PREPARED FOR THE NEW NORMAL
It gives me immense pleasure to write to you as the Chairman of your Company andpresent the 33rd Annual Report and consolidated financial statements of PNB HousingFinance Limited (PNB Housing) for the financial year ended March 31 2021.
The COVID-19 led pandemic which unfolded during the last quarter of FY 2019-20 hadunprecedented impact on the human life as well as economies across the globe. The completelockdown witnessed during the first quarter had a deep impact on the economy and led tosteep fall in the domestic output. A series of measures taken following the unlock phasehelped the economy recover in the second half of the year. However the pace of recoverywas impacted again by the second wave which resulted in localized restrictions in movementand economic activities.
The healthcare and the frontline workers have been the pillars of support during thesechallenging times and we are forever grateful to them for their unconditional services.
At PNB Housing we supported the government's initiatives to help individuals andbusinesses by implementing measures like moratorium Partial Credit Guarantee Scheme 2.0Emergency Credit Line Guarantee Scheme; and also participating in Special RefinanceFacility Targeted Long-Term Repo Operations deferment of interest on working capitalfacilities among others.
The RBI took decisive steps to ease the monetary policy to help the economy recoverfrom this unprecedented shock. There have been subsequent cuts in repo rates to supportliquidity. The RBI pushed more than Rs 2.7 lakh crores through Open Market Operation (OMO)purchases between February 6 and December 04 2020. Targeted long-term repo operations(TLTROs) of up to three years' tenure of a total amount of Rs 1.13 lakh crores forinvestment in corporate bonds commercial papers (CP) and non-convertible debentures(NCDs) in addition to injection of Rs 1.25 lakh crores through Long-Term Repo Operations(LTROs) were conducted in February-March 2020.
GROWING OPPORTUNITIES FOR THE HOUSING FINANCE COMPANIES
While housing demand was deeply impacted during the first half of FY 2020-21 thesituation improved in the second half owing to the pent-up demand falling interest ratesand the extension of the credit subvention scheme for the affordable housing segment.Post-pandemic there has been an incremental need for owning home rather than renting out.
The cumulative growth in on-book portfolio of HFCs for 9M FY 2021 (December 2020 vs.March 2020) stood at 2%. However the second half of the year witnessed recovery in demandleading to a gradual increase in disbursements nearing the pre-covid levels. The totalhousing credit increased from Rs 21.1 lakh crores as on March 31 2020 to Rs 22.1 lakhcrores as on December 31 2020. The disbursements started picking up from Q2 FY 2021onwards and the overall on-book housing loan portfolio of NBFCs/HFCs and banks isestimated to have reached Rs 22.1 trillion as on December 31 2020. Supported by portfoliobuyout banks continued to outpace the disbursement growth. The overall HFC credit inIndia is estimated at Rs 11.3 lakh crores as on December 31 2020 with exposures acrosshome loans (HL) loan against property (LAP) construction finance (CF) and lease rentaldiscounting (LRD).
Driven by robust demand and liquidity support from its bankers depositors debentureholders and the National Housing Bank the portfolio growth in the affordable segmentremained higher at 8% in 9M FY 2021 following the growth of 18% in FY 2019-20. Withunwavering demand the segment is expected to continue growing at a faster pace than theoverall industry.
The second wave has slowed down the recovery for the overall economy including the realestate sector. However with accelerated vaccination program to inoculate the populationis driving the hope for a faster turnaround with major global rating agencies and expertsanticipating a double-digit growth for the economy.
EVOLVING WITH DYNAMIC ENVIRONMENT
While we remained cautious during the year under review in terms of new business weutilized this time to chalk out a new strategic roadmap which help bolster our position inthe industry in the coming years. We have accelerated our digital journey and embarked oncontactless customer onboarding and disbursal one of the firsts in our sector to do so.We have sharpened our focus around the affordable housing segment and created a dedicatedproduct and infrastructure to help strengthen our presence. We are leveraging the power ofdigital and analytical tools to strengthen our processes including recovery and riskmanagement and to create a much stronger institution going forward. We will continue toservice our customers and help fulfilling the dreams and aspirations of owning a house formillions of Indians.
Even with the contraction in the economy in the same fiscal year your company hasfocussed on retail business portfolio quality recorded a decent income which translatedinto 44% year-on-year growth in Profit after Tax. This became possible due to the effortsof all the stakeholders and efforts of employees of the Company who have workedthroughout the year in COVID cyclone.
Distribution Strategy Technology Customer Centricity & Corporate SocialResponsibility are your company's key strengths. The company has pivoted its distributionstrategy around an array of products that helps to drive sustainable growth in business.The hallmark of our product bouquet is Innovation Affordability and Flexibility. With thechanging paradigm in the housing sector our strength lies in our efficiency to underwriteall categories of customers and nurture strong relationships with our business partnersand stakeholders.
With our retail focus and especially on Affordable Housing Segment we remain steadfastin supporting PM's Mission of Housing for All'. The current scenario highlights theurgent need to accelerate a sustainable business environment and PNB Housing Finance iscommitted and prepared to lead the change and build a healthy and progressive housingfinance company.
I take this opportunity to thank our fellow Board Members for their unflinchingsupport the leadership team and strong team of employees for their efforts to steerthrough the challenges and create a stronger PNB Housing Finance for tomorrow. I also wishto thank the Reserve Bank of India the National Housing Bank the Securities and ExchangeBoard of India and the Stock Exchanges for their continued support.
I am also thankful to the shareholders for their overwhelming support during thick andthin. I expect that we are building a stronger PNB Housing Finance which will addsignificant value in the coming years.
CH. S. S. Mallikarjuna Rao