Equity Raising Critical For PNB Housing Finance Amid Rising Delinquencies

India Ratings and Research opines that equity infusion as planned is critical for PNB Housing Finance Limited to provide adequate buffers for growth and mitigate any possible asset-side stress.

"In line with the industry, reported a rise in delinquencies for 1QFY22 with GNPA of 6.0% (FY21: 4.4%), 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. Stage 3 asset proportion is higher for the wholesale book (15.9%) than for the retail book (3.8%) in 1QFY22. The rise in retail NPA was due to slippages from the self-employed book that had taken moratorium," India Ratings has said.

According to it, the increase in the corporate book GNPA is the movement from identified Stage 2 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. PNB Housing Finance has formed a dedicated team for the resolution of delinquent corporate accounts. PNB Housing Finance has also restructured its loan portfolio under the COVID-19 Restructuring Scheme. PNBHF increased the provision coverage on the entire portfolio to 4.5% of the assets at end-1QFY22 (FY21: 4.1%, FY20: 2.6%) with stage 3 provisioning at 39.7%," India Ratings has said.