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PNB Housing Finance Ltd
Earnings Call Analysis
Q2-2025 Analysis
PNB Housing Finance Ltd
In the recent earnings call, PNB Housing Finance Limited reported a robust financial performance for Q2 FY '25, showcasing a year-on-year PAT growth of 22.6%, reaching INR 470 crores. The highlights include a disbursement growth of 28.2% YoY, contributing to an impressive overall loan book growth of 14% and retail loan book growth of 16.2%, amounting to INR 67,970 crores as of September 30, 2024. The company also noted that the corporate loan book stood at INR 1,531 crores, with total assets under management (AUM) at INR 74,724 crores.
In line with its strategic focus, PNB Housing Finance has made significant strides in the affordable housing sector. The company achieved a milestone by crossing INR 3,000 crores in its Roshni loan book, targeting a growth of INR 15,000 crores in affordable loans by FY '27. The affordable segment’s disbursement grew by 68.5% YoY to INR 630 crores in Q2 FY '25, showcasing the increasing demand and PNB’s ability to capitalize on the growing affordable housing market.
The cost of borrowings for PNB Housing Finance reduced by 8 basis points sequentially, now at 7.84%. Despite this reduction, the company maintained its guidance for a net interest margin (NIM) of 3.5% for the current financial year. NIMs slightly improved to 3.68% from the prior quarter due to lower borrowing costs. The strategy appears effective, as the return on assets (ROA) improved to 2.54% in Q2, and return on equity (ROE) reached 12.42%.
The asset quality of PNB Housing Finance has shown positive trends as the Gross Non-Performing Assets (GNPA) ratio improved to 1.24%, down from 1.35% in the previous quarter. The company managed to recover INR 48 crores from its written-off pool during the quarter, a notable increase compared to INR 28 crores in Q1. With a total written-off pool of INR 1,250 crores in corporate and INR 500 crores in retail, PNB expects to continue recovering from these pools over the next four to five quarters.
PNB Housing Finance is strategically investing in emerging markets, evidenced by a 31% YoY growth in the Emerging Markets segment, reaching INR 1,035 crores in disbursements. The company has targeted an incremental yield of approximately 9.8% in this sector, which reflects a 45 basis points increase compared to the prime segment. The firm aims to open 15 additional branches this financial year, enhancing its capability to tap into under-served segments in Tier 2 and Tier 3 cities.
Looking forward, PNB Housing Finance has laid out ambitious targets, including reaching INR 1 lakh crores in retail loan book by FY '27, with a mix comprising 15% affordable, 25% emerging, and the remainder in prime segments. The management has given a cautious yet optimistic outlook regarding yields, expecting the affordable business yield to be over 13% in the coming years. The anticipated commencement of the corporate business in the next few months is expected to further enhance yield and support growth.
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Ladies and gentlemen, good day, and welcome to the PNB Housing Finance Limited Q2 and H1 FY '24-'25 Conference Call of PNB Housing Finance Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Ms. Deepika from PNB Housing Finance Limited. Thank you, and over to you, ma'am.
Thank you, Fazal. Good evening, and welcome, everyone. We are here to discuss PNB Housing Finance Q2 and H1 FY '24-'25 results. You must have seen our business and financial numbers in the presentation and the press release shared with the Indian Stock Exchanges and is also available on our website. We would like to apologize because we could upload the presentation and the press release just a few minutes back due to some technical error. We will try to cover maximum in the update to be given by the management team. We have the entire management sitting over here, led by Mr. Girish Kousgi, our managing director and CEO. We'll begin this call with the performance update directly.
Please note, this call may contain forward-looking statements, which exemplify our judgment and future expectations concerning the development of our business. These forward-looking statements involve risks and uncertainties that may cause actual development and results to differ materially from our expectations. PNB Housing Finance undertakes no obligation to publicly revise any forward-looking statement to reflect future events or circumstances. A detailed disclaimer is on Slide 51 of the investor presentation.
With that, I will now hand over the call to Mr. Girish Kousgi. Over to you, sir.
Good evening to all the investors. Welcome to the earnings call. Before I get into quarter 2 and H1 FY '25 performance, I would like to highlight that our Affordable segment Roshni loan book has crossed INR 3,000 mark this month, making us the fastest-growing HFC in Affordable segment. It is a significant milestone towards the stated target of INR 15,000 crore affordable loan growth by FY '27.
On the loan book, last year, the retail loan book grew by 14.1%. Quarter 1 FY '25, the book grew by 14.4%. And this quarter, the retail loan book grew by 16.2% to INR 67,970 crore as on 30th September 2024. This is against the stated guidance of 17% for the financial year. The corporate book is at INR 1,531 crore as on 30th September 2024. The total loan book stood at INR 69,501 crore and assets under management is at INR 74,724 crore.
The total live account serviced by the company crossed 3 lakhs. The affordable and emerging market segment share in the retail loan book is witnessing increasing trend and is at 23% as on 30th September. The Affordable segment has shown a remarkable growth of 300% on a Y-o-Y in loan book at INR 2,959 crore. We have crossed INR 3,000 crore loan book as of now.
The Emerging markets segment has shown a loan book growth of 22% Y-o-Y at INR 12,545 crore. As per the strategy, the growth in the prime book is a balancing number and the prime book grew by 11% as on 30th September 2024.
In terms of reach, we currently have a strong network of 303 branches across 20 states and we plan to open 15 branches in this financial year with majority to be opened for affordable business. With this large presence, we are ready to capitalize the opportunity available in affordable and emerging market segments in Tier 2 and 3 cities.
We had a phenomenal quarter with disbursement of INR 5,341 crore in quarter 2 FY '25, representing a growth of 28.2% on a Y-o-Y basis and 21.5% on a quarter-on-quarter basis. As laid out in our strategy, we continue to focus on affordable and emerging market segment. Both these segments contribute 31% of the total retail disbursement of quarter 2 FY '25.
The disbursement in affordable segment grew at a rapid pace of 68.5% Y-o-Y to INR 630 crore in quarter 2 FY '25. The disbursement for the Emerging Markets segment registered a healthy growth of 31% Y-o-Y at INR 1,035 crores. The Prime segment business grew by 23% Y-o-Y at INR 3,676 crore in quarter 2 FY '25.
The company is expected to start corporate business in the next few months. The Corporate segment will further help us in yield and retail business. The incremental yield in the Affordable segment increased to almost 12% in quarter 2 FY '25 as compared to 11.4% in quarter 2 of the previous year. We are consciously increasing the yield in Affordable segment. The incremental yield in The Emerging Markets segment is 9.8% in quarter 2, which is 45 bps more than Prime segment.
On PMAY-Interest Subsidy Scheme with the government focus on the Affordable segment, that is EWS and mid-income group and the PMAY-Interest Subsidy Scheme close to 1 crore customers are expected to benefit over next 5 years. This leads to a huge opportunity for players like us with pan-India presence and special focus on affordable and emerging market segments. The company is geared up to source business from all its 303 branches under interest subsidy scheme.
On asset quality, GNPA improved by 11 bps to 1.24% this quarter. Last quarter, the GNPA was 1.35%. During the quarter, we recovered INR 48 crore from retail written-off pool in comparison to INR 28 crore in quarter 1. We expect to continue recovery from written-off pool from both retail and corporate book. The company has a written-off pool of around INR 1,250 crores in corporate and INR 500 crores in retail.
Our cost of borrowing has reduced by 8 bps sequentially to 7.84% in quarter 2. In quarter 2, PAT stood at INR 470 crore, registering a growth of 22.6% on a Y-o-Y basis. Net interest margin increased marginally at 3.68% during the quarter as compared to previous quarter. We reiterate our guidance is 3.5% on NIM. We will be able to manage NIM at the current level for the next couple of quarters. Our efforts across parameters aided in improving the profitability. Return on assets improved to 2.54% in quarter 2 and H1 at 2.45%. Return on equity was at 12.42% annualized for quarter 2.
Now I hand over to Vinay to cover on financials.
Hello. Good Evening to all, and welcome to Q2 and H1 FY '24-'25 Earnings Call. I'm happy to report a strong financial performance across all parameters during this quarter, driven by strong business performance with disbursement growth of 28% and loan book growth of 14% and retail loan book growth of 16.2%, our overall PAT has grown 23% year-on-year and 9% quarter-on-quarter to INR 470 crores in Q2 FY '25. Overall interest income has grown 4.5% year-on-year in Q2. However, this is colored by declining corporate book over the years. Kindly refer Page 35 of the deck, wherein we have shared separate P&L by segment for retail and corporate.
The Retail segment gross income has actually grown by 17% year-on-year, and operating profit that is pre-provision operating profit grew by 16.4% year-on-year in Q2.
Cost of borrowings reduced by 8 bps sequentially to 7.84% in Q2. The decline in cost of borrowings is driven by the benefits of rating upgrades, leading to competitive borrowing from debt capital market.
Company also received ECB sanction of USD 125 million, which is at a very competitive rate. This has ensured that the spreads have improved from 2.1% to 2.2% during Q2. NIMs have also improved to 3.68% during Q2 versus 3.65% in the previous quarter, largely driven by the lower cost of volumes. However, we reiterate we maintain our guidance of 3.5% NIM for the current year. With higher contribution of business now coming from affordable and emerging verticals, NIM should start improving from the next year onwards. Gross margin is maintained at 4.1% versus around 4.03% in previous quarter.
In Q2 FY '25, operating expenses have grown by 19% year-on-year to INR 199 crores. This is largely due to branch expansion done in Roshni and emerging vertical during Q4 of the last financial year, wherein we have added 100 branches. Excluding fresh investments done in these 100 branches, operating expenses would have grown by around 9%. This fresh investment will definitely help in profitable growth going forward.
On credit cost, as mentioned earlier, it remains benign, even during Q2 due to recovery of INR 48 crores from the retail written-off pool in this quarter. Overall credit cost remains [indiscernible] of 24 bps for Q2 FY '25. Our ROA improved by 30 bps year-on-year to 2.54%, which was 2.38% in the previous quarter. ROE has also reached to 12% for Q2 FY '25.
The company has maintained average daily LCR of 193% against the regulatory requirement of [ 65% ]. We have also maintained SLR of 15% on public deposits as of 30th September against the regulatory requirement of 13%. The capital adequacy stands strong at 29.16% with Tier 1 at 28.1%.
With this strong all-round performance during Q2, we are on track now to deliver on our business growth guidance for the current financial year.
Thank you, Vinay. I will now request Valli, our Chief Sales Officer for Prime and Emerging business and deposits to give segmental performance updates.
Thank you Deepika, and good evening friends. Welcome to the call. I appreciate you taking the time out late in the evening. I'm delighted to share with you that we had a really good quarter in the prime and emerging markets businesses for the company. You've heard some of the numbers from Vinay and Mr. Kousgi. You'll see them in the investor presentation as well. Over the next few minutes, let me try and give you some color of these businesses as to what they are and how they have fared in this quarter for us.
I'll start with emerging markets first. We took this decision to reorganize our branches and teams into prime and emerging markets because we believe that these set of geographies of branches have room to: Number one, grow at faster pace; number two, also give us higher yields on incremental disbursals. So we carved out 50 branches.
We started off this business as a separate one, about 2 quarters back. Firstly, let me speak of which are these markets. About 60% of these branches are in South as on date. So we are talking of most of Tamil Nadu except Chennai, branches in AP but not Telangana or Hyderabad, all of Kerala. Even in the North, we consciously chose the Tier 2 markets so that some parts of UP but not Lucknow, large share of Rajasthan, but not Jaipur.
So in these markets, our ticket size is around INR 25 lakhs, whereas our ticket size on the prime side of the business is about INR 35 lakhs. So at the end of 2 quarters, we're very pleased to see how the business has started off here. Disbursal in these markets, like you heard, has grown at 31% Y-o-Y. The book has grown at 22%. It's crossed INR 12,500 crores.
We had set out a guidance saying over the period of 2 to 3 years, we will have a difference in yield of 75 to 100 basis points between the prime and the emerging market side. In 2 quarters, we have already achieved 45 bps. So the difference in incremental yields between prime and emerging markets is now 45 bps. In fact, in these emerging markets, we took the yield up by 40 bps in 6 months as compared to what it was at the end of Q4.
In terms of product mix, NHL gives us about 35% of incremental disbursements in these markets. Again, this is a yield-accretive business. It fetches us a good 100-plus bps of premium over home loans. In these markets, 63% to 64% of our business is sourced by our internal team, which is our in-house origination team. About 37% is originated by our third-party distribution DMS.
And when we're doing all this and we are wanting to grow this business more, the asset quality in these set of branches, the NPA level is on par with those in the prime branches, if not better. So we're very pleased to have made this decision. It seems to be paying off well. It's taken off very well. We only see this business becoming bigger for the company, along with Roshni in the quarters to come. Mr. Kousgi mentioned that emerging markets and Roshni are now at about 31% of the company's retail loan disbursements as of Q2. Now this number or this metric by design will only go up in the quarters to come.
Now coming to the prime markets. So most larger cities of the country is the metropolitan cities like MMR, NCR, Bangalore, Chennai, Hyderabad, Pune, even the bigger cities like Lucknow, Chandigarh, et cetera, they fall into what we classify as prime markets. Now since these markets have a higher share of contribution to the economy itself, they are larger markets for housing loan demand as well.
So obviously, we witnessed more competition in terms of pricing in these markets. That's why the yield on incremental disbursements in these markets will be a little lower. But going to the sheer size of these markets, they will continue to contribute more to the growth for most lenders as is the case with us.
So on the prime side, also on the prime market side, we had a very good quarter on disbursal, on runoffs as well as margin improvement. We managed to grow our disbursements by 22-plus percent in these markets. The book grew by about 11% to INR 52,000 plus crores. And on this side of the business, we're working on growth, we're also working hard on restricting our runoffs. So our runoff share came down to below 17% on an annualized basis. Now this is a good 2-plus percent reduction Y-o-Y. This improved 40-plus bps Q-o-Q sequentially as well.
And while we are wanting to grow in these markets for bottom line reasons, we are also making a shift down the income pyramid from HNIs or super prime to the prime or the mass affluent segments.
So the incremental disbursals are more granular in nature. Just to give you a metric, 97% of the disbursements in these markets stood at loans below INR 3 crores, which is much lower than what the company has used to historically. In these markets, also, we managed to take the yield up. Incremental disbursement yield moved up by 15 basis points in 6 months.
I'd also like to share an update on investments in new branches. We opened about 35 new branches in quarter 4 of FY '24. Happy to share that all these branches are now fully operational. They are active on incremental disbursements for us. They contributed to 10% of the disbursements across prime and emerging markets for Q2 for us. This number was 6% in the previous quarter. So they should only go up in the coming quarters.
So to summarize, growth in business is auguring well on the back of investments in geographies and technology. We wanted to grow more in the margin-accretive businesses. We had emerging markets, be it NHL, we are seeing that happen. The shift in the customer segment in prime markets is happening as planned. The shift in the geography mix is also trending in the direction we want.
Just to give you an update, across prime and emerging markets, 50-plus percent of the incremental disbursements are now coming from non-metros. This is the first time across these businesses. And the asset quality for these businesses continues to hold up and improve quarter-on-quarter.
So we believe that our good performance in Q2 is a testimony to the fact that we are on the right path, and we'll only move forward on these businesses on all our imperatives, growth, margins and asset quality.
Thank you, and back to Deepika.
Thank you, Valli. I will now request Anujai, our Business Head for Affordable business to update on the affordable business performance.
Thank you, Deepika. Good evening, everyone. It is my pleasure to take you through the excellent outcomes that we have achieved in the last quarter in our Roshni business. We have ended the last quarter at a loan book of INR 2,959 crore, and I'm happy to share that we have become the fastest business in the affordable housing space to cross the loan book of INR 3,000 crores earlier this month. We have achieved this milestone in the 22nd month of our operation.
Our journey in the affordable housing finance space started in January '23, with Roshni business disbursing INR 5 crore of loans in that month. Executing well on our strategic plan, we reached a monthly disbursement rate of around INR 100 crore per month in about 6 months' time by July '23. We were the fastest in the affordable housing finance space to reach a loan book of INR 1,000 crore in just 11 month's time by November '23. We opened our 100th branch in December '23. Incidentally, this branch was also our first women-only branch that was set up in Chennai. With increased branch footprint, our loan book growth was even faster from there on, and we ended the FY '24 at a loan book of INR 1,790 crore in March '24.
As I mentioned, we crossed INR 1,000 crore of loan book in November '23. The next INR 1,000 crore came even faster, and we crossed loan book of INR 2,000 crore in the next 6 months by May '24.
We also opened 60 more branches in Q4 of last financial year. I'm happy to share that all these new branches have been fully operationalized in the last few months. With these 160 branches across the country, we are catering to 130-plus high-potential targeted districts across 13 states in the country.
We are operating in the 3 zones and contribution is evenly distributed amongst all these 3 zones. North zone accounts for 34% of our business. Contribution from West Zone is about 36% and South accounts for 30% of our business. We have a national presence, and this helps us in scaling up faster across all regions in the country.
In the last few quarters, we have worked hard to expand and strengthen our distribution. We have empanelled close to 2,000 connectors through our Roshni Darsi program. We have also empanelled close to 500 channel partners for DSA partnership. We have also strengthened our vendor support network for legal, technical, [ FI and FQ-related check ] with more than 1,000 empanelled vendors across the country.
We have also used technology solutions extensively to strengthen our operational framework. The last quarter has been our best ever quarter in terms of log-ins and sanctions, and we have been able to build a robust pipeline, which will support the business growth going forward.
Lastly, loan book has witnessed a year-on-year growth as we have ended the last quarter at a loan book size of INR 2,959 crore as compared to INR 745 crore that we had at the end of quarter 2 of last finical year. Quarter-on-quarter growth in the loan book stands at 25% plus.
Roshni disbursement have also seen a robust growth, year-on-year growth of 58.4% as we disbursed INR 630 crore of loans in the last quarter as compared to INR 374 crore of loans, same time last year. While we have grown our disbursement significantly, it is important to note that we have also improved our incremental yield simultaneously.
Yields for incremental business have gone up to close to 12% this quarter as compared to 11.4% same time last year and 11.58% in the previous quarter.
We have been able to improve our yields through an increased focus on high-yielding segments and products. Self-employed sourcing has gone up to 43% in the last quarter as compared to 35% last year. Sourcing from informal income segment has gone up to 29% in the last quarter as compared to 23% previous quarter.
Our non-home loan sourcing has also gone up to 35% in the last quarter as compared to 25% same time last year. With most of the new branches getting opened in Tier 3 and Tier 4 locations, this will become an additional factor, and we are confident our yields will continue to improve.
On the portfolio quality side, we don't see any early warning signs. As I mentioned earlier, we have been able to execute really well on the strategic plan that we have for Roshni business, and we are confident that we will be closing this financial year with a loan book of close to INR 5,000 crore. Thank you.
Thank you, Anujai. I'll now request Jatul, our Chief Credit and Collections Officer for retail to talk about credit and collection performance.
Yes. Good evening, everyone. Moving on to cover the portfolio quality and credit. Well, I can say that our PNB housing is risk first in business mix. Credit underwriting plays a crucial role in driving business and building a strong portfolio, ensuring sustainable portfolio quality. This function here operates independently assessing both the financial capability and collateral through dedicated legal and technical units.
The company today manages a robust and seasoned portfolio of around INR 68,000 crore, consistently achieving steady year-on-year growth. With a deep understanding of the various facets of the mortgage industry and the relevant experience of our team, we make informed, onboarding decisions. This expertise allows us to build a diversified portfolio, maintaining a balanced distribution across various industry segments, low and mid-ticket size cases being focused and a healthy mix of salaried and self-employed customer segments.
As the business grows organically, our well-established centralized monitoring mechanism conducts periodic testing of the portfolio on us and off us, providing an eagle-eye view of our business health. So as we speak, our portfolio shows no sign of stress.
Covering the credit process flow evolving around login, credit appraisal, collateral assessment and finally, the disbursement, each of these stages ensure that the lending process is thorough, minimizing the risk and maximizing the profitability of repayment. Right from the loan application submission, which is done through our digital platform in disbursement at each stage of the appraisal, one or another digital tool deployed by the company, be it the verification of documents to automated cams and bank statement verification, et cetera. This ensures faster and timely delivery to the customer.
Now moving to the portfolio highlights for quarter 2 of the current year. The company witnessed business growth, as already mentioned. As envisaged with respect to focus areas of control, 94% of the fresh sanction volume ticket size of up to INR 1 crore, 87% of our incremental business had bureau score of more than 700, having all the checks and balances in place with respect to prudent appraisal and managing early mortality. The delinquency in the business booked in the last few quarters is well within the tolerable limits.
To give you the idea as on 30th September, 30-plus from last 12 months origination is 0.1% and with the [ marred NPA ] that is 90-plus is 0.02%. If I go back and see the last 24 months also, 30-plus is 0.43% and NPA is at 0.09%. So that gives us the confidence to enable business growth with sustainable portfolio quality.
Now moving further to collections and recoveries. The company has been witnessing a successful trend over the past few quarters with complete grip on delinquent accounts, various approaches of curing methods put to use, ensuring sequential reduction in NPA quarter-on-quarter.
The strategy which we designed in the recent past and implemented at ground is yielding desired results as per our plan. Resolutions across buckets have been improving, driven by strategic interventions, both from a process excellence and technology leverage point of view.
The focus continues to remain on early delinquency management through leveraging deeper analytics and focus to increase self-curing of early delinquency, deployment of predictive AI models to improve accuracy on pre-delinquency management and ongoing monitoring and prompt resolution of any early mortality cases arising from the recent acquisitions.
And the next focus area, which is to arrest the vintage delinquency is controlled over the NPAs and recovery from the written-off pool. This is being enabled with the use of effective legal tools or measures to restrain delinquency, leverage of end-to-end technology through a collection application, which is being used to track the collection field team performance, digital capturing of payments and enables us to review through dashboards and various analytics. Optimizing the process for onetime settlements and reserve price fixations et cetera, strengthened our auctioning process. I will just cover the numbers in a minute to ago and month-on-month consistency of sale of repossessed assets by taking one of its kind industry-wide initiatives, which has really helped us to get to the desired results.
Over to quarterly update, the company closed the second quarter building on the momentum we established in Q1. Performance was robust in Q2, whereby we beat our Q1 numbers on almost all the measurable success metrics. Our ongoing rigor on SARFAESI saw us take over 300 possessions in quarter 2, which is far more than what we did in quarter 1, close to 170-odd positions. Further to dispose of these assets, we successfully sold out 134 properties in Q2 as against 98 in Q1 through the auctioning channel. So this vertical -- this has been a very -- success in disposing of the assets as well as the reduction in NPAs by taking one of its kind initiatives, as I talked about, be it marketing, be it creating awareness to dispose of these assets.
In terms of recovery from the technically written-off pool, we collected almost around INR 50 crores in quarter 2 as against INR 28 crores in quarter 1. So the strong control over recovery and resolution mechanism has set a growth trajectory in terms of robust portfolio with even lower delinquency. Given the proficiency in handling all aspects of collections, recoveries to sale of assets and overall resolution mechanism over the last few quarters, the company has set a path for reducing NPAs further and build a robust portfolio with steady growth.
Thank you, Jatul. I'll now request Anubhav, our Chief Technology Officer, to talk about our tech initiatives and it's progress.
Thank you, Deepika, and a very good evening to all. PNB Housing Finance technology function continues to evolve on the part of transformation agenda that was initiated in quarter 4 of FY '24. I'm pleased to share that as part of our transformation journey, we have upgraded and replaced our key core platforms like CRM, dialer, LOS, website and deposit. We have also reduced additional tech-led channels for sales, collections, operations and customer service functions. All the new platforms are high performing in terms of functionalities, features, capacity and performance. The new and upgraded platforms are set to deliver long-term robust tech capabilities for our business segments and customers.
Our long-term technology vision is to be recognized as a large tech-led digital player in the HF ecosystem, partnering with various fintech banks and aggregators through scalable digital platforms and tech services, which are integrated end-to-end.
All our technology investments are aligned to the business strategy and direction and focus on 5 strategic pillars. The first is delivering a frictionless customer experience. This aims to simplify and enhance experience for our customers across all channels and touch points. We have launched a new website that provides far more information and the same is [ disseminate ] to our customers and prospects. We have introduce self-service channels like chatbots and WhatsApp bots where almost 17% to 18% of customer requests are being self-serviced 24/7.
Our second strategic pillar is end-to-end sales enablement. Initiatives like introducing a sales mobile app for our frontline, automated lead scoring and allocation have been implemented. We have also introduced a fully functional app for our collection agents to be better equipped with all data and details in a secured manner to improve collection efficiency.
The third pillar is creating underwriting at scale. This focuses on our credit function, where we have built several calculators. Automation for underwriting includes digitalization of complete underwriting rules using a robust rule engine and the same have been implemented and used widely.
Our fourth pillar and focus area is to evolve into a data-driven enterprise. We continue to invest in building data analytics capabilities across organization. We are in the process of setting up a large data lake to build an integrated analytics view and enterprise and business segments, which will be used for developing numerous analytical models for prediction of risk, delinquency, conversion propensity and for anything and mass reporting across hierarchy for better management and control of the business.
And our last pillar of focus is tech innovation and performance. While delivering superior business capability, we are also focusing on building internal tech skills and capabilities, specifically in areas around cloud, mobility, engineering, performance engineering, tech monitoring and information security, which are very relevant in the technology landscape of today.
In recent quarters, we have automated a considerable part of our customer service touch points and reduce digital channel for customers who connect with us. As on date, these self-service channels are working well for us and have led to improvement in CFADS as well as unlock better productivity for our operations teams. Sales enablement initiatives include introducing modern and integrated LOS platform that has better control workflows and improved [indiscernible] capabilities for automation and integrations.
During the onboarding journey, we are now more than 80% digitized for the Affordable segment, and we are launching the pilot phase for prime and emerging business segments.
Entire field collection team is enabled with a robust mobile app that provides all details on delinquent cases, field tracking, complete payment automation workflow and associated capabilities for collection agents to leverage.
Lastly, we have set up 24/7 information security monitoring capabilities and continue to build resilience on our technology platforms in line with the new and emerging cyber threat landscape. Information access for users is also controlled using relevant tools, which were purely on a Zero Trust architecture model. Thank you.
Thank you, Anubhav. Fazal, you can open the forum for the Q&A.
[Operator Instructions] Our first question is from the line of Abhijit Tibrewal from Motilal Oswal.
First of all, congratulations on a good quarter and congratulations to Girish sir for recently completing I think 2 years at PNB Housing. So first of all, I mean, thank you for, I think, very enhanced disclosures that we are giving in the presentation. I think we also started reading out incremental yields. So I think that's where my first question also was that in terms of incremental yields that we've given out in prime, emerging and affordable, what proportion of this increase in incremental yield that we've seen over the last 2 quarters? What proportion has come from a product mix change? And what percentage has come from an increase in yields that you have been able to take in home loans?
Thank you so much. Thanks for the compliment. So the plan this year was to increase the yields on all the 3 segments starting from affordable, emerging and prime. So we started focusing on increasing yields, let's say, from June of this year because quarter 1, given the constraints and cyclical and therefore, we started this a couple of months late, and we are seeing good traction. So if you look at any of the segments whether it is affordable, emerging or prime, yield is driven largely by customer segment, geography, product and the program mix. So these 4 things have driven towards increased yield in all the 3 businesses, prime, emerging and affordable.
And sir, I mean just a related question on yields again. I mean, emerging, affordable, I mean we can understand, but the fact that you're also able to take yield improvements in prime, which is commendable given the kind of competitive landscape that we have in the country. So what is allowing us to improve yields even in prime?
So as I mentioned, even on the prime side, we are where we are and we will be always exploring opportunities, subsegment within prime so that we try and increase yield. It's also a combination of the program and the product mix and customer segmentation within the prime.
Yes. To add to what Mr. Kousgi said, I believe the two bigger levers in prime side of the business, which have helped improve yields is one is shift down the pyramid. So we have vacated the sort of ultra-HNI kind of customer segment. We see possibility to charge better premiums when you go down the income segment. That is number one. Second is a little bit of product mix as well. We're doing a little more NHL than what we used to earlier. We are also trying to see if we can move up that ladder. Combination of these and some of the factors, which Mr. Kousgi explained is helping us increase our yields.
And my second question was on margins. When Vinay sir was giving out his opening remarks. I think I heard that, I mean, while I mean, margins have been good for the first half of the year are you still guiding for a margin of 3.5%. So I mean, should we then conclude that maybe for next two quarters, we could see some new volatility and then as per your guidance, NIM should start improving from the next year onwards?
See NIM's will start improving maybe after 2, 3 quarters, right, as I've been mentioning since a very, very long time. We are putting in all the efforts to protect the NIM. We have given guidance of 3.5%, that is a threshold. So NIM's will be upwards of 3.5% while the endeavor will be to try and maintain at around 3.4 -- 3.64%, 3.65%.
Sir, the last question again is -- I mean, I think you've guided that for the next 4 to 6 quarters, we'll continue to see recoveries from the written-off pool. I think -- I mean this was the second quarter where we took a provision write-off -- provision write-backs in the P&L.
So two things I want to understand in terms of recoveries, one is, when will we go for repossessions and auctions in retail? What is the recovery that we see, in other words, what is the haircut that we are seeing in retail when we go for recoveries? And secondly, given that you spoke about almost INR 1,250 crores of written-off pool in corporate and corporate recoveries, you know, can be lumpy. Anything happening on the corporate recoveries? And are you expecting any corporate recoveries in the second half of this fiscal year?
Yes. So as of now, we have INR 1,250 crores written-off on the corporate side and INR 500 crores on the retail side. And if you look at quarter 1 and quarter 2, I think together, we've done about INR 28 crores plus INR 48 crores in quarter 1 and quarter 2, little over INR 75-odd crores. So this story will continue for next 4 to 5 quarters.
On the corporate side, as I had mentioned in the last earnings call, we were able to recover a bit in quarter 1. So in H1 we can expect good recovery on the corporate side, also on the written-off pool.
Sir, this is useful.
I think I didn't mention H1. I think in H2, we are expecting recovery from corporate also and retail recovery would continue for next 5 to 6 quarters.
The next question is from the line of Renish from ICICI.
First question, again, on the credit cost side. So of course, we need to understand that the revamp of collection, underwriting structure is helping us in better recoveries, et cetera. But on a normalized basis, given now corporate is only 2% so what kind of a steady state credit cost one should assume in retail business, especially when we are, let's say, over the next couple of years affordable and emerging will be larger piece in prime in a way, these two segments would be slightly more vulnerable than prime. So what steady state credit cost one should assume for PNB housing going ahead?
So on a steady state, for example, we have given a guidance in terms of retail book growth, reaching the INR 1 lakh crore by FY '27 with a mix of 15% in affordable, 25% in emerging and the balance in prime. So on a steady state, given the mix between these three segments, we should look at credit cost of about 40 to 42 bps.
Sorry, 40 to 45 basis points?
40 to 42. 41, 42 bps. So I think -- see on prime, we are expecting on a steady state credit cost of about 18 bps, on emerging around 20 to 24 bps, on affordable since we are focusing on the low risk and within this segment we are expecting about 50 bps. So as a combination blended within retail, we're expecting credit cost around 41, 42 bps.
Maybe I think if we go by this mix and the kind of credit cost you highlighted, I think the blended should be lower, but anyways, we'll discuss separately. Sir, second question, again, on the yield side in the prime segment. As Abhijit was mentioning, this is one of the most competitive product per se. And in that segment, from last two, three quarters, we are seeing a steady improvement on the business module as well as the book yield as well. So I mean, I do heard that we are vacating ultra-HNI and sort of going down the pyramid. But structurally, what are we doing to sustain this kind of yields on a more sustainable basis?
Yes. Dilip here, like I said, we are trying to be on the fringes of the outskirts of the city. We are trying to cater to middle income customers, we are trying to do a little more of NHL as compared to earlier within these 2, 3 levers, we are trying -- we are able to fetch higher yields than before. And this is a journey, we have just started off. We have worked about 15 bps in the last 6 months.
We believe there is still room for improvement there. I remember mentioning this in our earlier conversations as well, even if you take a city like Bombay, Delhi, NCR, the yields that the ultra-HNI's give us in the middle of the city are very different from what you get when you go to the outskirts of the city even to catering to salaried middle-income customers or self-employed customers gets us better yields. So between these 2, 3 things, there is a little bit of product mix, NHL. We believe that we will be able to take the yields. And early results seem to be showing that we are in the right direction. We will be moving ahead on this path.
So I mean does that mean there is a significant change in the ticket size?
Not really. It's come down a little bit. On the prime side of the business, we are in the range of INR 35 lakhs. We're trying to be more granular. We used -- 4, 5 years back historically we used to do many more cases which were sort of INR 5 crores plus, and that has come down.
Yes, that's what, okay. Got it. So earlier maybe we were in crores, now we are in lakhs.
Yes, a little.
Okay, got it. And my last question on the cost of borrowing side. So despite the rating upgrade, incremental cost of fund has increased maybe marginally by 13 basis points. But ideally, your incremental cost of funds should have come down, right? I mean, post rating upgrade. So what am I missing here?
It is basically, Renish, due to some mix as the bank mix between short term and long term do keep changing quarter-on-quarter. That has led to some impact between Q1 and Q2. We have also got some ECB's and NCD's traction starting from Q2 which is also playing out from improving the diversity and mix perspective.
Got it. Got it. So basically, just a mix change, which is impacting this, there is nothing much to read?
And also, if you see, we got the rating upgrade in quarter 4 of last year and quarter 1 of this year. So that will play out. And also, if you look at the difference between us in terms of cost of borrowing and some of the known leadership for companies in terms of cost in the space, I think the gap is not much. So we'll be able to cover that up, but also in the next 3 to 4 quarters, it is a question of time. Now we are also looking at possible upgrade, and we should further improve on the cost. .
However, having said that, I mean, overall borrowing costs on the portfolio has improved by 8 bps. So there, we have worked across all the instruments.
Next question comes from Nilesh Jethani from Bank of India Mutual Funds.
[indiscernible]
Sorry to interrupt, Mr. Jethani, your line is breaking in between.
Am I audible now?
This is much better, sir. Please go ahead.
My first question was on the affordable side. Just wanted to understand, considering these 160 locations that our branches are present, any sense or any understanding the corporates, which are operating around us, what could be typical even for branch for them? And of course, what kind of AUM per branch are we aspiring to when the target today is INR 15,000 crore AUM by FY '27. That is question number one.
Question number 2 is on what are you planning to do on the affordable side, trying to garner market share in Tier 2, Tier 3 cities or we are targeting a mix of virgin and market share gains, wanted to understand the philosophy.
See, in terms of growth, we had guided 17%. So this could improve in the next couple of years. We are trying to scale up in all the three segments within retail. Now looking at CAGR in terms of all the three businesses and what we have spoken. So we are expecting to reach a book of about INR 1 lakh crores by FY '27. So this -- by FY '27, today, we are at 303 branches. So in the next 3 years, starting from this year, we will be able to reach to a level of 500 branches.
So the split is going to be all the branches, what we're going to open in future I think 75% to 80% would be on the affordable side and the rest would be on emerging side. I think 500 branches, INR 1 lakh crores retail book by FY '27, that's the plan. And we plan to grow it about let's say, this year, we have guided 17%, next couple of years would be slightly higher. I think that's the plan.
In terms of affordable specifically, I would request Anujai to...
Yes. On the affordable side, I'll just try to set some context when we were working on the distribution blueprint for this business, we realized that there are about 155 districts across the country out of 550 to 600 districts that we had at that point in time. So around 155 districts were found to be high-potential districts for our kind of targeted business and out of these 155 districts, so far through these 160 branches, we are catering to about 130-plus districts already. These districts are concentrated in about 14 to 15 states in the country. Out of these 14, 15 states, we are already in some form, we are present in about 13 states. Within these 13 states and plus there are a couple of more states which we want to target, there is ample opportunity to open about 150 to 200 more branches.
And on the AUM per branch, just wanted to understand currently the locations where we are operating, our competition would be operating at what kind of AUM. Just wanted to understand, today, our AUM per branch optically looks much lower considering the faster growth in branch addition what we have seen. Just wanted to understand say from tomorrow itself hypothetically we stopped adding branches, so what could be AUM per branch potential for us in the current location itself?
So I think talking about affordable if you see, some of the mature -- some of the mature branches for us, we have reached now a little over INR 2 crores per month. So we feel that on the affordable side, on an average, branch could reach a potential of about doing INR 3.5 crore disbursement every month. So that is, let's say, after 12 to 15 months from the start. So depending on the vintage of the branch and the location potential, I think the branch could reach at, let's say, about INR 3.5 crores on an average.
Got it. And sorry to, again, circle back on the question. So when -- so you mentioned that in the current branch -- current location, there is scope to add even 150 more branches. So this refers to those are underserved areas or we can capture a higher market share in a decent size market? What's the thought process?
See, it will be a combination of Tier 2, Tier 3 and Tier 4, right, it will be a combination of yield and volume. So it will be a mix of these two. For example, Tier 2 and Tier 3 would get us more volume and part of Tier 3 and Tier 4 would give us a better yield. So it's a combination of these two, which is why I mentioned, I think one branch in the month can reach to the max potential of, on an average, INR 3.5 crores. .
So some of the -- for example, some of the affordable branches, let's say, in cities like Bangalore, Chennai, Hyderabad, could do even INR 7 crores, INR 8 crores per month. And some of the branches in Tier 4, they could do, let's say, INR 1 crores to INR 1.5 crores, but the yield is going to be much higher. So it's a combination of both yield and volume.
And one question on the corporate side. I wanted to understand the plan to rebuild up or refocus on corporate from next quarter onwards or maybe next 2. Just wanted to understand how different this is going to be versus the earlier avatar where PNB used to fund lot of builder finance or something like that. So how different are we this time?
Two things, we'll be starting corporate in the next couple of months. And this time, it will be very different, we will stick to basics. And we'll focus on ticket size around INR 200-odd crores, we will not get into chunky deals, and this will be only into construction finance and in terms of scale and size, corporate business at any given point in time, would be less than 10% of the overall portfolio.
The next question is from Harshit Toshniwal from Premji.
Am I audible?
Yes, you are audible.
Sir, on this affordable piece itself that you mentioned that the incremental yield, which we are having is roughly around 12%, 12.5% right now. But if you look at this segment and the other peers, now do you think that this is a good enough yield to charge for that customer segment that can cover our OpEx and possible sustainable cyclical credit cost? That is the one.
And the second part, sir, so how much of our new disbursements in this segment is through DSA, specifically the affordable one? If you can help on that aspect? And when I say DSA, when you say that in-house, I mean, employee sourcing mostly through DSAs, I would also want to look at that mix, direct versus DSA part.
And third, sir, if you can just give a breakup of the employees between the prime, emerging and affordable as on today.
So in terms of -- see, within affordable, there are three segments. So low risk, median risk and high risk. So if you look at our yield in the first year, let's say, till last year, the yield was about 11.4%, 11.5%. And this year, we have guided yield of about 12.6%. And for next year, the yield is going to be more than 13%. So this would be largely driven by no change in segment and change in profile both in salaried and self-employed, right?
And we will be focusing on low-risk and medium risk so we would not really focus on high-yield segment. And therefore, according to us, I think yield from affordable segment would be a little over 13% is what we would focus on. There could be opportunity at lower yield, there could be opportunity at higher yield, but I think our focus would be on low risk and medium risk and in terms of yield, next year, it's going to be a little over 13%.
Sir just to hear that, at this point of time, when we look at our disbursement, are -- basically customers would have otherwise gone to [indiscernible] although the larger set of [indiscernible] is our customer segment there very overlapping? And the second part was related to this itself of the incremental disbursement, how much is BT in our case, where we are basically -- where basically it's not a new loan, but it's more coming from somewhere else.
So in terms of the customer profile, I think, to a large extent, if we talk about low-risk and medium risk I think the customer segment is same, number one. Number two, in terms of BT for affordable, it's about 25%, 26%. And one more question you had asked in terms of what is the mix between direct and DSA. DSA is 31% in the affordable and the rest is direct.
Got it. Got it. And sir, one last thing. I think on the employee part, can you give the breakup of employees between the 3, specifically the sales or basically the branch employees?
See, I think for us, whether it is credit or sales, basically, we have a branch structure. So in branch, we have different categories: Low potential, median potential and high potential. So low potential would have one sales manager, one credit manager and one ops resource. So if it is the mid size, then we would have one sales manager and probably one ASM and one underwriter.
If it is a big branch, then we could have two underwriters and we could have two ASMs and one salesmen. This is our structure. In terms of total headcount...
Out of total headcount on, say, sales side on an overall basis, around 25% would be Roshni, affordable. The rest is between prime and emerging.
Okay. 25% would be affordable. So I remember, sir, you last time mentioned that there were 333 employees in the affordable segment?
Yes. Now we have a little over 400 employees in Roshni.
Next question is from Viral Shah from IIFL Securities.
Congratulations on a good set of numbers. So Girish, first question was on the point of with regards to the NIM. I know that this was asked. But wanted to check, given where we are, does it make sense for us to say, raise the guidance? Or as you mentioned that this is the threshold, is it after taking into account, say, any impact of potential rate cut?
Yes. That's right, Viral. The environment is slightly volatile. So we are baking in the impact of the rate cut that can come in. Our endeavor is to maintain 3.6% plus. But yes, the guidance we would like to maintain 3.5% for the year.
Got it, Vinay. And Vinay, as we go ahead as the mix kind of changes a bit more in terms of borrowings, do you see the cost of funds further inching up?
No, not really. Cost of fund for us should remain in the similar range. Actually, it should see a downward trajectory.
And the last question I had was with regards to the asset quality front. So you have given this data with regards to the 12 months and the 24-month MOB, how the delinquencies have trended on 30 and 90 plus. Can you help us with whatever these numbers say a couple of quarters back? And also, secondly, if you can help me with regard to the affordable segment of this piece.
See, Viral, early mortality always have been the focus of the company to monitor the early delinquencies of 12 months, which we have strengthened now to cover even up to 24 months. So if I look back a couple of quarters, I think these numbers are a shade better than the earlier times and having said that and even on the Roshni, Roshni is a pretty new book around INR 3,000-odd crores. So there is hardly, I think, 10, 12 number of cases into NPAs, which are resolution is in process with sufficient cover available. So that's not a significant number as of now.
Got it. Jatul, When you said that these overall numbers are a shade better than what they were. Are you referring to say versus two or three years back? Or are you referring to, say, two or three quarters back?
So around 6 to 8 quarters back, and this I'm talking only on aspect of early mortality. And overall, also, as you can see the graph quarter-on-quarter on NPAs particularly coming down each quarter. So that is on NPS. But having said that, the pre-delinquency management has been strengthened because the business is on a growing spree now. So we need to have stronger controls to restrict flows. If our flows are restricted and well, we have a well-defined strong mechanism in terms of taking properties to SARFAESI and then auctioning it on a regular basis. Almost we are selling two properties a day now. So that machinery will take care.
The next question is from [ Omkar Shinde ], who is an Individual Investor.
I have a few clarifications before I ask my question. So we said that we target INR 1 lakh crore AUM by FY '27 and 15% of it will be affordable, was that correct?
Yes, that's right.
And two more clarifications. In one of the previous questions, you had said that credit cost in the affordable segment could be somewhere in the region of 50 bps, 5-0 or was that 15, I did not get that properly.
5-0.
5-0, 50, okay. And now coming to the question. So again, with respect to the branch structure, you had said the small branch will have one salesperson, one credit person for the small branch. So is this also applicable for our affordable branches? Because now as you said, 12 to 15 months is the gestation period for a branch to reach INR 3.5 crore disbursement per month. So some of our earlier branches would have reached that. So would they still -- so where in the small, medium, large would these earlier branches be now? And how -- could you just reconfirm the medium and large structure?
What I mentioned was for affordable. And what would happen is that, let's say, you open a branch, okay? And depending on the potential, you will increase the manpower and then the branch could peak to a peak level of INR 3.5 crores. So this also has a combination of, a, geography, b, in terms of potential. .
So on an average, every -- let's say, we have, let's say, 300, 400 branches with a vintage of, let's say, 15 to 18 months' time. And on an average, I think the peak could be about INR 3.5 crores. So the branch structure, what I mentioned was for affordable. On the emerging and on the prime, one branch could have multiple ASMs, multiple ROs for field executive, sales executive and one branch manager. When I say branch managers, sales manager and then we would have credit and ops.
Understood. So I was asking with respect to that only for affordable itself. So when the branch reaches its peak level of INR 3.5 crores, INR 4 crores, what is the structure? And like is that at that point of time, it is like a large branch or a medium branch that I wanted to understand.
So let us say, we'll categorize A, B, C category, right? A category branches would be doing, let's say, about INR 6 crores to INR 7 crores. B category branches would do about, let's say, between INR 4 crores to INR 4.5 crores. And C category branches at its peak would be at INR 1.5 crores, INR 1.8 crores only. So it depends on the category of branches, which is to the potential and the geography. And therefore, I always talk about average.
Understood. With respect to sanction to disbursement, now what I have seen is on a quarter-on-quarter basis from the -- what is mentioned in Slide #21, our sanctions have -- sanction to disbursement ratio has dropped to 56% approximately from 75% in Q2 last year. Why is there such a big drop in the sanction to disbursement? And do we -- are we going to see some spillover effect in the coming quarters for this? I just wanted to understand this.
This, you are referring to the affordable business?
Correct. Yes. Slide #21, so INR 630 crores of disbursement against INR 1,100 crores of sanction, 56%. So there is a big drop from last year where it was approximately 75%. So why is there a decline?
Yes. So there is a decline only because of some process-related changes that we have done in July. But if I look at my -- so the quarterly numbers are lower as compared to the previous quarter. However, if I look at stand-alone numbers for August and September month, our conversions are back in order. And from next quarter onwards, we'll be able to see the similar conversions upwards of 70% as we move forward.
Understood. And finally, with respect to the incremental yield, we are at approximately 12% as per the slide mentioned. Where does the incremental yield settle over the next 3 to 4 quarters because when the rate cut starts to come from RBI, we will also have some -- very little headroom. So what do you think that the incremental yield and the overall yield will peak out in the affordable segment?
So when it comes to incremental yield, we are confident we will move towards close to 13% of yield.
See, I think the context is today to look at our cost of borrowing is around 7.8%, 7.85%, right? With this cost of borrowing level, we are talking about affordable yield of 13% from next year. Suppose let's say the rate goes down, let's say, by 100 bps. So then the 13% would slightly moderate to that extent, it might slightly come down. So what we are saying is we will protect the margin. So for affordable business on a steady state the yield is going to be 13-plus percent, 13% to 13.1%, 13.2% given the current cost of borrowing, so if there is any change in the cost of borrowing, accordingly, even the yield would vary.
Okay. Understood. And just finally, one last one. The overall OpEx to AUM is also increasing, that is, I think, as a function of us expanding the branches very fast. So where does that finally settle over, say, by FY '27 when we reach the INR 1 lakh crore AUM, can you guide where in the ballpark range would that OpEx to AUM be?
See, we are expecting it to settle at the current levels of 1% to 1.1% where it is right now. A large part of the upfront investment is done. Now it will be a minor investment of 40, 50 branches every year, which we will manage through the economies of scale in other business.
The next question is from Nikhil Kumar Agrawal from VT Capital.
I just had one question. You said that NIM will start improving after a few quarters. And since cost of funds is going -- like incremental cost of funds is going to be at the current level of 7.8%. And yields are improving across products, then NIM should ideally start improving right now, right, as in from next quarter itself. So it should go very well as per whatever you have said about yields and cost of funds. So can you please give more light on this?
So there are a couple of things. So one is we will be starting corporate shortly. Once we start corporate business then it will add to yield, number one, into margins. Number two, we also have book depletion on prime, emerging and very, very small extent on the affordable. So that is one which will again impact revenue and therefore, the margin. Number three, we also have a repricing policy where we try to retain the customer and switch from a higher interest rate to a slightly lower interest rate. Now these things would pull the yield down while on one side, the yield would come down because of foreclosure, because of repricing.
On the other side, we are changing segments. We are moving more towards affordable and emerging. We are increasing the mix change which would come at a higher yield so this would though ensure that the yield would go up. So because -- I think this balancing would play out in the next 2 to 3 quarters and post which the yield will start going up.
Okay. So because of the dragging effect of the things that you mentioned, the current yield will be maintained for a few quarters. And then net-net, yield should start improving after two to three quarters is what you're saying?
Yes.
Got it. And one last -- one clarification, you have already mentioned this, but I couldn't get it earlier. You said that once we start corporate book in a few months, the difference between this new corporate book and the one we used to have is in terms of ticket size. So if you could please mention the differential ticket size that you did mention earlier as well? And the other thing that you said was -- so what was the other thing? ticket size and the other thing was?
So one is we will start this business in very few select cities. We would focus on good quality developers category A and category B. Third, we would do largely construction finance business, will keep the ticket size lower. So basically, we would focus on very good quality of developers and good projects. There the yields could be lower compared to what normally this business would fetch. We are looking at a yield of about around 12%, 12.25%, so yields would be lower, much safer business. So these are the changes.
Okay. Yield would be 12% to 12.25%?
Yes.
And ticket size would be?
About INR 200 crores.
INR 200 crores. And ticket size in the corporate book that we used to have earlier, that was?
That was about INR 350 crores, INR 400 crores.
The next follow-up question is from Harshit Toshniwal from Premji.
Sir, sorry, one thing which is left. Sir, I'm just trying to do a calculation that we have INR 630 crores of quarterly disbursement in affordable, roughly INR 200 crore per month, and you said 70% is in-house. So that converts to INR 150 crore of disbursal per month in the affordable. Am I right till here?
Yes, you are right.
Just one question is that if you say that 400 employees is what we have in this segment sales, then that was to something like a INR 3.7 million per employee per month disbursal, which is, say, 2x, 3x of any other year. So if you can help me that is our direct sourcing or basically non-in-house sourcing much higher than 30%? Or where am I going wrong? Because INR 3 million to INR 4 million disbursement per employee per month would mean sourcing of at least INR 7 million, INR 8 million...
Yes. Harshit, I'll just clarify that. So 400 employees that we talked about, these are like all the full-time employees in Roshni business, they are spread across sales, credit, operations, legal, technical, all the various functions, right? Plus on the top of that, we see -- when it comes to our DST team, the feet on field that we have, the sales staff, the front line sales staff, that is managed through our subsidiary which is PHFL and that number for sales right now is around 900.
So just to clarify further, if I take a monthly volume of about -- so September, we did INR 275 crores. Out of that, about 59%, close to 70% of business was sourced in-house through the 900 people. My average productivity per sales staff, per sales employee, typically is around INR 20 lakh to INR 25 lakh per month. I hope that clarifies.
Yes, that helps, sir. Because this 900 is basically are -- so it's a 100% subsidiary which does sales for us.
That's correct.
And the cost of this will be more the -- I just wanted to understand more about the subsidiary. Does this source purely for PNB Housing Finance in affordable or other...
Yes. No, not specifically for affordable. They support all the three businesses, prime, emerging markets as well as affordable. But these 900 people are dedicated affordable business sales staff.
And they do business only for PNB Housing.
Yes.
Ladies and gentlemen, we'll take that as the last question. I would now like to hand the conference over to the management for closing comments.
Thank you, everyone, for joining us on the call. If you have any questions unanswered, please feel free to get in touch with Investor Relations. The transcript and the audio of this call will be uploaded on our website. That is www.pnbhousing.com. Thank you.
Thank you very much. On behalf of PNB Housing Finance Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.