month in about 6 months' time by July '23. We reached a loan book of around INR 1,000 crores in just 11 months time by November '23. We opened our 100th branch in December '23. Incidentally, this branch was also our first women-only branch, that was set up in Chennai.
With increased branch footprint, our loan book growth was even faster from thereon, and we ended the FY '24 as the loan book of INR 1,790 crores in March '24. We eventually crossed the loan book of INR 2,000 crores by May '24. In the last one year, we have opened 61 more branches. I'm happy to share that all these new branches have been fully operationalized. And with these 161 branches across the country, we are taking to 130-plus high potential targeted districts across 13 states in the country.
In the last quarter, we had announced our plan to open 40 new branches by March '25. I'm happy to share that we are on track to open all these branches as per the stated plan. In this round of branch expansion, we will be entering 2 new states, Punjab and Haryana. We look forward to developing these 2 high potential reasons for our Roshni business.
We are operating in three zones, and contribution is almost evenly distributed amongst all these three zones. North zone accounts for 34% of our business. Contribution from the west zone is about 36% and south accounts for the remaining 30% of our business. We have a true national presence, and this helps us in scaling up faster across all regions in the country.
In the last few quarters, we have worked hard to expand and strengthen our distribution. We have empanelled close to 2,000 connectors through our Roshni Saarthi program. We have also empanelled close to 500 channel partners for DFA partnership. We have strengthened our vendor support network for legal, technical, [indiscernible] related checks with more than 1,000 empanelled vendors across the country. We have also used technology solutions extensively to strengthen our operational framework.
The last quarter has been our best ever quarter in terms of logins, sanctions and disbursement. We have been able to build a robust pipeline, which will support the business growth going forward as we move through the last quarter of this financial year. Our self-employed sourcing has increased to 44% in the last quarter as compared to 42% in the previous quarter and 39% same time last year. Self-employed sourcing accounts for more than 40% of our portfolio.
Share of informal income segment has also gone up to 34% in the last quarter as compared to 25% same time last year. Informal segment now accounts for close to 30% of the portfolio. While we have grown our disbursement significantly in the last few quarters, it is important to note that we have also improved our incremental yield simultaneously.
Yields for incremental business has gone up to 12.14% this quarter as compared to 11.6% same time last year, and 11.95% in the previous quarter. We have been able to improve our yields through continued focus on higher-yielding segments and products. With most of the new branches getting opened in Tier 3 and Tier 4 locations, we are confident our yields will continue to improve going forward.
On the portfolio quality side, we don't see any early warning signs. Our bounce rates are as close to 9%, which is in line with the expectation in this segment, and NPA stands at 0.2% in the last quarter.
As I mentioned earlier, we have been able to execute really well on these strategic plans that we have for this business, and we are confident we'll be closing this financial year with a loan book of close to INR 5,000 crores. Thank you.
Thank you, Anujai. I'll now request Bhavya Taneja, National Head Marketing to talk about key marketing initiatives.
Thank you, Deepika. Good evening all. Considering the dynamic landscape of housing finance industry, PNB Housing marketing strategy has played a pivotal role in maximizing growth opportunities for all our businesses. Grounded with deep understanding corporate reputation management and digital communication strategies to strengthen our brand positioning.
Very happy to report that this quarter, one of the key highlights of our marketing journey was the launch of our very first brand mascot named Roshni named after our affordable housing product Roshni, which represents hope and positivity for our aspiring homeowners. We have rolled out a comprehensive 360-degree marketing campaign spanning television, print, outdoor media, cinema, digital and social media. Our cross media collaboration was targeted to capture consumer attention across all touch points, both online and offline. Thank you.
Thank you, Bhavya. I'll now request Jatul, our Chief Credit and Collections Officer, to talk about credit and collections performance.
Thank you, Deepika, and good evening, everyone. Credit underwriting plays a crucial role in driving business and building a strong portfolio, ensuring sustainable portfolio quality. So the company today manages a robust and seasoned portfolio of over INR 70,000 crores consistently achieving steady growth. The portfolio is well diversified, having balanced distribution across industry segments, low and mid ticket size cases in a healthy mix of salaried and self-employed customer segments.
The company witnessed business growth, as already I have talked about in Q3 of the current financial year. As envisage with respect to the focus area of control, 95% of our fresh sanctioned volumes have taken sizes of up to INR 1 crore. 84% of our incremental business had a bureau score of more than 700. Having all the checks and balances in place with respect to prudent appraisal norms and managing early mortalities, the delinquency, the business book in the last few quarters is well within the tolerable limit. To give you an idea, as on December '24, 30-plus from the last 12 months origination is 0.11%, and NPA is mere 0.03%. If I go back and see the last 24 months behavior, 30-plus is 0.53 and NPA from the last 24 months originations is 0.13% only. So far, we haven't witnessed any red flag with respect to our asset quality.
And from asset quality standpoint to ensure effective monitoring of the portfolio and reviewing leading indicators, we conduct regular data-based industry and peer reviews, market intelligence from bureaus industry partners. This serves us with an effective dip check from the -- for the company to measure our portfolio against industry benchmarks.
Moving to collections and recoveries. The company continued the trend of ensuring sequential reduction in NPAs on a quarter-on-quarter basis. Interventions such as minimization of total bouncing through our revised pre-delinquency model, rigorous reviews on telecalling and field resolution team helped us deliver the better performance.
At the end of the collection spectrum is the recovery from written-off pool, which involves resolution of high delinquent accounts, high vintage, accounts imposing some legal challenges, et cetera. The company continues as drive to recover better and we recorded a INR 53 crore recovery from technically written-off pool in quarter 3, which is far higher than the recovery in previous 2 quarters. On the property repossessed asset disposal front, we again continue to beat our own performances, 152 successful auctions were done in quarter 3 FY '25, as against 134 of quarter 2. We continued the momentum we gathered over the last few quarters in [ surface ] actions and legal, adding 251 more property positions in Q3 wherein the customers were NPA. Considering all this, the company feels confident in saying that we have equipped our collections, legal and recovery teams with the accessory tools and strategies around to successfully navigate and get to better performances in the quarters to come. Thank you.
Thank you, Jatul. I'll now request Anubhav, our Chief Technology Officer, to talk about our tech initiatives and programs.
Thank you, Deepika, and a very good evening to all. PNB Housing Finance continues to thrive on the bedrock of foundational, robust, scalable, high-performing technology, enablers, and capabilities. All our technology investments are aligned to the business strategy and direction. We have introduced several tech-led channels for sales, collections, operations and customer service functions. All the new platforms focus on rich functionality features, capacity and performance. The new and upgrade platforms are set to deliver long-term robust tech capabilities for our business segments and customers.
Today, I am pleased to share that our technology transformation agenda that was initiated in Q4 FY '24 is in the final stages of completion now. In the preceding quarter, we have successfully upgraded our core platform, loan management system. With this upgrade, we are now upgraded to the latest version of the product with several functional features and capabilities as well as upgrading to the latest tech elements within the architecture. This upgrade was successfully launched across all branches, centralized operations, CPC in a seamless manner.
We have also launched a new cloud-based LOS for our Prime and Emerging business segments, which is currently operating in a pilot mode across select set of branches. Having defined clear cut measures for monitoring the pilot we are progressing well and focusing on user adoption and change management for the new platform.
PNB HFL has been conscious of the massive change in the process and user experience that the new LOS brings and hence the rollout shall be spread across the next few months to ensure seamless adoption across branches and minimize any potential disruption for business.
Same approach was followed by the rollout of LOS for Affordable business segment in quarter 1 and quarter 2 of FY '25. We continue to focus on evolving into data-driven enterprise. And now we have announced our capabilities in the analytics domain by having successfully created a cloud-based integrated data platform that has a curated data model integrated to all our core systems. This data platform is data service enabled and is being used for generating insights and visualization to better monitor and calibrate business decisions. This data lake setup has helped PNB Housing Finance to successfully meet timelines for all [ issue ] regulatory data reporting requirements, which was there in the last quarter.
We also continue to expand the footprint of robotic process automation through bots and have recently introduced 2 new automations developed in-house in productivity of operations and financing, respectively.
Lastly, we remain focused on the threats of cybersecurity and have set up 24/7 information security monitoring capabilities and continue to build resilience on our technology platforms in line with the new and emerging cyber tech landscape. Information access for users is also controlled using relevant tools which was purely on a zero-trust architecture model. We have recently further augmented our information security capabilities by introducing additional AI-based monitoring capabilities for our e-mail landscape as well as for our internal network traffic monitoring. Thank you.
Thank you, Anubhav. Yashashree, we can open the floor for Q&A, please.
[Operator Instructions] We'll take our first question from the line of Ashwini Agarwal from Demeter Advisors Llp.
This is a phenomenal set of numbers, congratulations to all of you.
I am sorry, Mr. Agarwal, can you use your handset mode. Your voice is breaking.
Is this better now? .
Yes, please go ahead.
No, I said Mr. Kousgi and team, congratulations on delivering a fantastic set of numbers. The question I have is that as you look out for the next 2 to 3 years, how do you expect the various levers to -- I mean I see revenue mix improving, our margin mix improving. At the same time, cost to income should stabilize once your branch rollout is over, but credit costs should normalize. In conjunction to that, where do you see leverage going? What would be an acceptable level of leverage? And therefore, in the medium term, say, 2 to 3 years from now, what kind of an ROE expectation would you have assuming the credit cycle remains without accidents?
Our plan by FY '27 is to take retail book to INR 1 lakh crores with the mix of Roshni and Affordable, 15%, Emerging, 25% and 60% Prime. So as you must have noticed, since last few quarters, we are trying to do more of Affordable and Emerging and trying to reduce our growth rate in Prime to ensure that we are profitable. So next 3 years' time, we should be able to cross the INR 1 lakh crores on the retail side. With the shift in segment incremental yield, we are looking at funding of over 4%. In terms of credit costs, it will be 0.25. We'll be pretty comfortable with the leverage of 5.5 to 6 in the next 3 to 4 years' time. I think so this is our plan. In terms of ROE, it should be mid-teens and...
Okay. Second question I had was that what I'm seeing on the ground, I mean, I heard the comments from the credit team and there seem to be no worries at this point. But what we are also seeing is a slowdown of industry in general, and in that context, how confident do you feel that the self-employed and the informal sector borrower will not be a cause for pinpoint. I mean are you seeing anything on the horizon that worries these?
I think a couple of things here. If you look at the mortgage industry, I think demand is very good. Demand is robust. So there were a lot of challenges, I think, in quarter 3 with respect to 4 states; pricing, we had mentioned that in Karnataka, in MP, Hyderabad and Andhra. So there were certain challenges to do with the entire city maps, I think redefining the city maps. In terms of Karnataka and MP, there are certain challenges in terms of registration. Maharashtra, there was election and therefore, there was a lot of challenge in terms of getting the properties registered.
I think it's only because of these incremittent interventions which were beyond control, the growth probably for the industry will look on a lower side. Otherwise, demand is quite robust. So in spite of all these challenges, we were able to put up a good show in quarter 3, if these challenges aren't there, we would have done probably much more than what we have done. So I think very clearly, we are seeing that this demand is there, demand will continue for next years to come. There is absolutely no challenge on the demand.
And last, if I may...
Yes, I think just to answer your second question. I know there are certain challenges in the overall financial space with respect to unsecured though stress increasing, especially on the MFI small ticket personal loans, personal loans. So we are constantly checking our portfolio for stress level and also, we have a robust process of onboarding self-employed customers. So we have effective tool of pre-delinquency management and we also try and check first stress levels when customers are regular or current with us. So far, we have not seen any stress which will worry us on the mortgage book, be Prime or Emerging or Roshni.
And if I may squeeze the last one in. On the runoffs, I mean, how much of these are BTs? And are you happy to let the BTs go? Or are you putting a strategy in place to retain these loans? Any thoughts on that, please?
So BT would be in the range of 5.5% to 6%, average. So we have a very strong retention team. So we also have a repricing policy. So whenever a customer approaches us for repricing, it fits into our scheme of things to retain the customer. And if it doesn't fit, we let customers move out. So we have a dual strategy here depending on at what price we need to retain the customer. But having said that, over the last few quarters, we have reduced the overall closure which is now down to 16.5% to 17%, which is in line with our projections.
And so out of 17%, 6% or so is BTs and the remaining is up prepayment? Would that be the correct understanding?
Remaining would be -- yes. So 6% -- 5.5% to 6% is BT and the remaining would be foreclosure, part to closure and natural runoff due to repayments.
We'll take our next question from the line of Sanket Chheda from DAM Capital.
Congratulations on great set of numbers also the plans. My question was there was a little bit increase in Stage 2 of about INR 450 crores. So what was that account? And how should we look at it?
So I think this was largely driven by one account on the corporate side. So this account has been in the SMA bucket since last 2 years, and if you see in this particular account in the last 2 years, we have collected close to INR 200 crores on the principal. So principal has come down by INR 200 crores. So we don't see any challenge...
Okay. Okay. You expect it to get resolved in the quarter [indiscernible]?
Yes, we expect this to move bucket back to this quarter.
Okay, okay. And sir, the second question was on disbursement. So besides the registration issues in a couple of states, you have managed to clock Q2 level of disbursement, which over the Q1 was itself a very strong jump and this quarter also Y-o-Y jump looks good. So do we expect some of the lost business in this quarter to add to the Q4, which is usually seasonally strong, how do you see it? And if you were to say [indiscernible] the hit that was there in this quarter in terms of the disbursement like those issues were not to be there, how much we would have done more?
So as I mentioned, there were challenges in few states, that is Karnataka, then Andhra Pradesh, Telangana to a small extent, in Chennai because of [ rains ] in Maharashtra and MP. So as we see now, I think most of the states, I think the process have eased. So we expect that quarter 4 will be good for the industry as well, not just PNB Housing. And I generally believe that whatever business the industry has lost or maybe what we would have left behind because of the procedural delays and changes to would, I think, should come through in quarter 4 and quarter 1 of next year.
Next question is from the line of Renish from ICICI.
Congrats on a great set of numbers. Sir, my first question is on the Prime housing divestment on sequential basis. If you look at it actually fell by a couple of percentage points. So it is right to assume that it's because of these states wherein we saw some disturbance on temporary basis in Q3? Or it is by choice?
Yes. So our plan is to grow the book by 17%, that's the guidance. So this has broadly 2 metrics. One is disbursement. And second is loans total closures. So disbursement would vary depending on the closures to maintain book growth. Now to a certain extent, yes, I think all these challenges in these states has impacted on the Prime and Emerging side and also [indiscernible] to a little extent. But I think broadly, our strategy is to grow our Affordable and Emerging book faster, and the growth in Prime is going to be, to that extent, lesser. So this is in line with our strategy. Having said that, to a small extent, yes, there was impact on Prime and Emerging because of these interventions in these 4 or 5 states.
Got it. And sir, my second question is on the OpEx side. I mean, if you look at the other OpEx line item which has been growing at some 15%, 20-odd percent on sequential basis, which is now like INR 90 crores. And when we look at the sequential growth, it is actually much higher than the retail loan book growth. So why the incremental investments are going? And where do you see cost income ratio setting in near term?
Renish, on the other OpEx, actually, it is more of a seasonal in nature. So during festive season, some marketing spend has happened. And there is some expense on the general and administrative costs also, which is more one of our seasonal images, it will normalize back to the same levels of Q1, Q2 next quarter.
Okay. And would you want to guide us, what a steady state cost-to-income ratio?
On a steady state, we have guided cost to ATA of 1% to 1.1%. So we have been maintaining that, and that will maintain.
And sir, just last question from my side on the sourcing. Now in the entire retail segment divestment, what percentage of that would be BT in?
It will be around -- see, we have 3 segments within retail. So on the Prime and Emerging, the BTs would be in the range of 17% to 18%. On Roshni, it will be higher, it will be about 25% to 27%. So if we can take average maybe about 21%, 22%.
Okay. Okay. And any -- I mean, internally, do we have any limits to the extent will restrict BT and look for, let's say, new to credit kind of a customer? Or how is it? At some point BT would impact our yields.
So I mean, we don't really have a number on BT yields. So depending on the opportunity and the customer profile and the financials, we'll take a call. So we don't have a definitive number. It is more driven by market dynamics. But largely we focus on new to companies, new to credit and also BT yields. So this percentage could vary segment to segment. But I think largely BT is now more in Roshni because it's a new business. And therefore, the focus may be is slightly more.
Okay. And just a follow-up on the Affordable side. So this 25%, 27% of BT, which is happening is right to assume that most of this would be coming from HFCs? I mean, the Affordable financials...
It would be largely from the Affordable set of companies.
We'll take our next question from the line of Viral Shah from IIFL Securities.
Congrats on a good set of numbers. Just one clarification first I wanted was that to the earlier question on the Stage 2 increase, will this is just the same account that, say, even 2 or 3 quarters back had intermittently slipped and then again upgraded in September '24?
Yes. This is the account which has been in SMA bucket for, I think, almost 2 years. So there is significant development in the project and the same. And also, as I mentioned in last 2 years, principal has come down by almost close to INR 200 crores. So we don't see any challenge.
Okay. And you see this being upgraded in 4Q, again?
This quarter.
Yes. Okay. Fair enough. And the second question I had was with regards to your -- the exposure or state-wise on the retail side. So we have seen that in this quarter, we had some challenges on the ground in the states of say, Karnataka, Telangana, but on a sequential basis, I'm seeing that, of course, its mix has been increasing. So how did we manage to do this? Because we saw that at least for our peers, these are one of the major reasons why you saw growth slow down?
So I think by design, our focus is more on South for all the 3 segments, Prime, Emerging and Roshni. So maybe this quarter because -- see this quarter also there was a challenge in west. There was a challenge in north and there was challenge in south as well. So we see challenges across in all the 3 zones that is south, west and north. And therefore, the mix almost -- I think it remains the same. But our focus will be slightly more on South followed by north and then west.
Okay. Got it. And sir last question...
And also as I mentioned, if these challenges weren't there, our numbers would have been far higher than what we have shown.
Okay. Got it. And in that same light, would you want to say, give us -- I know it's just now one more quarter left, we can do the arithmetics, but say, more so raising your eventual say, loan book targets, given that we are beating this year, and we seemed to be on a strong footing. So are you seeing, say, instead of INR 1 lakh crore retail loan book target by FY '27. Any upgrades to that target?
No, no. As of now, we stick to INR 1 lakh crores by FY '27. If they can do more or else if there is anything in the mix, I think, will be happier. So as of now, we maintain 1 lakh crore as of today.
Right. And sir, last question was with regards to the corporate book. Last quarter, we announced the hiring of Mr. Rana coming from ICICI Bank to restart the corporate vertical. So any updates on that because we did not see any disbursements in this quarter?
Yes, hopefully, this quarter, we might see a couple of sanctions and if possible one disbursement as well. But from this quarter, it will start.
Yes, great. And just one last suggestion, of course, once we start that, but it will be really helpful to get much better color on what are we intending to do separately and also maybe hear from Mr. Rana maybe sometime next quarter when we come back.
Absolutely, I think I've already mentioned before, definitely, we will give more color on the business, what kind of business they're going to do. I think just to talk about corporate will be pick and choosy. The ticket size will be much less, very strong underwriting norms, and we will look at only very safe and strong structure. So I think once we start will give more color on corporate.
Next question is from the line of Abhijit Tibrewal from Motilal Oswal.
Yes. Thank you, and good evening, everyone. Sir, I mean, just trying to understand, even this Stage 1 provision cover a decline of 20 basis points is because of the same corporate accounts slipping into Stage 2?
Yes. So if you see, we are also resolving a lot of accounts. And some of the accounts probably will mature in quarter 4. So some of the accounts are nearing maturity. And therefore, we've seen good repayment pattern in the last few quarters. And that is why ECL has been calculated accordingly.
Got it. And sir, I mean, going forward, will it remain at these levels? Or do you think it will go back to the 75 basis points where we were at?
Please come again.
The provision cover on Stage 1 was 75 basis points until last quarter. What I'm saying is now, will the new normal be in this 50, 55 basis points or will we go back to 75, 80 basis points?
See a lot of things are happening. I think we are improving on the quality of origination. This we started a little over 2 years back. And all the accounts which was there as a portfolio, we've been trying to manage, maintain them. So we have an initial model. So we run it through the model. And as of now, as I mentioned, on the retail side, we are talking about credit cost will be benign for the next few quarters. And long term, it will be about 25 bps.
On corporate, we see a lot of recoveries happening and a lot of accounts are now nearing maturity. And therefore, depending on the model, if there is a need, only then we would be providing slightly higher otherwise no, I don't think so we need to. Do you want to add anything.
Yes. So Abhijit, this is largely on account of slippage of one account from Stage 1 to Stage 2 corporate accounts. Once it moves back to Stage 1 next quarter, probably the percentages will get [indiscernible].
Got it. And sir, the second question that I had was, during this quarter, what was the total quantum of write-offs that I have -- that we had?
In this quarter, hardly anything. There is none. Nothing to -- nothing material.
And sir, I mean, have you had a chance to kind of evaluate that because of Karnataka, Telangana and fewer other states that you spoke of, how much business did we do lose during the quarter? And the related question, what is the status in Karnataka now? Has it improved or are there problems in Karnataka still there?
I think if these challenges weren't there, across all the 3 business we should have done at least about INR 500 crores, INR 600 crores more. .
Got it. And sir, status of Karnataka. I mean, has anything improved or still -- I mean, those problems continue to be?
So in all the states, there is improvement. So the challenge what was there, let's say, 2 months back in Karnataka, I think now there is a lot of improvement. And same thing is true with MP as well. So I don't think so quarter 4 should see much of a challenge for these reasons.
Got it. And sir, then the last question that I had is now that it is widely expected that we will see some repo rate cuts in India in this calendar year. I just wanted to understand how our liabilities more particularly for bank term loans, how are they placed in regards to being linked to repo rates [indiscernible] MCLR and what impact will we see on our NIM, if hypothetically speaking, let's say, if there's a repo rate cut of 50 basis points in the next 3 years?
So Abhijit on the liability side, 70% plus of our liabilities are floating first of all. So that is one. Secondly, within term loans, around 1/3 of our term loans are linked to repo or T-bill, so that will get repriced immediately. And the rest are also, again, very short-term benchmarks like 1 month or 3-month MCLR. So that will also get repriced sooner than later. However, there is always a lag between repo and MCLR. So to that extent, there could be a timing gap. Depending on the timing, we expect 25 bps, every 25 bps change in the repo should lead to 10 bps reduction on our cost of borrowings, and we plan to pass it on. There should not be any very big impact on the NIM from the overall impact perspective.
If you could just repeat the last line for every 25 basis points cut in repo rates? What is the impact on our cost of borrowings?
Around 10 bps. Immediately 10 bps.
10 bps. And that we expect to pass it on. And what you are expecting, then margins can be maintained at current levels, there will not be an impact on the margins.
Yes. There should not be. I mean, that should be -- that is our endeavor. We'll try to maintain the margins.
Next question is from the line of Suraj Das from Sundaram Mutual Fund.
I think few questions have already been answered. Just a follow-up to Abhijit's question there, what is the return of pool outstanding for you and if you can bifurcate in between retail and corporate? And what kind of recovery you are expecting, let's say, over the next 4 to 6 quarters? That would be all from my side.
The corporate is about INR 1,250 crores. So we expect a recovery of about 67%, and that we'll be able to collect in the next 3 years' time. Retail, the pool is INR 450 crores. So we expect about INR 45 crores to INR 50 crores every quarter for the next 3 quarters.
Next question is from the line of Aditi Naval from RSPN Ventures.
I just had a few data keeping questions. So one is sequentially, your employee expenses have dropped. So what could possibly be the reason for that? And second would be on fee income. So fee income has been sort of subdued in this quarter? Is there also -- any light on that as well?
So fee income is not subdued. It has grown 20% year-on-year. This includes the insurance commission, which has grown around 30% in revenue. So rest of the line remaining constant. So that has grown well. On the employee cost perspective, there was a one-off related to some actuarial valuation of around INR 4 or INR 5 crores. And rest is, we have brought down overall cost by optimizing the head count and revisiting certain incentive structure that we have. So it is based on the overall efforts being put in on the [indiscernible] quarter. .
Can you just repeat the insurance part on the fee income?
So I'm saying on the fee income, overall fee income growth is 21%. Within the fee, the insurance commission has grown 30%, in line with the disbursement growth.
Next question is from the line of Kamal Mulchandani from Investec Capital Services.
Firstly, congrats on a good set of numbers. Most of my questions were answered. Just would like to understand the path to achieve INR 5,000 crores of Affordable housing book by the end of FY '25. I understand that by December, it's INR 3,800 crores, and we have done disposals of around INR 900-odd crores this quarter. So like if you could just guide the part to achieving the Affordable housing AUM book?
So on Affordable, if you see, as of March, we were at INR 1,790 crores. So now we are at INR 3,838 crores. So we have doubled the book in 9 months. So we disbursed about INR 925-odd crores in quarter 3. So to get to INR 5,000 crores, we should disburse INR 1,200 crores. It's an average of INR 400 crores per month. So we see that is quite possible. So hopefully, we should get to INR 5,000 crores. .
But there will be some repayments as well, right?
No, we have taken [indiscernible].
Next in line is Mr. Anurag Mantry from Oxbow Capital.
Just one question on the overall credit cost. So basically, if I add back maybe the recoveries that you've had this quarter, both from the retail and the wholesale side. I think your PBT mentioned like INR 53 crores on the retail and [indiscernible] on wholesale. I think eventually get about INR 75 crores. And if I annualize that, it seems like 40, 45 bps kind of quarterly run rate, the normal credit cost as such. And that's similar trends there for the last couple of quarters. So just wanted to understand that X of the write-off recoveries, why are we running at like 40, 50 bps credit cost because I think bulk of this book is now just the retail book as such, which probably should retain most of our credit cost?
It's not 40 bps. It is somewhere around INR 30 crores roughly on account of the ECM strengthening under Stage 1, Stage 2, which translates to around 20 basis points annualized.
So I mean -- so you're saying that only INR 30 crores is the normal provisioning and the balances for ECL [indiscernible]. Is that how we should look at it?
Yes, that is right.
We'll take our next question from the line of Kunal Shah from Citi.
Yes. Firstly, if I were to look at it in terms of the OpEx. So if you can just broadly break up this 1.1% OpEx to assets over 3 segments. So maybe affordable, what is the kind of OpEx that we are seeing and how much would be in the Prime. So broadly, just wanted to give in terms of where we are in terms of the profitability in the Affordable housing in the Emerging and in the Prime segment. And the targets which you have highlighted in terms of the Emerging and Affordable, would there be the additional investment branch rollouts that would be required? Or it's more in terms of the productivity gains that would happen?
So if you look at strategy in terms of starting Affordable, it started over 2 years back. Emerging started this year. So I think most of the investment in terms of setting up business is done on the Roshni side. On Emerging also, we started off with 50 branches. That was an initial investment. So now going forward every year will be opening about 50-odd branches. So that is more of a BAU. So no major investment in terms of branch network as well. So if you look at the OpEx at this point in time, I think we should look at a consolidated basis. I think very soon, we will see -- I think we'll be able to break it up segment by then we'll be able to share. But at an overall level, we'll be able to maintain OpEx at 1% to 1.1% [indiscernible].
Okay. So in Affordable, we would be already at breakeven? Affordable and Emerging?
Yes. Affordable, we are already -- we are profitable. We are yet to get to the mature stage, which will take one...
Sorry?
We are already profitable on Affordable, and we are moving towards the steady-state ROA, which will take maybe one more year for us to get to a [indiscernible].
Okay. Got it. And secondly, in terms of the -- maybe when we -- if there are BTs, maybe in RBI FSR, there was an indication that when you look at it for the personal loans overdue, they have maybe some kind of a retail facility, home loans as well. So any sense in terms of the customers whom we are onboarding, is there any overdue in any of the PL or maybe the small ticket loans and could there be any risk in terms of the reclassification or maybe it's like a clear cut of rejection, okay? If we see overdue in any of the customer in any of the product segments?
See, the overall bureau score, I think, takes into account such behavior on account of any kind of financing of it. So that is appraised on a case-to-case basis as this comes through. So we said in the beginning that 84% of our onboarding are above INR 700 bureau crores. So that takes into account such behavior.
So in fact, in respect of the segment, whether it's Prime, Emerging or Roshni, we are very particular about credit history. So when we onboard the customer, we look at customers' existing exposures and how is the repayment. So only with good repayment track record, we would onboard the customer, otherwise it is a clear no go.
So the question was largely with respect to 12 and 10-odd percent which are in NPC and up to 700, okay particularly on the Affordable and maybe I think you have shared similarly on the other. So it's not with respect to maybe 75%, 80%, which are any which ways better or maybe more than 700, but for the other part of the portfolio yes?
I think we can't purely go by the score because you will have a lot of customers who take a small loan of about 25,000, 30,000 loans being due to credit. And within a year's time, they would -- they'll have a score of more than 725, 730. We can't really go by the score. So we need to see whether the customer is due to credit or customer has certain exposures. If so, how is the repayment. So we will not go, for example, 750 is not same for all the customers. Somebody having 750 with INR 30,000 loan, may not be that good vis-a-vis compared to somebody having 750 score with 3 or 4 loans all being servicing properly on time. So score is one of the parameters which we look into, but we'll also get deeper to understand how was the strength and only then we can, with respect to [indiscernible].
Sir, the question was maybe since we are building up the book and there could be the risk of spillover from unsecured to secured, so given that we are growing it and lately, could that risk be higher for us, yes? That was the primary question, yes.
Because this is mortgage. This is secured. And for example, all the home loans, we know the end use. And in terms of loan against property, we are very particular about end use. And only if we are convinced about the end use only then we take the [indiscernible]. So the chances of replacing mortgage loan with any unsecured loan, I think the chances are very, very low.
Next question is from the line of Himanshu Taluja from Aditi Birla Sun Life AMC.
Just one question at my end. If you can just give me the -- if -- maybe I'm sorry if I'm repeating the question. If you can just give the color on the corporate account, which got slipped in Stage 2? Secondly, what is the principal outstanding on this any provisions which you are holding in this or this is a past corporate account? And lastly, what is the comfort that you have that this account will again get upgraded in the coming quarter?
So as I mentioned, I think I had mentioned this, so again I'll mention. So this is an account, which we are watching very closely, seeing very closely since last many years, especially in last 2 years, it has been in SMA and the principal has come down by close to INR 200 crores in the last 2 years. So we are very much comfortable about this account. So there's nothing to worry about. .
Okay. Any provisions, which you're holding on this, any PCR, which is there in this account, particular account?
Yes, we are holding as per the state withholding provision for [indiscernible].
We'll take our next question from the line of Ankit Minocha from Adezi Ventures Family Office. .
My first question is with regard to a hypothetical rate card situation, which an earlier participant was alluding to. So you mentioned that there was a 10 bps reduction on the cost of funds every 25 bps rate cut. But I just wanted to understand, is there also a lag involved in this? I mean, how quickly are you able to price your assets or how slowly are you able to price your assets versus your liabilities?
See, this 10 bps is immediate, so that we are planning to -- we should be able to pass it on quickly and the remaining impact, again, it's a matter of timing. So we should see rest of the difference also to flow through in the next 3 to 4 months. .
Okay. So I mean, then would not even be the possibility of any expansion in NIM for a short period of time, right?
Depending on the competition, how they react, there could be some minor impact, but largely, we -- our endeavor is to ensure that...
Actually, there are 3, 4 things happening. So one is we are trying to change the mix between Prime, Emerging and Affordable. And with every passing quarter, we are doing more business on the Affordable and Emerging compared to Prime. Number two, in all the 3 segments, we are trying to up the yield Prime, Emerging and Affordable. We'll be starting to cooperate from this quarter, which will help us on the yield and profitability. So in the -- and also we have -- obviously, we have a large pool of corporate and retail write-off. So we are expecting good recovery. So these things we have on the positive side. And if there is a rate cut, of course, there will be some lag, which we will also pass on. So I think this differential, we feel that we'll be able to manage because we have certain levers which can try to factor the rate cut.
Very helpful. And I understand you've given some element of guidance for FY '27, but I mean we are in Jan FY '25. So just understanding how do we see FY '26 evolving? I mean if you can just give some color on the potential book value? Or I mean, even how growth kind of seems to be panning out. What you think could be FY '26 could look like?
So as I mentioned, demand is quite good, mortgage industry is doing well. I think this year, every quarter, there were some challenges. The other quarter 1 were cyclical. And quarter 2, there was some challenge which some companies and industry saw especially on the collection side. And quarter 3, there was some challenge because of procedural changes in certain states. So I think throughout the year, first 9 months, there has been some challenges or the other, also coupled with the heat wave and general election and election in Maharashtra. So otherwise, talking about demand, demand is very good. This industry will do well.
And also with PMAY [indiscernible] subsidy scheme, I think demand should only go for us, especially on the Roshni and Emerging sides. So we see demand to be quite robust for next few years. And I'm not able to comment on what's the plan for next year. We would share with the investors at the appropriate time. But our INR 1 lakh crore by FY '27 should be in that and the growth should be slightly better than what we showed this year.
Okay. Yes. And my next question is about the -- what would be the -- as you're getting more and more into the affordable space, what have you absorbed as the incremental trend in asset quality? I mean, when did you start to get into this space and I mean if there are any asset quality issues that might crop up, ideally by when would they start to crop up? Like in terms of what are the loans tenure, etc, you could just help us with that?
So in terms of credit cost of the -- whereas for the Prime we say it will be in the range of -- it will about 18 bps. Emerging should be about 22, 23 bps. I'm talking about once the portfolio has matured and for Affordable it should be about 50 bps. So if you see blended, we should be about 25 bps. So I think that is the risk what we see and we have budgeted that. Otherwise we don't see any incremental risk in any of these segments, including the Affordable. .
Next question is from the line of Anusha Raheja from Dalal & Broacha.
Sir, firstly, on this credit cost, how do you expect that to pan out in Q4 and the current run rate of Q3 is likely to continue?
It will continue.
Okay. And assuming that if this account gets -- corporate account gets recovered it shall be better?
No. As I mentioned to you, we are pretty much comfortable on the stage. And this quarter, it will be a rolled back. So we are pretty comfortable. Credit costs will be on similar lines what you are seeing in quarter 3.
Okay. And secondly, on this nonhousing loans, which sits on Prime, Emerging and Affordable segment. So what basically the nonhousing loans comprise of?
Non-housing would have 3 products, one is loan [indiscernible] property, second is rental discounting, and third one is funding for corporate [indiscernible] commercial space. But largely for us, non-home is loan against property. .
Okay. So do you have any unsecured personal loans? If you have it?
No, we don't have it. We do only secured.
Okay. And do you expect any margin pressure to come in on the Prime segment loans assuming that you would be competing with the banks and we would be seeing a decline, repo rate cuts next fiscal. So I think this space is quite competitive. So you expect some sort of margin pressure because I think rates you will have to bring down the -- your lending rate as well there?
If there is margin pressure on Prime, which is why we moved from Super Prime to Prime, even in Prime there is margin pressure. And that is the reason we are growing at a slower pace compared to Emerging and Affordable. So this margin pressure increases because this is a space where a lot of banks also would be focusing on. So this pressure is there, and it will continue, but we have planned to overcome that. So our plan is to try and grow the Prime to slower compared to Emerging and Affordable.
Okay. And sir, lastly, sorry, if I am repetitive, the credit cost guidance for FY '26, what that number could be for recoveries? I mean -- and what you have baked in credit cost including recoveries?
So I think this trend should continue for the next few quarters on credit cost because we have good tools for it now, book where we expect good recoveries to happen in the next few quarters. So I think for FY '26 also, credit cost should be very good.
Okay. So the full year guidance for FY '26, you will share post Q4? .
Definitely, we'll share.
Okay. And sir, lastly, since the growth rate has been quite strong in Emerging and Affordable, how do you assess that book in terms of asset quality?
See, asset quality on Prime and Emerging should be almost similar. We don't see any change at all. And as far as Affordable is concerned, it will be in line with industry today, we are better than the industry. Of course, it's not comparable because our book has not matured. But I think it will be in line with industry once the book matures.
We'll take our next question from the line of Vijay from Insightful Investment Managers.
Most questions are answered. Just one thought. Sir, for next year FY '26, given that the book mix keeps changing, Will the NIMs also be slightly better in FY '26?
Yes, definitely. NIMs will be better.
And sir, how much in your estimate should the expansion be approximately?
Short term, it is very difficult to predict. We'll be sharing plans for FY '26, maybe after quarter 4. But I think long term, what we mentioned, I think FY '27, when we're talking about book of INR 1 lakh crore NIM should be about 4% to 4.1%.
Ladies and gentlemen, we'll take that as a last question for today. I now hand the conference over to management for closing comments. 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 Investor Relations. The transcript of this call will be uploaded on our website. Thank you.
Thank you very much. On behalf of PNB Housing Finance Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.