# 1. Financial Performance ## A. Key Figures * RoA: 2.57% annualized 9M FY26 (+9 bps YoY) · 2.48% 9M FY25 * RoE: 12.31% annualized 9M FY26 * **Net Interest Income:** **₹772 Cr** (+11% YoY) * **PAT:** **₹520 Cr** (+7% YoY) * NIM: 3.63% Q3 FY26 (from 3.67% Q2 FY26) * Cost of Borrowing: 7.50% Q3 FY26 (↓19 bps QoQ) * Yield: 9.72% Q3 FY26 (from 9.95% Q2 FY26) * **AUM:** **₹86,048 Cr** * **Operating Expenses:** **₹240 Cr** (+7% YoY, +5% QoQ) ## B. Revenue & Profit * **Exceptional Asset Efficiency:** RoA reached a high of 57% annualized, reflecting strong earnings generation on deployed assets and sustained profitability momentum. * **Profit Growth with Margin Pressure:** PAT rose solidly despite NIM compression, supported by balance sheet expansion and cost of funds improvement. ## C. Margins & Yields * **Funding Cost Discipline:** Cost of borrowing improved meaningfully QoQ, aided by repo rate pass-through and proactive bank renegotiations, with incremental borrowing costs sharply lower. * **Yield Normalization Complete:** Q3 yield decline driven by large corporate account run-off is now fully embedded; management confirms **72% as the new sustainable baseline**. * **Near-Term Headwinds:** Lower disbursement yields and asset mix shift weighed on NIM, though funding cost gains partially offset the pressure. ## D. Balance Sheet * **Scaled and Diversified Base:** AUM remains robust at ₹86,048 Cr, supporting over **6 lakh live accounts**, indicating strong client retention and portfolio breadth. ## E. Cash Flow * **OpEx Within Guidance:** Operating expenses rose modestly, with a one-time spike from labour code compliance and ESOP normalization; opex/ATA ratio held at **0.9%**, within the 1–1% target band. --- # 2. Loan Book & Growth ## A. Key Figures * **Retail Loan Book:** **₹81,931 Cr** (+16% YoY) · **Total Loan Book:** **₹82,203 Cr** (+14% YoY) * **Corporate Loan Book:** **₹272 Cr** (down from ₹319 Cr) * **Q3 Retail Disbursements:** **₹6,217 Cr** (+16% YoY) * **Repayment Rate:** Increased to **19%** (from 15% in Q1) ## B. Retail Loan Growth * **Sustained Momentum:** Robust 16% YoY retail loan book expansion underpinned by strong disbursement growth and market demand across segments. * **Runoff Dynamics:** Repayment rate rose to 19% driven by balance transfer (BT) outflows, but recent RBI rate cuts have shifted trend with **BT inflows now exceeding outflows**. * **Growth Outlook:** Management targets **17% full-year retail growth**, supported by a **45–50% sequential jump in Q4 disbursements**, signaling strong pipeline execution. ## C. Corporate Loan Run-off * **Accelerated Run-off:** Sharp decline in corporate developer loans due to **₹350 Cr maturity at end-Q2**, outweighing minimal repayments, with book now minimal at ₹272 Cr. ## D. Disbursement Trends * **Segment Strength:** Q3 disbursements rose 16% YoY, led by **25% growth in Emerging Markets** and **20% in Prime segment** despite yield pressures. * **Yield Stability:** Despite 25 bps yield drop—partly from **₹340 Cr corporate foreclosure (10 bps impact)**—incremental yields remain stable, reflecting pricing discipline. * **Q4 Mix Shift:** Disbursement ticket size expected to decline further due to higher PMAY concentration, especially in southern markets like Tamil Nadu. --- # 3. Asset Quality & Credit ## A. Key Figures * Gross NPA: 1.04% (Dec 2025) (-150 bps YoY) · 1.04% (Sep 2025) (stable QoQ) * **Credit Cost:** **-19 bps** (Q3 FY26) * NIM: 3.63% (Q3 FY26) ## B. GNPA & Provisions * **Portfolio Discipline Maintained:** Strong improvement in gross NPA from 19% a year ago to current 04%, reflecting effective underwriting and collection efficiency, despite seasonal pressures in the Affordable segment. * **Proactive Collections Response:** Early delinquency uptick in Q2 due to external ordinance-related disruptions prompted swift remedial actions to safeguard asset quality. ## C. Credit Cost Trend * **Benign Credit Environment:** Negative credit cost of 19 bps driven by **₹49 Cr in recoveries** from written-off loans, underscoring robust collections and low loss incidence. * **Favorable Forward Outlook:** Credit costs expected to normalize at **20–25 bps** from FY27–28, significantly below historical levels, indicating structural improvement in portfolio quality. ## D. Fraud & Write-offs * **Fraud Impact Contained:** The declared corporate fraud account was fully provisioned and written off in FY23, with **no material financial impact**; legal proceedings are ongoing. * **Transparency & Process Integrity:** Fraud classification followed due process; disclosure was proactive, not regulator-mandated, and **no internal lapses** are anticipated. * **Recovery Pipeline:** Significant recoveries of **₹49 Cr** achieved in the quarter, with **₹1,000 Cr total written-off pool** (retail + corporate) offering potential for future value retrieval. --- # 4. Segment & Portfolio Mix ## A. Key Figures * **Affordable & Emerging Loan Book:** **39%** of retail portfolio (+31% YoY) · Target **45–50%** medium-term * Affordable Segment Disbursements: 15% YoY decline · 4.5% QoQ drop * **PMAY 0 Subsidy Disbursed:** **₹7–8 Cr** (early stage) * **Construction Finance Exposure Cap:** **8–10%** of total book ## B. Affordable & Emerging Markets * **Growth Rebound Expected:** Despite near-term disbursement decline due to **geographic recalibration** and government ordinances, recovery anticipated by Q4 FY26. * **Strategic Expansion:** Portfolio mix target raised to **45–50%**, with increased footprint planned despite unchanged segment classification. * **Demand Tailwinds:** Repo rate cut improves affordability, offsets recent **10–15% price gains** in top cities, and supports demand momentum in rate-sensitive segments. * **PMAY 0 Progress:** Early-stage rollout hurdles resolved; subsidy flow active but **current disbursement contribution remains minimal**. ## C. Construction Finance * **Yield-Accretive Launch:** Calibrated entry into **Tier 1 city construction finance** and **emerging developer lending** (₹25–30 Cr tickets) to boost NIM. * **Controlled Growth:** Construction finance expansion capped at **5–7% over 2–3 years**, with total exposure limited to **8–10% of book** for risk discipline. * **New Verticals:** Introduction of **small developer finance** (25–30% ticket size) targeting **11–12% yields**, enhancing portfolio yield profile. --- # 5. Branch & Distribution ## A. Key Figures * **Branch Network:** **358** pan-India branches (79% in Affordable/Emerging segments) * **Annual Expansion Target:** **40–50** new branches annually * **Q4 FY25 Additions:** **35–40** new branches planned * **Net FY27 Target:** **75–80** total net additions over FY25–FY27 ## B. Branch Expansion * **Staggered Rollout:** No sequential branch growth in Q3 FY25 due to end-quarter launch timing, with bulk additions deferred to Q4. * **Forward Momentum:** Majority of new branches in Q4 FY25 will become operational in Q1 FY26, supporting next-year growth. ## C. Tier 3 & 4 Focus * **Strategic Penetration:** Expansion heavily skewed toward **Tier 3 and Tier 4 cities**, reinforcing commitment to affordable housing demand. --- # 6. Risks & Underwriting ## A. Construction Risk * **Confidence in Underwriting Discipline:** Management sees no anticipated disruption to growth, citing strong performance in underwriting and collections. * **Risk-Based Pricing Framework:** Salaried borrowers benefit from softer rates versus self-employed, reflecting differentiated risk assessment. * **Proactive Risk Management in Construction Finance:** Despite inherent risks in construction lending, strict underwriting standards are in place to mitigate exposure. ## B. Regulatory Impact * **MFI Ordinance Created Sector-Wide Spillovers:** The prior-year MFI-focused ordinance indirectly disrupted the affordable housing segment, particularly in southern markets. ## C. Southern Market * **Strategic Pivot in Tamil Nadu:** PNB Housing recalibrated its affordable housing strategy in response to government ordinance-related instability, including **restricting ticket sizes** in affected areas. * **Path to Normalization:** Plans are underway to resume and revise the affordable housing strategy in the South as conditions stabilize. * **Limited Pricing Flexibility in Affordable Segment:** Industry-wide competition is intense, but pricing is already at competitive lows, leaving **minimal room for further rate cuts**. * **Regional Risk Contained:** Beyond the ordinance impact, no broader overheating or systemic risks are identified in southern markets. --- # 7. Guidance & Outlook ## A. Key Figures * **Retail Loan Book Growth Guidance:** **17%–18%** (FY26) * **Affordable & Emerging Markets Share:** **~39%** of retail loan book * ROA (9-month FY26): 2.57% · Medium-term ROA Guidance: 2.5%–2.6% * **NIM:** **3.63%** Q3 FY26 · **3.67%** Q2 FY26 · **Guidance: 3.6%–3.7%** * Repo Rate: 5.25% (after 25 bps cut) · 125 bps total easing in 2025 [Page 2] ## B. Growth Targets * **Sustained Growth Trajectory:** Maintains 17–18% retail loan book expansion, with strategic emphasis on Affordable and Emerging Markets, now a near-majority segment. * **New Business Verticals:** Small developer finance launch expected in Q4 FY26 or Q1 FY27, targeting incremental yield uplift and diversification. * **Long-Term Ambition:** Management affirms conservative scaling approach, with medium-term AUM targets under review and growth aligning with industry norms post-startup surge. * **Policy Catalysts:** PMAY 0 anticipated to be transformative for disbursement volumes, with material impact expected 6–12 months post-rollout. * **Guidance Flexibility:** Potential near-term calibration in growth pace acknowledged amid industry volume headwinds, though medium-term outlook remains constructive. ## C. Margin & ROA * **ROA Normalization Path:** Current elevated ROA reflects recovery benefits; medium-term target of 5–6% expected as credit costs stabilize and margins hold. * **ROA Expansion Levers:** Targeted 40–50 bps improvement by FY28+ via higher-yielding construction and developer finance, driving NIM and fee income uplift. * **Confidence in Margin Resilience:** Despite future reversal of provision benefits and leverage pressures, management expects stable returns supported by yield enhancement and lower credit costs. ## D. NIM Forecast * **NIM Under Pressure, But Guided:** Margins declined modestly QoQ due to lower new asset yields, partially offset by cheaper liabilities; full-year guidance reaffirmed. * **Structural Yield Compression:** ~10–12 bps residual decline expected, but targeted borrowing cost reductions aim to fully neutralize impact. * **Rate Cut Environment:** 125 bps cumulative repo rate cuts in 2025 create tailwinds for funding costs, though PLR remains unchanged since January. * **Forward-Looking NIM View:** Guidance to be reassessed post-Q4 based on rate stability, with confidence in sustaining **NIM plus fee income at ~1%** over time.