Pnb Housing Finance Limited · NSE:PNBHOUSING
Pnb Housing Finance — FY2019 Earnings Presentation
71 slides from Pnb Housing Finance's earnings presentation, May 9, 2019
Slide 1: Investor Presentation cover letter to exchanges
@ pnb Housing f n':tn L1mi a ethtAr Ki BtAtAt May 9, 2019 The SSE Limited, National Stock Exchange of India Limited, Listing Department, Listing Department Phiroze Jeejeebhoy Towers, "Exchange Plaza" Dalal Street, Sandra Kurla Complex, Mumbai - 400 001 Sandra (E), Mumbai - 400 051 Scrip Code: 540173
Slide 2: Investor Presentation May 2019
Investor Presentation May 2019
Slide 3: Safe Harbor
Safe Harbor This presentation and the accompanying slides (the “Presentation”), which have been prepared by PNB Housing Finance Ltd (the “Company”), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any secur
Slide 4: About PNB Housing Finance
About PNB Housing Finance Housing
Slide 5: Leading Housing Finance Company…
Leading Housing Finance Company… Disbursement Loan Assets Retail Loans INR 36,079 Crore* INR 74,023 Crore (US$ 5,216 mn) 79% of the AUM (US$ 10,702 mn) Asset Under GNPA Management 0.44% on AUM INR 84,722 Crore (US$ 12,248 mn) 0.48% on Loan Assets Average Cost of 102 branches Book Value Per Share Bor
Slide 6: …incorporated in 1988
…incorporated in 1988 • IPO - Raised INR 3,000 2018 Crore • AUM crossed INR • Included in 2017 MSCI Global 25,000 Crore Small Cap • Introduced • DEPL, acquired Index new brand image by QIH, the • AUM crossed • Destimoney • Robust and Carlyle (1) 2016 INR 50,000 Enterprises scalable target Crore Priv
Slide 7: HFC Sector well placed...
HFC Sector well placed... Housing
Slide 8: India's Mortgage Market
India’s Mortgage Market Under penetrated mortgage market, rising urbanization coupled with increase in housing demand is leading to mortgage market expansion Indian mortgage market is significantly under-penetrated Increasing urban population Mortgage to GDP Ratio (%) 40.00% 65% 63% 31.99% 32.37% 32
Slide 9: Mortgage Sector Growth: Limited Interest Rate Sensitivity
Mortgage Sector Growth: Limited Interest Rate Sensitivity 30.00% Leading Bank Home Loan Rate Overall Growth Banks Growth HFC's Growth 26% 25.00% 22% 22% 21% 20% 20.00% 18% 17% 17% 18% 17% 17% 15.00% 13% 15% 15% 11% 13% 10.00% 10.8% 10.0% 10.2% 10.2% 9.6% 8.7% 8.4% 8.8% 5.00% 0.00% Mar-12 Mar-13 Mar-
Slide 10: Sustainable Growth of HFCs
Sustainable Growth of HFCs Portfolio Growth of HFCs Total Loan of all HFCs: INR 10.3 trillion as on Dec-18 30% 26% 26% 24% Top 5 HFCs: 81% 21% 22% 21% 22% 19% 20% 14.7% 20% 21% 22% 19% 19% 15% 16% 1.0% 12% 1.6% Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Dec-18 1.7% 37.4% Other Loans Overall Portfolio Home L
Slide 11: Government Initiatives
Government Initiatives Housing
Slide 12: Growth Drivers
Growth Drivers Urbanization Improved Affordability Favourable Demographics Home Buyers Developers Financers • GST rate cut from 12% to 5% on • RERA results in higher • Infrastructure status for affordable under-construction property developers accountability housing, enabling easier institutional cr
Slide 13: PMAY-CLSS
PMAY-CLSS Changes / Inclusion in the scheme effective 1-Jan-17 • Existing scheme renamed as PMAY-CLSS for EWS/LIG • Maximum tenure changed from 15 to 20 years • Scheme extended to Middle Income (MIG) available upto March 2020 Category EWS LIG MIG I MIG II Household Income (INR Lakhs per annum) 3 6 1
Slide 14: Liquidity Position
Liquidity Position Housing
Slide 15: Projected Bond Market Liquidity
Projected Bond Market Liquidity Expected Demand for Corporate Bonds (Issuer) (INR trillion) 3-4 55-60 13-15 1.5-2 2.5-3.5 8-9 27.4 FY18* Infrastructure Corporates NBFCs/HFCs Banks Regulatory Push Total Projected Demand FY23 Enough liquidity for Expected Supply for Corporate Bonds (Investor) future g
Slide 16: Long Term Resource Mobilisation
Long Term Resource Mobilisation Deposits NHB Refinance • 2nd highest deposit • Received refinance sanction of mobilizer among HFCs INR 3,500 Crore from NHB NHB Deposits • Over 4.5x increase in value and >3x increase in volume Fully drawdown during FY19 since April 2018 Securitization Resource • Se
Slide 17: Deposit Outstanding
Deposit Outstanding (INR Crore) 14,315 CAGR +26% 11,586 9,987 7,121 31-Mar-16 31-Mar-17 31-Mar-18 31-Mar-19 2nd Largest Deposit taking Housing Finance Company 1 Crore = 10 mn 16
Slide 18: Deposit Mobilisation
Deposit Mobilisation Count INR Crore 12,000 1,032 1,100 1,000 10,000 900 800 8,000 624 700 586 11,400 537 600 523 10,851 6,000 492 470 464 457 500 438 9,695 9,207 8,859 400 4,000 306 8,464 7,185 300 212 7,185 6,327 2,000 5,118 200 4,762 3,505 100 0 0 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18
Slide 19: Asset Liability Maturity profile
Asset Liability Maturity profile (INR Crore) 27,573 24,023 20,260 17,285 17,584 13,019 8,105 7,083 5,512 5,475 5,521 5,511 5,768 4,784 upto 1 month 1-3 month >3-6 months >6-12 months 1-3 years 3-5 years >5 years Total Assets Total Liabilities Particulars upto 1 month 1-3 months >3-6 months >6-12 mon
Slide 20: Financial Performance of the Company
Financial Performance of the Company 19
Slide 21: Highlights – Q4FY19 vs Q4FY18
Highlights – Q4FY19 vs Q4FY18 Disbursement (INR Crore) AUM (INR Crore) Loan Assets (INR Crore) -2% +36% +30% 8,739 8,562 84,722 74,023 62,252 57,014 Q4FY18 Q4FY19 31-Mar-18 31-Mar-19 31-Mar-18 31-Mar-19 GNPA* NII (INR Crore) PAT (INR Crore) +15 bps + 13% +51% 0.48% 610 380 541 0.33% 252 31-Mar-18 31
Slide 22: Highlights – Q4FY19 vs Q4FY18
Highlights – Q4FY19 vs Q4FY18 Average Yield Average Cost of Borrowing Spread +8 bps +47 bps -39 bps 10.57% 10.65% 8.06% 2.98% 7.59% 2.59% Q4FY18 Q4FY19 Q4FY18 Q4FY19 Q4FY18 Q4FY19 NIM Gross Margin Opex to ATA ROE -3 bps +508 bps -41 bps -27 bps 3.59% 3.78% 0.73% 0.70% 20.77% 3.18% 3.51% 15.69% Q4FY1
Slide 23: Ind AS Transition
Ind AS Transition Housing
Slide 24: PAT Reconciliation for Previous Financial Year
PAT Reconciliation for Previous Financial Year FY18 Q4 FY18 Particulars (INR Crore) (INR Crore) Net Profit as per IGAAP 829.41 219.21 Add / (Less) : Adjustments as per Ind AS on account of: Reclassification of net Actuarial Valuation of Employee Benefits obligation to (0.13) (0.46) Other comprehensi
Slide 25: Expected Credit Loss (ECL) Provisions
Expected Credit Loss (ECL) Provisions Classification of the Assets based on the ECL computation under Ind AS: Particulars (INR Crore) 31-Mar-19 31-Mar-18 Gross Stage 3 (GNPA) 354.86 186.11 % portfolio in Stage 3 (GNPA%) 0.48% 0.33% ECL Provision Stage 3* 74.34 52.89 Net Stage 3 280.52 133.22 Coverag
Slide 26: Expansion Led Growth and Robust TOM
Expansion Led Growth and Robust TOM 25
Slide 27: Business Operations
Business Operations No. of Branches Branches – Point of Sales & Services Hubs – Fountain head for Decision Making No. of Branches Unique Cities* 18 102 21 15 Geography Hub Branches Our Network North 8 33 16 8 South 8 35 9 5 West 7 34 6 7 62 32 New Branches^ contribute 27 ~32% of Retail Disbursement
Slide 28: Consistency in Underwriting with advent of Technology
Consistency in Underwriting with advent of Technology Scalable Hub and Spoke Model Spokes Regional Hub Central Operations Customer acquisition / Underwriting Post Disbursement Operations servicing Field Investigation CPC Fountain head Fraud Control DSA DST for decision Unit making Underwriter review
Slide 29: Robust Risk Buying Processes
Robust Risk Buying Processes Underwriting to Collections Specialization Customer profiling Other mitigating measures 3C Approach • Selective approach to • 3C approach: Counsel, • Professionally customer profiling • Mark to Market policies qualified with vast with tailor made Collect and Cure mortgag
Slide 30: Strong Business growth
Strong Business growth (INR Crore) Disbursement CAGR 36,079 +36% 33,195 20,639 14,456 FY16 FY17 FY18 FY19 Asset 84,722 CAGR +45% 62,252 41,492 27,555 74,023 57,014 38,531 27,177 31-Mar-16 31-Mar-17 31-Mar-18 31-Mar-19 AUM Loan Assets 1 Crore = 10 mn 29
Slide 31: Lower NPAs and Adequate Credit Cost
Lower NPAs and Adequate Credit Cost Non-Performing Assets Credit Cost (ECL Provision) (INR Crore) 0.48% 258 0.38% 0.33% 162 0.25% 196 0.22% 0.22% 0.14% 0.15% 151 62 11 31-Mar-16 31-Mar-17 31-Mar-18 31-Mar-19 FY18 FY19 GNPA NNPA 2-years lagged NPA* Total Provisions 1.90 450 232% 240% 239% 238% 237% 2
Slide 32: Sustainable Portfolio Mix
Sustainable Portfolio Mix 31
Slide 33: Asset Under Management
Asset Under Management Consistent Product Mix Product-wise Break-up (% of AUM) (As on 31-Mar-19) Individual Housing 13% Construction Finance 17% Retail Loan Against 29% 29% 29% Property 30% 29% Retail Non-residential 4% Premises Loans 58% Lease Rental 4% Discounting 4% Corporate Term Loan Non-Housin
Slide 34: Well Balanced Growth Across Products
Well Balanced Growth Across Products Individual (INR Crore) Housing Loans 48,915 1% Home Purchase 58% of AUM 36,549 4% Residential Plot 82% 24,868 7% Residential Plot cum Constn 17,029 6% Self Construction Housing Loans Home Improvement/Extn 31-Mar-16 31-Mar-17 31-Mar-18 31-Mar-19 Construction Finan
Slide 35: Loan Assets Walk and Securitized Pool Highlights
Loan Assets Walk and Securitized Pool Highlights Asset Bridge Highlights of Securitized Pool (INR Crore) 84,722 10,699 74,023 • Securitized book (IHL and Retail LAP) outstanding at ~13% of AUM • Developed expertise in Securitization • Average MOB at the time of transaction is 25 months • Superior as
Slide 36: Retail Focused Operations
Retail Focused Operations Retail Loans contribute 79% of the AUM Loans given as Individual Housing Loans, Loan Against Property and Non Residential Premises Loans Focus on mass housing segment; established a niche in self employed segment Evidence based income assessment and established banking rela
Slide 37: Key Loan Profile
Key Loan Profile Individual Housing Loans Retail Loan Against Property INR 31 Lakh INR 48 Lakh Average Ticket Size (US$ 44.8 k) (US$ 69.4 k) Weighted Average Loan to Value (at 70.6% 49.6% Origination) Salaried vs Self- 70% : 30% 19% : 81% Employed Weighted Average 22.3 Years 13.5 Years Tenure* Prima
Slide 38: Corporate Book
Corporate Book Housing
Slide 39: Corporate Book Summary
Corporate Book Summary Unique Corporate Amount houses ATS No. of Unique No. of Loan Product Segment % of AUM (INR Cr) INR Cr Corporate houses Accounts (US$ mn) 128.3 Construction Finance 11,152 13% 194 (18.6) 159.8 Lease Rental Discounting 3,092 4% 169 23 (23.1) 103.8 Corporate Term Loan 3,678 4% 74
Slide 40: Corporate Book Risk Buying and Review Mechanism
Corporate Book Risk Buying and Review Mechanism • External valuation and legal title checks to supplement inhouse expertise Risk Buying • Centralised team with specialisation across Acquisition, Technical, Legal, Credit, Operations • Effective risk management with segregation of responsibilities • S
Slide 41: Corporate Book Approval Process
Corporate Book Approval Process CCB (Includes 2 independent Board members & Managing Director) Management Committee (Includes management, Managing Director & 1 independent Board member) Committee of Management (Managing Director, Executive Directors and CFO) Managing Director Executive Directors (Bu
Slide 42: Construction Finance Loan Stages
Construction Finance Loan Stages Real Estate Project Lifecycle Risk / Pricing Usage, Conversion and Approvals from Land aggregation Land registration competent authorities Post Launch Apartment Inventory Stage I Stage Stage I StageIIII Stage Stage III III Stage Stage IV IV Stage Stage VV PNB Housing
Slide 43: Corporate Term Loans and Lease Rental Discounting
Corporate Term Loans and Lease Rental Discounting Corporate Term Loans Lease Rental Discounting • Constitutes 4% of AUM • Constitutes 4% of AUM • Spread across 17 reputed • Spread across 54 reputed developers developers • Presence in 9 large cities • Top 7 markets contributes over 79% • 100% of LRD
Slide 44: Corporate Book – Additional Details
Corporate Book – Additional Details 43
Slide 45: Corporate Book Details
Corporate Book Details Disbursement Disbursements in ~70% of FY19 Customers Asset Under Repeat AUM FY18-19 at INR disbursements were Management at INR 9,630 crore; 6% made to repeat 17,922.5 crore growth YoY customers Average construction Top Exposure Construction Top 20 developers Top 20 developers
Slide 46: Exposures identified through Early Warning
Corporate Book Key Exposures under Pro-active Measures 3 Exposures Cured fully during the Year Exposure 1: account resolved after initiating legal action against Exposures identified through Early Warning the borrower entity Cured with minimal Exposure 2: scope of the project enhanced; developer mov
Slide 47: Corporate Book Robust Asset Quality
Corporate Book Robust Asset Quality Delinquency 2.57% 1.70% 0.80% 0.00% 0.17% 0.17% 31-Mar-17 31-Mar-18 31-Mar-19 30+ 90+ Exposures moved to NPA bucket as on 31-Mar-19 • 2 exposures under NPA aggregating to INR 30 crore Exposure 1: • Minimal credit loss of INR 2.14 o Slower construction due to del
Slide 48: Operational and Financial Performance
Operational and Financial Performance 47
Slide 49: Well Diversified Resource Profile
Well Diversified Resource Profile (INR Crore) Access to a Diverse Base of Funding Relationships with multiple lending partners 7.83% 7.12% 6.54% 8.45% 33 Banks 32 Pension Funds 7.32% 6.39% 7.73% 2.30% 3.92% 2.47% 18.20% 19.47% 26.83% 25.86% 5.69% 572 Provident 2 Multilateral 17.23% Funds Agencies 17
Slide 50: Margin Analysis
Margin Analysis Average Yield Average Cost of Borrowings Spread 11.25% 10.76% 9.07% 8.55% 2.54% 10.24% 10.35% 8.00% 2.21% 2.35% 7.70% 2.18% FY16 FY17 FY18* FY19* FY16 FY17 FY18* FY19* FY16 FY17 FY18* FY19* NIM Gross Margin 3.10% 3.19% 3.31% 3.50% 3.34% 2.97% 2.93% 3.27% FY16 FY17 FY18* FY19* FY16 FY
Slide 51: Operating Leverage playing out with Better Return Profile
Operating Leverage playing out with Better Return Profile Opex to ATA Ratio Cost to Income Ratio 0.83% 25.15% 0.73% 22.43% 0.61% 0.65% 19.61% 17.22% FY16 FY17 FY18* FY19* FY16 FY17 FY18* FY19* Return on Asset Return on Equity 1.56% 1.61% 17.12% 17.44% 1.46% 14.92% 1.37% 14.20% FY16 FY17 FY18* FY19*
Slide 52: CRAR and Gearing
CRAR and Gearing Capital to Risk Asset Ratio 21.62% 5.14% 16.67% 13.98% 12.70% 3.92% 2.98% 3.66% 16.48% 12.75% 11.00% 9.04% 31-Mar-16 31-Mar-17 31-Mar-18 31-Mar-19 Tier 2 Tier 1 Average Gearing (x) 10.77 9.30 8.72 7.60 31-Mar-16 31-Mar-17 31-Mar-18* 31-Mar-19* Ratio is calculated on Monthly Average
Slide 53: Shareholding
Shareholding Housing
Slide 54: Shareholding
Shareholding Shareholding as on 31-Mar-19 4.0% 0.9% 2.4% 7.7% Top Shareholders 32.8% General Atlantic Singapore Fund, Birla 19.9% Sunlife MF, Malabar Investments, Reliance MF, SBI MF, Franklin Templeton MF, Vanguard, Wasatch, Fiera Capital, Auburn Ltd 32.4% Promoters (PNB) Quality Investment Holding
Slide 55: Detailed Financials and Valuations
Detailed Financials and Valuations 54
Slide 56: Consolidated Balance Sheet
Consolidated Balance Sheet Particulars (INR Crore) 31-Mar-19 31-Mar-18 Particulars (INR Crore) 31-Mar-19 31-Mar-18 LIABILITIES ASSETS 1 Financial Liabilities 1 Financial Assets (a) Derivative financial instruments 210.8 38.6 (b) Payables (a) Cash and cash equivalents 4,034.0 2,817.0 (I) Trade Payabl
Slide 57: Consolidated Profit & Loss Statement
Consolidated Profit & Loss Statement Particulars (INR Crore) Q4 FY19 Q4 FY18 YoY Q3 FY19 QoQ FY19 FY18 YoY Interest Income 1,892.9 1,424.1 1,764.1 6,792.9 5,046.7 Add: Net gain on fair value changes 50.4 26.1 51.8 128.9 33.5 Add: Income on derecognized (assigned) loans 93.9 116.2 152.4 308.1 116.2 L
Slide 58: Return to Shareholders
Return to Shareholders Earnings Per Share (INR) Dividend Per Share (INR) 71.2 9.0 9.0 50.5 6.0 36.7 27.5 3.4 FY16 FY17 FY18* FY19* FY16 FY17 FY18 FY19 Book Value Per Share (INR) 450.5 394.2 336.7 169.1 31-Mar-16 31-Mar-17 31-Mar-18* 31-Mar-19* *As per IND AS 57
Slide 59: Employee Efficiency
Employee Efficiency (INR Crore) Disbursement / Employee Loans Outstanding / Employee 28.99 49.79 51.05 24.25 24.88 45.28 21.23 39.91 FY16 FY17 FY18 FY19 31-Mar-16 31-Mar-17 31-Mar-18 31-Mar-19 Total Revenue / Employee Profitability / Employee 5.30 0.82 4.59 4.79 0.73 3.96 0.62 0.48 FY16 FY17 FY18* F
Slide 60: Saksham – Contributing to the Society
Saksham – Contributing to the Society 59
Slide 61: Glimpses of Social Interventions
Glimpses of Social Interventions Enhancing Human Potential • Partnered with The Confederation of Real Estate Developers Association of India (CREDAI) to conduct Onsite & Offsite skill enhancement training programmes for construction workers Reaching Out, Reaching Far • Collaborated with various NGOs
Slide 62: Winning Awards & Accolades
Winning Awards & Accolades Recognised as Best Bagged Gold in Won Silver for Mr. Sanjaya Gupta Conferred bronze Winner at The Brand of India 2019 ‘Home Loan Annual Report recognised as One award at the Economic Times by The Economic Provider of the Year FY2017-18 of the ‘Most SKOCH Awards Innovation
Slide 63: Management Team...
Management Team... Housing
Slide 64: …with Extensive Industry Experience
…with Extensive Industry Experience Age : 56 Years No. of Years with PNBHF : 8 Years Sanjaya Gupta Managing Director Prior Engagements : AIG, ABN Amro Bank N.V. and HDFC Limited Age : 47 Years Age : 53 Years Age : 57 Years No. of Years with No. of Years with No. of Years with PNBHF : 7 Years PNBHF :
Slide 65: …under the Aegis of a Highly Experienced Board
…under the Aegis of a Highly Experienced Board Sunil Mehta Sh. Lingam Venkata Prabhakar Sunil Kaul Shital Kumar Jain Gourav Vallabh Chairman – Non Executive Non Executive Director Non Executive Director Independent Director Independent Director Age: Age: Age: Age: Age: 59 Years 56 Years 59 Years 79
Slide 66: Corporate Governance
Corporate Governance Board of Directors It has 11 members, 3 are non-executive directors, 7 are independent directors and Managing Director Audit Committee (ACB) It has 3 members, all are independent directors Nomination and Remuneration Committee (NRC) It has 4 members, 2 are independent directors
Slide 67: Key Takeaways
Key Takeaways Strong Retail Growth in One of the Lowest Efficient Improving Cost to Distribution Network Loan Book NPA’s amongst Borrowing Mix Income Ratio and Robust TOM HFC’s Strong retail distribution 5th largest by Loan Assets Robust Asset Quality Diverse and cost Operating leverage network with
Slide 68: Annexure
Annexure 67 @ pnb Housing Finance Limited
Slide 69: Glossary
Glossary ATA Average Total Assets GNPA Gross Non-Performing Asset ATS Average Ticket Size HFCs Housing Finance Companies AUM Asset Under Management LAP Loan against Property BVPS Book Value per Share LIG Low Income Group C/I Cost to Income LRD Lease Rental Discounting CRAR Capital to Risk Asset Rati
Slide 70: Formulas
Formulas Ratios Formulas Used Average Borrowings (%) Interest Expense / Average Borrowings Average Gearing Ratio (x) Average Borrowings / Average Net worth Average Yield (%) (Interest Income + Assignment Income) on Loans / Average Loan Assets Operating Expenditure(Employee Cost + Other Expenses + De
Slide 71: Thank You
Thank You Company: PNB Housing Finance Limited CIN: L65922DL1988PLC033856 Ms. Deepika Gupta Padhi (Head-Investor Relations) Phone: +91 11 23445214 Investor.relations@pnbhousing.com www.pnbhousing.com 70