PNB Housing Finance hit 5% lower circuit after reporting 19% drop in Q3 net profit

PNB Housing Finance shares tanked 5% to Rs 463.00 on the BSE at 09:30 am after reporting weak Q3 results.

The bank reported a 19% year-on-year (YoY) drop in net profit to Rs 188 crore during the October-December quarter, owing primarily to an increase in gross non-performing assets (GNPA) following the Reserve Bank of India’s (RBI) November 12 circular on bad loan up-gradation.

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PNB Housing’s assets under management (AUM) decreased by 5% sequentially and by 14% year on year to Rs 66,539 crore in the quarter ended December. According to the company, the decline in AUM is mostly due to loan sell down, accelerated payments, and no new sanctions in the corporate book, with the retail book accounting for 88%  of the total AUM.

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During October-December, the mortgage lender’s disbursements were Rs 2,828 crore, a 12% decrease from the previous year. Collection efficiency increased to 98.53% for the reporting quarter, up from 95.42% a year earlier and 98.28% at the end of September. As a result of reduced AUM growth, the company’s net interest income — the difference between interest received and spend — fell 25.6% year on year to Rs 439 crore. In October-December, the net interest margin was similarly weaker, at 2.67%.

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PNB Housing Finance’s GNPA ratio deteriorated substantially to 7.64% at the end of December, up from 5.92% a quarter ago and 4.47% a year ago. The net NPA ratio increased to 4.87% at the end of the third quarter, up from 2.69% the previous year.

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“NPA of Rs 4,340 Crore includes Rs 829 crore, which is less than 90 DPD (days past due) but included due to asset classification norms as per RBI notification dated 12-Nov-2021,” the lender said.

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On November 12, the central bank stated that loan accounts categorised as NPAs may be upgraded to ‘standard’ assets only if the borrower pays all interest and principal arrears. The law will apply to both banks and non-bank financial companies (NBFCs).