# 1. Financial Performance ## A. Key Figures * **Net Interest Income:** **₹765 Cr** (+14% YoY) * **Pre-Provision Operating Profit:** **₹646 Cr** (+16% YoY) * **PAT:** **₹582 Cr** (+24% YoY) * **Spread Margin:** **2.26%** in Q2 FY26 (from 2.23% in Q1) * NIM: 3.67% in Q2 FY26 (from 3.74% in Q1) · 3.7% avg in H1 FY26 * ROA: 2.73% in Q2 FY26 · 2.65% annualized in H1 FY26 * ROE: 13.14% annualized in Q2 FY25 * CRAR: 29.8% · Tier 1: 29.2% · Book Value: ~₹690/share * **Provision Release:** **~₹70 Cr** * **Total Write-Off Pool:** **~₹1,000 Cr** (Corporate: ₹675 Cr) ## B. Revenue & Profit * **Robust Profitability Growth:** Strong double-digit expansion in net interest income, pre-provision profit, and PAT driven by operating leverage and cost discipline. * **Margin Dynamics:** Spread margin improved sequentially despite NIM compression from lower investment yields; management expects margins to stabilize in the second half. * **Leadership Resilience:** Solid quarterly performance maintained amid leadership transition, underscoring operational stability. ## C. Net Interest Margin * **NIM Pressure Offset by Funding Gains:** NIM declined due to lower asset yields, though partially offset by materially lower incremental cost of borrowing. * **Gradual Yield Improvement Expected:** Asset yield benefits will flow in incrementally over coming quarters rather than through a step-up. ## D. Asset Quality * **Significant Recovery Opportunity:** Large pending write-off pool of **~₹1,000 Cr** represents potential upside if recoveries materialize, particularly in the corporate book. ## E. Capital & Liquidity * **Healthy Capital Buffer:** Strong capital adequacy with CRAR and Tier 1 well above regulatory minimums, supporting book value growth to **~₹690/share**. --- # 2. Loan Book & Disbursements ## A. Key Figures * **Retail Loan Book:** **₹79,440 Cr** (+17% YoY) · **6%** of total loan book * **Total Loan Book:** **₹79,771 Cr** (+15% YoY) * **Q2 FY26 Disbursements:** **₹6,000 Cr** (~) · **₹5,995 Cr** retail (+12% YoY) * **Roshni Disbursements:** **₹828 Cr** (+31% YoY) * **Corporate Loan Book:** **₹332 Cr** (down from prior) ## B. Retail Growth * **Resilient Momentum:** Strong YoY and sequential disbursement growth despite Q2 headwinds, led by robust demand in Affordable and Emerging Markets. * **High-Growth Segments:** Emerging and Affordable segments grew at a **34% YoY** pace, now representing **38% of the retail book**, underscoring strategic focus. * **Operational Efficiency Lag:** Per-branch disbursement remains flat despite **25% branch network expansion** (160 to 200), indicating underutilization or ramp-up lags. * **Pipeline Strength:** Sanction levels estimated at **over ₹8,000 Cr**, with a healthy **68–70% sanction-to-disbursement conversion rate**, supporting near-term disbursement visibility. ## C. Corporate Activity * **Corporate Rebound in Motion:** After a foreclosure-driven decline, reactivation is underway with new sanctions expected to drive disbursements in H2 FY26. * **Larger Ticket Outlook:** Management signaled appetite for **deals up to ₹150–200 Cr**, beyond initial ₹50–60 Cr focus, suggesting scaling in corporate lending capacity. ## D. Segment Mix * **Balanced Growth Trajectory:** Management affirms continued expansion across both retail and larger corporate segments, aligned with full-year guidance. --- # 3. Branch & Distribution Network ## A. Key Figures * **Branch Network:** **356** locations nationwide (**198** Affordable, **85** Emerging, **73** Prime) * **Disbursement Targets:** **₹1.8 Cr/month** (Ganga) · **₹1.3 Cr/month** (Yamuna) · **₹70–80 Lakh/month** (Kaveri) * **Geographic Mix:** **33%** North · **35%** West · **32%** South ## B. Branch Expansion * **Sustained Expansion:** Aggressive growth trajectory with **40 new branches added** in the past year, fully operational and contributing to performance; **40–50 new branches planned annually**. * **Efficiency Optimization:** Recent branch reductions in Affordable and Prime segments reflect **routine consolidation of unprofitable locations**, not strategic retreat; expansion continues in parallel. * **Scale Target:** Network on track to reach **250 operational branches by year-end**, with gross additions and closures to be disclosed separately. ## C. Branch Performance * **Performance Drag from Ramp-Up:** Disbursement per branch flat YoY due to **40 new branches still scaling below optimal levels**, suppressing overall average. * **Tiered Productivity Model:** Branches categorized by size (Ganga, Yamuna, Kaveri) with clear monthly disbursement thresholds for self-sustainability, especially in **Tier-4 and Tier-5 locations**. ## D. Geographic Coverage * **Balanced Regional Footprint:** Revenue contribution evenly spread across North, West, and South zones, enhancing **resilience to regional economic fluctuations**. * **Strategic Regional Focus:** Plans to deepen presence in **Punjab, Chandigarh, and the Northeast**; **Tamil Nadu leads in AUM**, supported by UP, Maharashtra, and MP. * **Segment Alignment:** Network skewed toward **Affordable and Emerging segments**, reinforcing growth strategy, while Prime segment expansion remains **range-bound due to macro conditions**. --- # 4. Product & Portfolio Mix ## A. Key Figures * **Affordable Housing Loan Book:** **₹6,531 Cr** (Q2 FY26) (+121% YoY, +14% QoQ) * **Affordable & Emerging Disbursements:** **31%** and **23% YoY growth** respectively, contributing **~50% of total retail disbursements** * **Emerging Business Disbursements:** **₹2,122 Cr** (+23% YoY) * **Total Accounts Serviced:** **3.5 lakhs** ## B. Affordable Housing * **Explosive Loan Book Growth:** Affordable housing loan book more than doubled YoY, reflecting strong market penetration and portfolio scaling. * **Seasonal Headwinds:** Monsoon-related construction delays muted segment growth in first half, particularly impacting self-construction and plot-plus-construction disbursement timing. * **Stable Balance Transfer Dynamics:** BT in/out rates remain favorable at **9% and 4%**, indicating limited customer churn and pricing resilience. ## C. Emerging & Prime Segments * **High-Growth Engine:** Affordable and Emerging segments collectively grew 34% YoY, now representing **38% of the retail loan book**, reinforcing strategic focus on financial inclusion. * **Emerging Segment Gains Share:** Emerging business now accounts for **41% of Prime+Emerging mix**, up from 36% YoY, signaling successful expansion into underserved markets. * **Prime Segment Discipline:** Prime disbursements grew only 2% YoY, consistent with strategy of **profitable growth** and margin stability in a volatile rate environment. ## D. Customer Composition * **Portfolio Diversification:** Self-employed and informal segment exposure increased to **43% and 30%** respectively, aligning with inclusive lending mandate and risk-adjusted return targets. * **Ticket Size & Product Mix:** **72% of portfolio** is concentrated below **₹25 Lakh** ticket size, with **35% non-housing loans**, highlighting granular, diversified asset composition. * **FY27 Mix Guidance Confirmed:** Strategic AUM targets unchanged—**15% Affordable (~₹15,000 Cr), 65% Prime, balance Emerging**—providing clear roadmap for portfolio evolution. --- # 5. Funding & Borrowing Costs ## A. Key Figures * Cost of Borrowing: 7.69% in Q2 FY26 (↓7 bps QoQ) · 7.42% incremental cost (↓2 bps QoQ) * Portfolio Yield: 12.13% (marching towards 12.25% in coming quarters) * **Incremental Yield – Roshni:** **12.1%** in Q2 FY26 (↑from 12% YoY) * Yield: 9.95% in Q2 (↓4 bps QoQ despite 10 bps rate pass-through) ## B. Cost of Borrowing * **Funding Cost Relief:** Significant decline in incremental borrowing costs driven by repo rate cuts and active bank negotiations, with **66% of loan book repriced** to lower rates. * **Gradual Margin Benefit:** Lower incremental costs to progressively reduce overall funding expense, though full benefit may be moderated by planned customer pass-throughs. * **Competitive PLR Pressure:** PNB Housing’s **10 bps PLR cut lags peers**, raising concerns over **Prime segment borrower retention**, though management confirms **10 bps already passed on** of a 14–15 bps funding benefit. * **Forward Pass-Through:** Additional rate cuts possible if further meaningful reductions in borrowing costs occur, with timing likely aligned to **next monetary policy decision**. ## C. Incremental Pricing * **Roshni Yield Expansion:** Strong double-digit growth in incremental yields due to strategic shift toward **higher-yielding segments** and **expansion into tier 3/4 markets**. * **Margin Resilience:** Business maintains healthy margins despite rate pass-through, with investor focus on whether **further PLR reductions** will be implemented. --- # 6. Risks & Asset Quality ## A. Key Figures * Gross NPA: 1.04% (Sep 2025) (↓ from 1.06% in Jun 2025 & 1.24% YoY) * **Credit Cost:** **-53 bps** (reversal) (driven by ₹60 Cr recoveries & ₹70 Cr ECL release) * **30+ Delinquency Rate:** **1.40%** (vs. industry 3.7%) * **1+ DPD (Affordable):** **~2.5%** (below industry) * **Repossessed Properties Auctioned:** **178** (Q2 FY26) · **276** (H1 FY26) * **Recoveries from Write-off Pool:** **₹59 Cr** (Q2) · Pool size: **₹1,000 Cr** (₹675 Cr corporate) ## B. Delinquency Trends * **Asset Quality Improvement:** Sustained reduction in Gross NPA to 04%, supported by strong collections and **negative credit costs**, reflecting effective resolution and conservative legacy provisioning. * **Recovery Momentum:** Robust execution in recoveries with **steady quarterly inflows from written-off pool**, including a **₹70 Cr ECL release from a foreclosed Stage-I corporate loan**, underpinning credit cost reversals. * **Collection Efficiency:** Collection infrastructure remains resilient, with **bounce rates contained at 4%** (mostly technical), aided by omni-channel engagement and segmentation. * **Forward Guidance on Credit Costs:** Negative credit costs expected to persist for **2–3 quarters**, potentially extending to **4–6 quarters** depending on corporate resolutions, though **lumpy recoveries could accelerate extinguishment before FY27 ends**. ## C. Portfolio Maturation * **Seasoning-Driven Delinquency:** Recent uptick in 30+ delinquencies and GNPA linked to **12–18 month vintage loans**, consistent with typical mortgage seasoning; no broad-based deterioration observed. * **Affordable Housing Pressure:** Sequential increase in delinquencies in affordable segment attributed to **portfolio maturation**, with over **₹2,500 Cr in loans >2 years old**, and exposure to **EWS/LIG, Tier-3/4, and informal borrowers**. * **Cyclical & Structural Factors:** Q1 disruptions (monsoon, state ordinances) added pressure, but trends remain **within industry benchmarks**; management emphasizes long-term stability over short-term volatility. ## D. Informal Segment Exposure * **Strategic Shift to Higher-Yield Segments:** Portfolio mix evolving with **informal segment exposure rising to 30%**, driven by **PMAY2 focus on EWS/LIG**, while formal salaried accounts still represent **50–53%** of book. * **Risk Management Guardrails:** Internal caps set at **45–50% for self-employed** and **35–40% for informal sector** to balance yield enhancement with credit discipline. * **Proactive Mitigation:** EMI affordability maintained via **city-tier-based loan structuring**, minimizing delinquency risk despite segmental shift. --- # 7. Guidance & Outlook ## A. Key Figures * **Loan Growth Guidance:** **17–18%** annual target maintained * Corporate Disbursements: INR 100–150 Cr aspirational for FY26, gradual restart underway * NIM Guidance: 3.6–3.7% range expected for FY26, with exit rate in this band * **Branch Expansion:** **40 new branches** added to network of 198; productivity ramp-up underway ## B. Loan Growth & Segment Dynamics * **Sustained Growth Trajectory:** Full-year loan growth guidance reaffirmed, supported by **strong momentum in retail and affordable housing segments**. * **Affordable Housing Inflection:** Festival season tailwinds expected to boost disbursement growth from Q3 onward. * **Branch Ramp-Up Lag:** Near-term per-branch disbursement softness attributed to new branch ramp-up and **management transition phase**, with improvement expected as productivity normalizes. ## C. Margin Outlook & Funding Strategy * **NIM Stabilization:** Margins likely **bottomed out in Q2**, with gradual improvement anticipated within the guided range, aided by lower borrowing costs. * **Mix Pressure Persists:** Continued shift toward **Prime and Emerging segments** to exert modest downward pressure on NIM despite cost benefits. ## D. Strategic Continuity & Leadership * **Strategy Unchanged:** Core strategic pillars—**retail expansion, affordable housing, asset quality leadership, and risk discipline**—remain fully intact despite MD & CEO transition. * **Corporate Business Resumption:** Gradual restart under **revamped policy framework**, maintaining original guardrails but updated for current market conditions; no strategic pivot. * **Leadership Confidence:** Interim management emphasizes **responsible, accountable growth**, with incoming CEO expected to **continue existing high-yield segment focus** through March '27.