Equity raising critical for PNB Housing Finance amid rising delinquencies: Ind-Ra
Aug 20, 2021
Mumbai (Maharashtra) [India], August 20 : India Ratings and Research (Ind-Ra) has said equity infusion as planned is critical for PNB Housing Finance (PNBHF) to provide adequate buffers for growth and mitigate any possible asset-side stress.
In line with the industry, PNBHF reported a rise in delinquencies for 1Q FY22 with GNPA of 6 per cent led mostly by the impact of second Covid wave which has disrupted borrowers' already weak cash flows.
The rise in NPAs is also because of a consistent decline in the loan portfolio especially the wholesale book since FY19, said Ind-Ra.
Stage three asset proportion is higher for the wholesale book (15.9 per cent) than for the retail book (3.8 per cent) in 1Q FY22. The rise in retail NPA was due to slippages from the self-employed book that had taken moratorium.
The increase in the corporate book GNPA is the movement from identified stage two and a significant increase in credit risk accounts. With the gradual unlocking of the economy and in the absence of a third Covid wave, collections could improve.
PNBHF has formed a dedicated team for resolution of delinquent corporate accounts. It has also restructured its loan portfolio under the Covid-19 Restructuring Scheme.
PNBHF increased the provision coverage on the entire portfolio to 4.5 per cent of assets at end-1Q FY22 with stage three provisioning at 39.7 per cent.
Ind-Ra said PNBHF's assets under management fell 14 per cent year-on-year to Rs 71,800 crore at end of 1Q FY22 due to challenging operating environment.
In May, PNBHF's board had approved equity raising of Rs 4,000 crore through a preferential allotment. However, the case is sub-judice with PNBHF appealing to the Securities Appellate Tribunal. Final decision on this is awaited.
PNBHF has adequate liquidity in terms of cash and liquid investments of Rs 7,000 crore and unutilised sanctioned bank lines of Rs 5,500 crore at end-June 2021.
The company issued non-convertible debentures in June aggregating Rs 1,300 crore for three years at 6.5 per cent.
Debt repayment (along with interest) stood at Rs 8,800 crore for July to September of which Rs 1,700 crore is working capital loans which could be rolled over, said Ind-Ra.
