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.