Company Update : PNB Housing Finance by Motilal Oswal Financial Services Ltd
Earnings beat led by high provision write-backs; NIM stable
PPoP in line; asset quality sees minor improvement
* PNBHF’s 1QFY26 PAT grew 23% YoY to ~INR5.3b (5% beat).
* NII rose ~16% YoY to ~INR7.5b (in line). Other income grew 9% YoY to INR1b.
* Opex rose ~12% YoY to ~INR2.2b (+2% QoQ) (in line). PPoP grew ~17% YoY to INR6.3b (in line). Credit costs net of recoveries resulted in write-backs of ~INR562m (vs. estimated write-backs of INR162m). This resulted in net credit costs of -30bp (PQ: -35bp and PY: -7bp).
Healthy retail loan growth of 18% YoY; Disbursements up ~14% YoY
* 1QFY26 Retail disbursements grew 14% YoY to ~INR49.8b. Corporate disbursements were NIL during the quarter.
* In 1QFY26, 20 branches were reclassified from Prime segment to Emerging Markets segment. The affordable and emerging segment contributed ~50% to the 1QFY26 retail disbursements.
* Total loan book grew ~16% YoY/3% QoQ to ~INR777b. Retail loans grew ~18% YoY to INR769b as of Jun’25. Affordable and Emerging Loans form ~37% of the Retail loan assets. As of Jun’25, the affordable book grew to ~INR57.4b (PQ: ~INR50.7b), up 143% YoY.
Reported NIMs stable sequentially; spreads up ~5bp QoQ
* Reported NIM in 1QFY26 was stable QoQ at 3.74% (PQ: 3.75%).
* Yields declined ~4bp QoQ to 10%. Portfolio CoB declined ~8bp QoQ to 7.75% and incremental CoF declined ~40bp QoQ to 7.44% (PQ: 7.83%).
Minor improvement in asset quality; Benign credit costs driven by recoveries
* Total GNPA/NNPA ratios stood at ~1.06%/0.69% (% of loan assets) and exhibited a minor improvement despite the seasonality in the first quarter of the fiscal year. Retail GNPA was also stable at 1.07%, while Corporate GNPA was NIL (like last quarter).
* PNBHF shared that recoveries from the retail book stood at ~INR400m and recoveries from the corporate book stood at ~INR170m in 1QFY26.
Valuation and View
* PNBHF reported a strong all-round performance in 1QFY26, supported by solid execution that translated into healthy loan growth, stable asset quality, stable margin, and robust profitability.
* We believe that the company is well-positioned to sustain this earnings momentum and deliver on its stated guidance over the near-to-medium term. Commentary on the NIM trajectory, particularly in the context of a declining interest rate environment, will be a key monitorable. We may revise our estimates and TP after the earnings call scheduled for 22nd Jul’25.
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