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Edited Transcript of PNBH.NS earnings conference call or presentation 24-Oct-19 12:30pm GMT

Q2 2020 PNB Housing Finance Ltd Earnings Call

NEW DELHI Dec 4, 2019 (Thomson StreetEvents) -- Edited Transcript of PNB Housing Finance Ltd earnings conference call or presentation Thursday, October 24, 2019 at 12:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Deepika Gupta Padhi

PNB Housing Finance Limited - Head of IR

* Kapish Jain

PNB Housing Finance Limited - CFO

* Sanjaya Gupta

PNB Housing Finance Limited - CEO, MD & Director

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Conference Call Participants

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* Aayushi Mohta;CD Equisearch Pvt. Ltd.;Research Analyst

* Abhijit Tibrewal

ICICI Securities Limited, Research Division - Research Analyst

* Amit Premchandani

UTI Asset Management Company Limited - Fund Manager

* Nidhesh Jain

Investec Bank plc, Research Division - Analyst

* Nischint Chawathe

Kotak Securities (Institutional Equities) - Senior Analyst

* Piran Engineer

Motilal Oswal Securities Limited, Research Division - Research Analyst

* Ronak Vora;AUM Fund Advisors LLP;Equity Research Analyst

* Subramanian Iyer

Morgan Stanley, Research Division - Equity Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, good day, and welcome to the PNB Housing Finance Limited Q2 and H1 FY '19-'20 Earnings Conference Call. (Operator Instructions) Please note that this conference is being recorded. I now hand the conference over to Ms. Deepika Gupta Padhi. Thank you, and over to you.

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Deepika Gupta Padhi, PNB Housing Finance Limited - Head of IR [2]

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Thank you, Steven. Good evening, and welcome, everyone. We are here to discuss PNB Housing Finance Q2 and H1 Financial Year '19-'20 Results adopted as per Indian Accounting Standards. With me, we have our leadership team represented by Mr. Sanjaya Gupta, Managing Director; Mr. Shaji Varghese, Executive Director, Business Development; Mr. Ajay Gupta, Executive Director, Risk Management; Mr. Anshul Bhargava, Chief People Officer; Mr. Sanjay Jain, Company Secretary and Head of Compliance; and Mr. Kapish Jain, Chief Financial Officer. We will begin this call with the overview and performance update by the Managing Director, followed by an interactive Q&A session.

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 statements to reflect future events or circumstances. A detailed disclaimer is on Slide 2 of the investor presentation available on our website.

With that, I will now hand over the call to Mr. Sanjaya Gupta. Over to you, sir.

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [3]

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Thank you, Deepika. Good evening, everyone. Welcome all to our quarter 2 and H1 financial year '19-'20 earnings call. You must have seen our business and financial numbers in the presentation and the press release shared on the Indian stock exchanges and is also made available on our website. In this call, I would like to spend more time talking about both qualitative and quantitative aspects of our business and assets under management, liquidity position and capital growth.

Despite the challenging environment, the company continues to mobilize resources from various sources like bank term loans, ECB deposits, securitization via direct assignment route, et cetera. Numerous measures announced by the government and the RBI has all -- has adequately helped in infusion of liquidity in the sector and reposing confidence.

The company incrementally mobilized INR 45,000 crores post the liquidity crisis of September of 2018, that is over the last 4 quarters. The company enjoys a very strong deposit franchise, supported by highest rating of FAAA for deposits from CRISIL Limited and is the second highest deposit mobilizer in the HFC sector. We mobilized more than INR 1,000 crores and acquired over 17,000 deposit accounts in the month of September 2019, growth of over 2.5x from September 2018. These deposits are sticky in nature with tenure ranging between 30 to 36 months and renewal rates of over 40% by value.

Deposits as on 30th September, 2019 stand at INR 17,179 crores. That is 20% of our total financial resources. With INR 15,108 crores of securitized book as of 30th September 2019, the company has developed expertise in securitization through the direct assignment route.

As on September 30, 2019, our securitized book is of 36 months vintage, with gross nonperforming assets of only 0.19% or 19 bps. With an objective to contain gearing, the company securitized INR 3,580 crores in quarter 2 of the current financial year. With our continued focus on the long-term borrowings, securitization and sell-down of corporate finance assets, the ALM gap across buckets has further contracted. The negative balance of INR 1,959 crores in less than 12 months window as of 31st March 2019, reduced by about 30% to INR 1,371 crores as on 30th September 2019.

RBI's announcement of raising the limit for on-lending of housing loans up to INR 20 lakhs to be qualified under PSL is another beneficial view for the company, as around 20% of our individual home loan falls below the INR 20 lakh bracket.

On our resource profile, 22% is contributed by nonconvertible debentures; 22% by banks; 20% by deposits; 17% by direct assignment; 8% refinance from the National Housing Bank, NHB; and 6% through external commercial borrowings; and 5% are the commercial papers. The company has raised ECB of $175 million from multilateral institutes like IFC Washington, DC and multinational bank like SMBC, reposing their faith of the operational robustness of the company.

The company has maintained adequate cash and liquidity investments of INR 4,557 crores as on 30th September 2019. Additionally, the company has healthy pipeline of sanctions from banks and financial institutions. On capitalization front, our CRAR as on 30th September 2019 is at 15.67%, with Tier 1 at 12.69%. This has improved from CRAR of 13.98% with Tier 1 of 11% as on 31st March 2019. The improvement is primarily due to the reduction in corporate loan book and securitization of our retail assets.

Please note that the CRAR numbers are as per IGAAP, net own funds and does not consider the positive impact on net worth arising out of IndAS adjustments.

The average gearing of the company is at 9.2x during H1 of financial year '19-'20, which has improved from 9.3x during financial year '18-'19. As on 30th September 2019, we have assets under management of INR 89,471 crores; retail assets of INR 72,595 crores, constituting 81% of the AUM. We continue to focus on building our retail book during the year.

Geographically, West is our largest market, with 40% of assets under management, followed by North and South at 30% each. We have limited presence in East, with 3 branches, 2 in Calcutta and 1 in Bhubaneswar, which forms a part of the North zone.

In our retail segment, which comprises 81% of the AUM, individual housing loans constitute 59% of the AUM; retail loan against property, that is, retail loan -- LAP constitutes 18%; and retail nonresidential premises loans are at 4% of the AUM.

In the individual housing loans segment, funding towards completed properties is around 79%. Even on incremental disbursement, the individual housing loans disbursed in H1 of current financial year under the APF category is lower by 21% compared to H1 of the previous year.

Our retail LAP segment consists of loans, primarily disbursed for working capital to the SME customers. Our LAP book has an average ticket size of INR 47 lakhs, with loan-to-value of 50%. Majority of our LAP customers are credit tested with average monthly income of INR 2.1 lakh per month. LAP portfolio includes 82% of self-employed customers in the age bracket of 40 to 55 years. There are queries raised around the average ticket size of the retail book. The company is into mass housing and over 75% of its retail loans are under the -- are under INR 1 crore.

In our retail loans, only 20 accounts are with an average ticket size of over INR 15 crores, which is just 0.6% of the retail assets with 0 NPA. You may also refer to a detailed slide on this shared on our investor presentation.

The corporate loan book as of 30th September 2019 is 19% of the assets under management, down by 1% on a sequential basis. This constitutes 12% as construction finance, 4% as corporate term loans and 3% as lease rental discounting.

Our lending in this space is primarily to marquee real estate developers and repeat customers. During H1 of the current financial year, the corporate book witnessed natural runoff of 6.33%, excluding a sell-down of INR 842 crores, which was in LRD. As on 30th September, our corporate book is spread across 156 unique developers, down from 163 as on 30th June, 2019. Construction finance is spread over 118 developers and 158 residential projects. Our funding in the corporate loan book is primarily to the projects that cater to mass housing segment.

As on 30th September 2019, the company has funded over 73,000 units, with 94% of the units having ticket size up to INR 1 crore and up to -- and from INR 1 crores to INR 3 crores.

During H1 of financial year '19-'20, principal repayment started in 38 accounts, having total outstanding of INR 1,492 crores. The amount collected in these facilities during the period is INR 230 crores. The top 20 developers with 62 loan accounts constitute 62% of the corporate book.

In our construction finance book, as on 30th September 2019, the under-construction percentage has come down to 57% as compared to 62% as on 30th June 2019. We have strengthened our existing teams and created specialized groups of skilled professionals from various teams to monitor, measure and proactively mitigate risk arising out of the current -- arising due to the current environment.

As informed earlier too, as a part of continuous monitoring, we had identified 5 accounts which were stretched. Initially, when we had identified these accounts, the loan outstanding as on 31st March 2019 was INR 908 crores, which has reduced by 8% as on 30th September 2019 to INR 833 crores.

On lines of conservatism and as a proven measure, we have created over 33% ECL provision in these 5 accounts, up from 21% as on 30th of June 2019. In addition to this, we have also increased the quantum of steady-state provision by INR 12 crores to INR 169 crores.

Out of these 5 accounts, 1 account, that is Ireo Private Limited with security cover of over 2.5x has moved into NPA in quarter 1 of financial -- of this financial year. As mentioned in our last earnings call, the developer had approached with a structured new payment plan. As a result, the developer deposited INR 39 crores resulting in principal outstanding reduced to INR 111 crores. We continue to work with the developer on the structured payment plan and expect to resolve this account by the end of the current financial year.

The largest corporate exposure of the company is to Lodha Developers. The company has given them 2 loans amounting to INR 1,250 crores for 2 projects, that is, Lodha World One and Trump Towers. The company is the sole lender in both these cases. We have long-term relationship with Lodha, and these are our fourth and the fifth facilities to them. The earlier 3 facilities were either prepaid or timely repaid. Our security cover in these projects is more than 1.5x, along with the personal guarantee of the promoter. There is no pending regulatory approvals and construction risk on this project is next to 0. To boost sales, the developers have undertaken an intense sales drive.

With the challenging environment, the company has not only significantly reduced corporate loan disbursement, but has also tightened its lending norms, restructured the entire team and heavily invested in IT enablement of the workflow to further make operations robust and world class. We would continue to remain cautious in lending to this segment till we see positive development and improvement in the sector.

Gross NPAs as on 30th September 2019 is at 0.84% of the loan assets. The gross nonperforming assets on retail loans is at 0.84% and on corporate loans is at 0.83%. The gross nonperforming assets on the AUM is at 0.73% as on 30th September 2019.

As a result of effective use of SARFAESI, the gross nonperforming assets on sequential basis in absolute terms has come down by INR 21 crores from INR 645 crores as on 30th June 2019. In this regard, I would also like to mention that the life to date write-offs by the company is just 6 basis points on the cumulative disbursements.

As on 30 September 2019, our total provisions to assets stand comfortably at 1.2%, and the provision coverage is at 143%. The Board of Directors of the company approved the capital raise plan up to 2,000 crores. The Shareholders Relationship Committee is overseeing the capital raise plan.

Today, the Board was appraised on the current status of the capital raise. The trade is currently under process, and we will come back to the market in the next few weeks time with an update. The Board is in synchronization with the management and plan and approach towards the capital raise.

The company further strengthened the financial stability. The profit after tax for H1 of 2019 and '20 stood at INR 651.3 crores as compared to INR 508.8 crores for H1 of '18-'19, a growth of 28%. The spread on loans for H1 during the current financial year is 256 basis points. Excluding the assignment income and other IndAS adjustments, that is as per IGAAP, the spread on loans for H1 of the current financial year is 206 basis points. Net interest margin for H1 of the current financial year is 316 basis points.

The gross margin, net of acquisition cost and including fees for H1 of the current financial year stood at 344 basis points against 319 basis points during H1 of the previous financial year.

The OpEx to average total assets, or ATA, for the financial year, excluding ESOP cost of INR 16.8 crores, being more of an accounting provision, stood at 56 basis points. This includes employee cost of our subsidiary company, PHFL, which largely houses the in-house sales force.

The cumulative ECL provision as on 30 September 2019 is INR 725 crores. As a prudent management with the positive impact of corporate tax cut, the company added an additional amount of INR 12 crores in the steady-state provision for contingencies amounting to INR 169 crores.

The return on assets for the period is at 1.58% compared to 1.47% of the previous financial year. On average gearing of 9.2x against 8.9x during the previous financial year, the return on equity for H1 of '19-'20 is at 16.74% compared to 15.54% for H1 of the previous year.

The closing net worth as per IndAS as on 30th September 2019 is INR 8,035.3 crores.

Now let me talk about the business performance. During H1 of the current financial year, we registered a degrowth of 4% in loans file logins compared to the corresponding period of the previous financial year. The disbursements degrew by 31% to INR 12,604 crores vis-à-vis INR 18,172 crores during H1 of the previous year.

The company during Q2 of the current financial year securitized INR 3,580 crores of its retail loan portfolio, both home loans and LAP, through the direct assignment route totaling to INR 5,898 crores. With consistently superior asset quality and good proportion of priority sector lending, the company's portfolio continues to enjoy a good demand from banks, HFCs for pool buyout.

Net of the assigned loans, the loan assets of INR 74,353 crores as of 30th September 2019, representing a healthy growth of 11% year-on-year.

During H1 of financial year '19-'20, out of the total individual housing loan disbursements, around 28% by value was in less than INR 25 lakh category, which can be termed as affordable housing. With stabilization of our branch network in Tier 2 and Tier 3 cities, we look forward to growing the contribution of affordable segment in our individual loan portfolio.

On CSR, our continuous endeavor under the Saksham program is in line with our philosophy to enable the marginalized community in becoming capable and self-reliant. We work in construction -- we work for construction labor skills enhancement trainings, day care centers, education and health care under our CSR program. We have a strong 1,684 full-time employee team as on 30th September 2019. The company continues to maintain a balanced approach to business and growth with focus on asset quality and profitability. The primary focus of raising equity, maintaining adequate liquidity with matching ALM, robust asset quality and reduced gearing, the company expects to maintain the current run rate of disbursement for rest of the financial year '19-'20, with increased share of retail business.

With this, we would now open the floor for questions and answers. Thank you very much.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from the line of Amit Premchandani from UTI Mutual Fund.

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Amit Premchandani, UTI Asset Management Company Limited - Fund Manager [2]

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Thanks for a very comprehensive outlook. I just had a question on the capital raise. That part of the outlook was still not clear in the sense, there is no timeline mentioned in when will we raise capital. And we expected that by calendar year 2019, you will be able to raise capital. So does the timeline hold? And what is the amount that you're likely to raise?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [3]

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See. The amount is INR 2,000 crores, which is already approved by the Board. The volatile external situation has been forcing the BRLM, the management and the Board to keep on changing the format. And I think in the time frame of 2 to 3 weeks from now, because we really deliberated the entire day with our Board and our Stakeholders Relationship Committee, I think we are going to come out with a firm sort of a format and not the sort of in the gray. And certainly, we will reach out to all of you and update you. So I would say, just bear with us a little bit more. It is actually -- this entire, I would say, deferment has happened because of the external environment, especially for HFCs. And believe me, it is our endeavor to maintain liquidity, reduce gearing, be solvent. We are able to raise liabilities. And within 15 to 20 days, I'm sure that we should be detailing the Street and our roadshows will commence. We are very, very clear on that. It looks that probably the -- I mean, the inflow of capital will not happen in this calendar year, but should certainly happen by February of 2020. We had very detailed discussions with all the Board members, the 2 large stakeholders represented on the Board, and it was a very empowered and, I would say, very focused meeting that we had today.

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Amit Premchandani, UTI Asset Management Company Limited - Fund Manager [4]

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What is the primary reason of the timeline changing from December 2019 to Feb 2020?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [5]

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Well, basically, it is that because of the external volatility, we could not go to the market or reach out to the market being an HFC. And I still -- once after Diwali, we'll again gather and we sort of, along with our BRLM, we should have a very strong capital raise plan, and we will hit the market by -- in another 3 weeks' time. And we are sure that we will get commitments before we start doing our roadshows.

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Amit Premchandani, UTI Asset Management Company Limited - Fund Manager [6]

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And your expectation was that it will be preference capital. Now that we -- now we should expect QIP? Or it is still a preference...

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [7]

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Well, I would still say that the format is not yet closed out, but to highlight you because we have a large FDI also which owns a large stake in the company and FDIs cannot participate, I think it is going to be a combo of rights or a combo of 2 things like that.

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Amit Premchandani, UTI Asset Management Company Limited - Fund Manager [8]

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So it may be a rights issue also?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [9]

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Well, it can be.

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Amit Premchandani, UTI Asset Management Company Limited - Fund Manager [10]

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And sir, on the margin front, even in this environment, without doing the corporate book, which is a larger -- higher-margin book, your margins are going up. How much of the core margins, excluding assignment, had gone up?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [11]

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So basically, the core margin without assignment has gone up from 198 to 206. And I think that in quarter 3, it should climb up. It's my estimation, don't hold me. And it's not a forward-looking statement. It is just a guess of a product manager, should go up between 11 to 12 bps more. Because the full impact of the reference rates, which we did change in June, will take about 105 days to firm at a portfolio level. And I think we should be buying on at about 213, 214 basis points without the assignment income.

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Amit Premchandani, UTI Asset Management Company Limited - Fund Manager [12]

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What is the current, sir, 213 basis points that you want to see?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [13]

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No. Today, it is -- the floor is 206.

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Amit Premchandani, UTI Asset Management Company Limited - Fund Manager [14]

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206 is the spread, right? Not margins?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [15]

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It is the spread. It's the yield on portfolio minus the cost of funds.

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Amit Premchandani, UTI Asset Management Company Limited - Fund Manager [16]

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Right. So margin would be slightly high -- could be north of 3?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [17]

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Yes. It is, 315.

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Amit Premchandani, UTI Asset Management Company Limited - Fund Manager [18]

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Core, core?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [19]

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What do you mean by core?

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Amit Premchandani, UTI Asset Management Company Limited - Fund Manager [20]

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The difference between -- what is the margin, NIM.

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [21]

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Yes. The NIM is about -- is at 3.16%. It is there. We're doing that.

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Amit Premchandani, UTI Asset Management Company Limited - Fund Manager [22]

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That would be including margin -- assignment or without assignment?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [23]

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Including.

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Amit Premchandani, UTI Asset Management Company Limited - Fund Manager [24]

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Yes. I was just asking without the assignment, sorry.

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [25]

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Yes. That is included.

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Amit Premchandani, UTI Asset Management Company Limited - Fund Manager [26]

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Okay, sir. And what is the status of the 4 accounts out of the 5? One is NPA.

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [27]

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Okay. I'll give you details. So just it is -- so 19% of the AUM is of corporate book and CF is 12%, corporate term loans is 4% and LRD is 3%. The top 20 developers, they contribute to 62% of the book, right? Now coming to 4 accounts. Now one is IPL Gurgaon, which is an NPA of INR 111 crores, and the developer deposited INR 39 crores in this quarter. And that is how it came down from INR 150 crores to INR 111 crores. The ECL provision is 37%, and we continue to work with the developer and expect to resolve this account by the end of the financial year.

The second one is Supertech, Gurgaon, which is Stage 2, and the outstanding loan amount is INR 244 crores. The ECL provision is at 36%, and we are working towards ensuring remoteness to bankruptcy in this account. Once that is in place, the option is to get additional funds for the project and taken -- and we have also taken additional collateral on an exclusive charge basis to further secure our loan. Out of 16 towers in Phase 1, 8 towers are in advanced stage of construction and the civil work is 85% completed, and 80% is also sold.

The third one is Ornate, Mumbai. This is Stage 1. The outstanding loan is INR 181 crores. The ECL provision is 32%. All approvals are now in place for additional FSI. Due diligence is being done by Shapoorji Pallonji to be a joint venture partner.

JBS Group, Mumbai, Stage 2. The outstanding loan amount is INR 259 crores. ECL provisioning is of 35%. Fresh evaluation of the project is completed. Requirement of additional funds has been identified. Work on project site has started with focus on completing the retail commercial area, which is majorly sold and has committed receivables. She is in talks with a private equity firm and a few financial institutions to fund incremental debt requirements.

Then is an Ireo Waterfront, which is a Ludhiana project. This is in Stage 2. Outstanding loan is INR 38 crores. The ECL provision here is small as -- because our security cover is almost 6 to 7x. The developer has offered structured payment plan and paid around INR 7 crores. We continue to work with the developer and expect to resolve this account by the end of the financial year.

We have created specialized teams of sales professionals of various streams and faculties to monitor, measure and mitigate the increase in risk due to ongoing systemic environment.

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Operator [28]

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The next question is from the line of Piran Engineer from Motilal Oswal Securities Limited.

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Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [29]

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Congrats on the quarter. I had a couple of questions. Firstly, what percentage of our deposits come from retail sources?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [30]

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86% by value.

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Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [31]

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Okay. Which means that our average ticket size is INR 6.5 lakhs to INR 7 lakhs per deposit?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [32]

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No. Our average ticket size per deposit is about INR 1 lakh.

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Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [33]

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But then -- I mean, it doesn't add up.

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [34]

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Well, okay, okay. Sorry, sorry. I stand corrected.

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Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [35]

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So, it's INR 7 lakhs?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [36]

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Yes. It is INR 6 lakhs, INR 7 lakhs.

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Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [37]

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But how are we able to get such high-value deposits? Because our...

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [38]

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(inaudible), we will also do it.

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Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [39]

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No. That's fine, but like Bajaj Finance's average ticket size is probably half of that...

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [40]

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See. Our...

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Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [41]

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And it's a similar-sized book also. 2 lakh depositors, INR 15,000 crores, INR 16,000 crores of...

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [42]

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The thing is that -- is the customer profile and the way the brand has been positioned in the target audience. And our broker and our franchise network, our relationship managers, our service standards. I mean, you take that, on the 36th minute of your SMS coming from the bank that your account has been debited, your deposit will be there through a unichannel, whether you want it on e-mail, you want it physical, you want at home, you want in office, you want at broker, you want in our branch. That is the type of automation, accuracy, dedication and service orientation, that's our products or our services. We have very predictable service standards.

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Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [43]

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Understood, understood. That's good to know. So secondly, why is our OpEx so low this quarter? Are there any one-offs? Or is it just -- for example, other OpEx is down from INR 57 crores last quarter to INR 44 crores. Even on a Y-o-Y basis, our overall OpEx is down while the book has grown. So...

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [44]

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So one is that, as we have been saying over the years that this organization has been investing a lot on infrastructure, on technology, on [scaling], on people development, on expanding the team, branch network, hub creation. Now this is a year of consolidation. So you have started seeing the colors of our past investments, and you have started seeing optimization of capacity utilization. And I think we are in a state where the expense on running the company has stabilized because, frankly speaking, there is no branch which has been added. On the technology side only, we are working on the wholesale or the corporate finance part because most of our digitalization was completed, most of our information security initiatives got completed. Our top CTC is totally digitalized. So primarily is that whenever a high-growth company takes a little pause, the incremental costs don't add up. And if you have been following these earnings calls of ours, I've been again and again saying that 30% of capital expense hits you in the same financial year as a revenue expense because of where it creates taxes salary, depreciation, AMT, et cetera, et cetera. So that has not sort of -- and that is why even in the previous earnings call, we used to bifurcate our OpEx into steady state and for capacity building. And that capacity building has actually stabilized, and we are optimizing the past capacities, and hence, the OpEx is showing its colors.

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Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [45]

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That's true, but I mean, to be honest, you all have been not opening branches for the last 3, 4 quarters, but it's only in this quarter that there's a sudden dip. So I was...

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [46]

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Just a second. And that is what I keep saying, this is annuity business. Your cost will give you -- first, your income will come with a lag even when our business incremental disbursements have degrown by 31%. Our profit are really smart, right, because whatever buildup you did in financial year '19 had a full year impact this year. And the lucky part is that we did smart business in quarter 1 and half of quarter 2. And in quarter 3 and quarter 4, the flow will start coming in.

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Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [47]

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Okay, okay. Let me put it this way. For every incentive that you'll pay a sales employee for disbursement, do you all upfront that expense in the quarter? Or is it amortized?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [48]

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No. The incentives will also be amortized.

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Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [49]

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It will be amortized?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [50]

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Upfronting will only be for the fixed salary. The variable salary -- the variable component of salaries will be amortized for the life cycle of a product.

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Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [51]

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Makes sense. Makes sense. And sir, last question. When you mentioned that the run rate of disbursements for the rest of the year will be similar to 2Q, this is assuming that you all do not raise capital?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [52]

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No, no.

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Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [53]

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The trajectory would be...

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [54]

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So let me be very, I mean, kind. Today, I mean, yes, we have a capital constraint. But the fact of the matter is that there has been so much of, I would say, apprehension in the sector. For example, you did not pick up on that line that when, at an industry level, under-construction properties are 68%, we are only 21%. And this is not overnight that you can bring about this change. This change, we have been building about ever since November of '17. Let me say, we were the first people to forecast that there is going to be a tightening of liquidity. Now we could have (inaudible) that on the supply side, the credit flow will get constrained. So we started sort of be on the back fold even when we are doing retail under construction.

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Operator [55]

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The next question is from the line of Nidhesh Jain from Investec.

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Nidhesh Jain, Investec Bank plc, Research Division - Analyst [56]

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Sir, firstly, better cost of funding going up, and banks becoming very, very competitive. The spread between what the rates are being offered, let's say, PNB Housing or other HFCs, we have seen very sharp difference between the rates offered by SBI and some of the other players. So do we think that the competitive positioning for a company like PNB Housing has been weakened because of this? And only if market sentiments improve, we can be able to get funding at a competitive rate?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [57]

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See, one thing is -- you complete your question, then I will start my answering.

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Nidhesh Jain, Investec Bank plc, Research Division - Analyst [58]

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And secondly, what we have also observed in the bond market that HDFC and LIC have been able to get funding, especially recently at quite competitive rates. So what is the conversation that you are having with bondholders? And what is putting them -- what is securing them to give you money at a same rate of comparable rate to the likes of HDFC and LIC Housing Finance?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [59]

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Okay. So the first thing is, we have never been competing with the large public sector banks on price. We -- you would see that over the last 10 years, we have never advertised any of our loan asset to RAG with a coupon rate. We have right transfer credit, and we have been doing it from day 1. Yes, we arbitrage between our rate and the lowest rate has wide range. A, we are not going to walk that path at all even if my cost of funds is that low because it does not make any business sense.

The second thing is, as we said, we are basically -- we have created a differentiator now demonstrated over the last 8 to 9 years that we can acquire, underwrite, deliver of dignity and manage self-employed individuals very well. And there, the opportunity to price credit at our price point is still very modest. The opportunity to earn non-funded income is very small. The opportunity to cross-sell fee-based products, third-party products is very small. And even after the portfolio getting tested by demonetization by GST, by the current liquidity tightening, the portfolio is best in class. And if you were to see a securitized portfolio of almost INR 16,000 crores with the 39 MOB, the gross NPAs are only 19 basis points. So that is the type of quality differentiator we bring at the right price.

So we are not the discount masters of the sector at all, and we have never been, we will never be. And that is the firm conviction with which this management works, the right price of products, right? So that is on that side. And that is why when it comes to retail properties and completed properties, we have an edge with the -- with our other players. Yes, the process of acquiring is very widely dispersed. It is really good. The process of delivery has to be very robust because the sale deed has to be done along with the transaction, and the protection of mortgage happens on the day the disbursement check, the physical check, is given. It gets honored later on, but the mortgage creation happens much before.

And so that's about the competition, about our sort of segment specialization, our veracity, our tenacity, our robustness, our systems, our digitalization, et cetera. And we are very sure that with the advanced technology that we have across this company, we are going to further optimize, utilize. I will never use the word exploit. We don't never exploit any resource. And so that's about it. We are very confident.

And the real estate developers also like us for that because we bring in a new segment of customers to their business that we start selling properties not only to salaried people, but also to self-employed people. And in India, 73% of new housing gets created by self-employed people, and there are only 23% penetrated. So it's a huge opportunity. There's a huge -- there is huge headroom to grow. So we are very positive. We never competed even in days when our cost of funds were as low as anybody else. We never competed with the brand names that you took, right? And that is why we were able to grow because we never -- we created the -- actually we, I would say, resized the market for formal sector lending. So that's what we have brought to the business as a nation builder, right?

Now coming back to the bond market. Well, yes, there have been a lot of, I will say, secondary, market, I would say, dumping a little bit of our bonds, at the moment, high spread. We have chosen the people. The retail that the same people also subscribes to our new bond issuances, and they like to sell it in the secondary market at a discount. That market dynamics, we are never going to do any buybacks. I'm not going to fall into that trap and snowball that effect. And we -- I really wish I was wanting that large bond to come our way today or yesterday, but I'm very hopeful that any market that goes upon our way for a very extended term from a large marquee brand. And we are going to have our shareholders with anybody and everybody.

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Nidhesh Jain, Investec Bank plc, Research Division - Analyst [60]

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Sure, sure. And secondly, sir, on the corporate book, there have been a lot of concerns across the board. But as of now, the opportunities that you have disclosed, there's attrition. There has not been any attrition to NPA. So how is the quality? Do you expect this to change over a period of time? And any accounts which you think may get added to that?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [61]

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So when we manage a portfolio, whether it is retail or it is corporate, the forward flow, the backward flow, their stabilization, their normalization. So that is a job of annuity lender. So yes, I would say -- I would really wish that these 4, 5 names get out. And if one of them comes, then so be it. And in the past also, when this entire fury of corporate finance was not there, it was the fact that there were no forward flows and there were no regulations and there were no maturing of accounts. So it's a continuous process. And unfortunately, this entire thing has gone, blown out of proportion. And we can -- we welcome anybody who really wants to come and talk to Deepika, our Head of Investor Relationship. We are exhausted with -- if it was not for the fair practice score, we were wanting to put it up on the entire portfolio on our website. But our capital market lawyers didn't agree to it last evening, and I was disappointed by my lawyers. And my team worked very hard on those all 168 accounts, and you can give me your business, but we were advertising in these.

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Nidhesh Jain, Investec Bank plc, Research Division - Analyst [62]

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Yes. And just lastly, let's just be clear on one more question on corporate account -- corporate book. There is a perception in the market that some of the loans have been advanced at a much lower yield. And this is a perception, which I have heard with some of the peers or some of the investors as well. So any comment on that? Or any...

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [63]

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(inaudible) So okay, the answer is what is the definition of corporate finance or construction finance? There are a lot of people saying we are not right pricing our credit. If you go on our website, we very diligently follow transparently in a truthful manner disclose that all of our construction finance loans are for ready to date where the land has been aggregated, consolidated, converted, plans approved, RERA-registered and formerly launched to Stage 4, as we decide, right?

And the -- if you see and you compare the pie of under construction of quarter 1 to quarter 2, you would also see the price moving and they are very completed, right, in that sort of formal and very, very marquee brands. And so this is a formal construction finance, and that is why the portfolio we can talk about it so openly, we can share everything. 94% is mark housing with marquee brands. Those brands, they go with a bond or an entity of their own balance sheet can probably do it at a much lower rate. So it would not be very kind to say that we have not right-priced our risk or our credit. So it can be the same development, my dear friend.

But what is that construction finance loan for? Is it for purchase of land? Is it for consolidation? Is it for aggregated? Is it for regulatory arbitrage that is approval? So it all depends that where are you entering with what brand, what is the rating, what is your security cover, what is your debt service cover, what sort of covenant, what quarterly monitoring are you doing, or you're just writing a single check and telling the developer, okay, you pay after 5 years.

Your utilization, sales velocity, collection efficiency, operation, operational compliances, your escrow compliances, litigations, everything, these are 5, 6 working that they have terminated attributes, a team of qualified people work quarterly to monitor what we agreed as our time of loan sanction and what is the reality. And we do this sort of RAG analysis with our Red-Amber-Green with our Board every 6 months.

So if we are -- our references are so stringent. Obviously, we will have to shave off a few basis points on the unit.

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Nidhesh Jain, Investec Bank plc, Research Division - Analyst [64]

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Yes. And just 2 more questions on the data point. One is that fee income has not dropped that much versus the disbursement drops that we had seen in this quarter. So what else are the reasons for that?

And secondly, the assignment spread. The assignment income as a percentage of loan assigned during the quarter has come down substantially over Q1 in this quarter? So...

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [65]

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So one is, the fee income has not come down as much as the disbursements have come down. A, the majority of the, I would say, the growth in disbursement has happened on the corporate side. From the retail side, the result is only 11%. So that is one reason.

The second reason is that the fee income also gets amortized. So there is a forward flow from the volume transfer. So it would not be very, I would say, precise to make that comment that if your loan disbursements have fallen by 32%, why your fee income has not fallen.

And what was the second part of the question?

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Nidhesh Jain, Investec Bank plc, Research Division - Analyst [66]

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Sir, assignment income as percentage of loan assigned within the quarter.

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [67]

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Yes, that spread is not as much as quarter 1 spread because this quarter, we did more of home loan PSL and not LAP. Last quarter, we did a lot of LAP.

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Operator [68]

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The next question is from the line of Abhijit Tibrewal from ICICI Securities.

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Abhijit Tibrewal, ICICI Securities Limited, Research Division - Research Analyst [69]

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So first thing is...

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Operator [70]

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Mr. Tibrewal, can you speak closer to the handset, please? Your voice is not audible.

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Abhijit Tibrewal, ICICI Securities Limited, Research Division - Research Analyst [71]

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Is it audible now?

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Operator [72]

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Yes, sir.

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Abhijit Tibrewal, ICICI Securities Limited, Research Division - Research Analyst [73]

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Yes. So sir, I wanted to understand, I mean, within your corporate loan book, I mean, all the qualitative projects that you have lent to, I mean, how much of the exposure would be under moratorium now?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [74]

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About half the book is under moratorium.

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Abhijit Tibrewal, ICICI Securities Limited, Research Division - Research Analyst [75]

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All right. And...

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [76]

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But there is more than 67%, but it has moved above 67% to the current one.

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Abhijit Tibrewal, ICICI Securities Limited, Research Division - Research Analyst [77]

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Okay. So from 67%, it's down to about 50% now?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [78]

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Yes, yes. And even during moratorium -- principal moratorium period, if there is a healthy cash flow than anticipated, the excess cash flow than anticipated from principal moratorium -- from principal repayment and in this first half of the year, INR 233 crores got repaid during principal repayment from these accounts, which were actually under principal moratorium.

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Abhijit Tibrewal, ICICI Securities Limited, Research Division - Research Analyst [79]

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Okay. And sir, what is the typical tenure of this moratorium? About 12 to 15 months?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [80]

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See, see, the -- okay. Now what happens is when you acquire a construction finance account, it also depends at what stage of construction you are acquiring the project. So if the project is acquired towards, let's say, 50%, 60% completion, the moratorium period will be shorter. But if a project is acquired at the nascent stage and construction, it's taking, let's say, 30, 35 months, the moratorium period will be around 30 months. So it all depends at what phase of a life cycle of a project, an account is acquired. So there is no, I would say, fixed that 60% of door-to-door term with this moratorium and 40% will be open for repayment. It is not like that.

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Abhijit Tibrewal, ICICI Securities Limited, Research Division - Research Analyst [81]

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Okay. And sir, out of these 4 corporate exposures which are under your watch list, I mean, are they currently all in the moratorium now?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [82]

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No, they are known. They are known. They're like IPL, as I said, they have repaid INR 39 crores (inaudible) move to repayment on it is that moratorium behavior is in moratorium is (inaudible) is in principal repayment.

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Abhijit Tibrewal, ICICI Securities Limited, Research Division - Research Analyst [83]

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Okay, okay. All right. And sir, during your opening comments, I missed, what is the retail GNP and the Corporate GNP now?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [84]

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Retail is that -- so this is at portfolio and balance sheet level, retail is 0.84% and corporate is 0.83%. There is 1 basis point difference. At a portfolio level, since it is only 89%, the corporate book, you can see 84 bps.

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Abhijit Tibrewal, ICICI Securities Limited, Research Division - Research Analyst [85]

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Okay, okay. All right. And sir, just one last bit. So out of the total retail disbursements, how much were disbursed into salaried and self-employed, if you could just broadly give me that split?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [86]

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It would be about 40 -- 60-40, 60 for salaried, 40 for self-employed.

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Operator [87]

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(Operator Instructions) The next question is from the line of Aayushi Mohta from CD Equisearch.

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Aayushi Mohta;CD Equisearch Pvt. Ltd.;Research Analyst, [88]

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Sir, what sort of disbursements amounting to around INR 850 crores have you made to contracts in H1.

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Kapish Jain, PNB Housing Finance Limited - CFO [89]

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Sure. Managed bond, INR 850 crore disbursement was [sold].

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [90]

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We have basically construction finance loans, where the projects are performing as per our stipulated guidelines, and these are partly disbursed loans where the demand have come.

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Aayushi Mohta;CD Equisearch Pvt. Ltd.;Research Analyst, [91]

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But sir, why are we increasing our exposure to corporates?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [92]

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It is not increasing my commitment to disburse. These loans are already partly disbursed. If I stop credit on the supply side, these projects will never get delivered. And there are so many people who are waiting for their homes. So I would not be a good, I would say, creditor for the project. So now I have 168 projects. We are committed, along with the developer, to deliver about 74,000 units. I cannot (inaudible) the ongoing projects.

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Aayushi Mohta;CD Equisearch Pvt. Ltd.;Research Analyst, [93]

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So sir, how much more...

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Operator [94]

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Sorry to interrupt man, but for any follow-up, request to rejoin the queue, please.

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Aayushi Mohta;CD Equisearch Pvt. Ltd.;Research Analyst, [95]

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No, but it's related to the same question. It is taken...

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Operator [96]

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Yes, man, I understand that, but as per the guidelines, we need -- you need to rejoin the queue, please.

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Aayushi Mohta;CD Equisearch Pvt. Ltd.;Research Analyst, [97]

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Sure.

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Operator [98]

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Thank you. The next question is from the line of Nischint Chawathe from Kotak Securities.

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Nischint Chawathe, Kotak Securities (Institutional Equities) - Senior Analyst [99]

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Hello? Am I audible?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [100]

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Yes, yes, yes.

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Nischint Chawathe, Kotak Securities (Institutional Equities) - Senior Analyst [101]

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Yes, sure. I just wanted to get the 1 or 2 numbers. What could be your Stage 2 loans?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [102]

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See. What is that?

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Deepika Gupta Padhi, PNB Housing Finance Limited - Head of IR [103]

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He wants Stage 2 loans.

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [104]

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So which Stage 2 loans?

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Nischint Chawathe, Kotak Securities (Institutional Equities) - Senior Analyst [105]

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You have given Stage 1 and Stage 2 loans put together at around INR 73,700 crores.

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [106]

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Yes.

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Nischint Chawathe, Kotak Securities (Institutional Equities) - Senior Analyst [107]

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I just wanted a breakup as to how much of this is...

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [108]

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Well, there are retail loans, so we have a retail base of 3 lakh customers. These are under the fair practice, so I cannot divulge these details of my customers, sir.

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Nischint Chawathe, Kotak Securities (Institutional Equities) - Senior Analyst [109]

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No. I just wanted a number in terms of between break down in [cube] between Stage 1, 2 and 3. So I just want...

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [110]

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We don't give those types of breakup, sorry.

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Nischint Chawathe, Kotak Securities (Institutional Equities) - Senior Analyst [111]

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Sure, sure. No issues. Just a qualitative color will be of the INR 12,000 crores of...

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [112]

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(inaudible). It is already in our annual report.

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Nischint Chawathe, Kotak Securities (Institutional Equities) - Senior Analyst [113]

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Sure, sure. I was just looking at a quarterly color, but that's fine, if it's not available.

The other thing was, if I look at the incremental resource mobilization of around INR 12,000-odd crores, it would give a broad qualitative color in terms of how much your rates from banks, mutual funds or whatever, some breakup of that.

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [114]

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Most of it is from banks, and mutual funds is basically CPs. Banks have very smartly gone up in the beginning of the year from, I think, 16% to 22% plus deposits. NCDs have been reformed.

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Nischint Chawathe, Kotak Securities (Institutional Equities) - Senior Analyst [115]

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And the NCD issuance number that -- on an outstanding basis, if I look at the activities that you had, it would be largely with mutual funds or different insurance as well?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [116]

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They are all mixed, provident funds, insurance companies and mutual funds. It's a mix and match. And that add to [RFP, ADB].

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Operator [117]

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The next question is from the line of Ronak Vora from AUM Advisors.

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Ronak Vora;AUM Fund Advisors LLP;Equity Research Analyst, [118]

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Hi, sir. It's one. Provide the geographical distribution of your retail book.

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [119]

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40, 30, 30. 40 is West. 30 is South. 30 is North. North (inaudible).

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Ronak Vora;AUM Fund Advisors LLP;Equity Research Analyst, [120]

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40 is North, right?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [121]

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40 is the West, West, West.

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Ronak Vora;AUM Fund Advisors LLP;Equity Research Analyst, [122]

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40 is West, and the rest is North.

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [123]

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South is the -- 40 is West, 30 is South, 30 is North.

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Operator [124]

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The next question is from the line of [Mohit Mangal] from CRISIL.

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Unidentified Analyst, [125]

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Sir, the credit costs have gone up substantially in 1H 2020. So do you have any guidance for the full year '20 for...

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [126]

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I think, see, what happened that we had -- one was, obviously, the tax reduction, and our portfolio behaved very well. Our spreads will increase. So we had a little bit of -- I would say, largely, we have (inaudible), and it has moved from 48 basis points to 80 basis points. And I think on an annualized basis, it should stabilize at about 60 basis points.

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Operator [127]

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The next question is from the line of Himanshu Khona from Morgan Stanley.

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Subramanian Iyer, Morgan Stanley, Research Division - Equity Analyst [128]

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This is Subramanian. I just have a data question, if you could split the income on assigned loans into gross income and expenses attributed to the pool.

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [129]

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Gross and expense?

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Subramanian Iyer, Morgan Stanley, Research Division - Equity Analyst [130]

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Gross breakup...

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [131]

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It is income only. What is the expense?

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Subramanian Iyer, Morgan Stanley, Research Division - Equity Analyst [132]

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So there would be essentially expenses that would be attributable to the pool that will be netted off, right?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [133]

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Yes. So there is also fee, so there's nullified. So unamortized expense and unamortized fee on a particular amount, whether it is sold out, 90% will get upfronted and will get normalized. And the remaining spread will get front-ended, and about 20 to 25 bps we assign for services.

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Subramanian Iyer, Morgan Stanley, Research Division - Equity Analyst [134]

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Yes. So it's possible to split that 110...

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [135]

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Every pool will have a different dynamics because some will be self-employed, let's say, housing services. Salaried house income will be LAP. So there is no thumb rule that I can tell you. Every pool has got different spreads, has got different unamortized COE, has got different unamortized upward fee.

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Subramanian Iyer, Morgan Stanley, Research Division - Equity Analyst [136]

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Okay. Got it. And the other question I had was also other data question, if you can provide the yields by product, both on a book basis and incremental basis.

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [137]

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I think the financing is on our website. This is not -- okay, I'll just give you. You want the incremental?

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Subramanian Iyer, Morgan Stanley, Research Division - Equity Analyst [138]

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As well as the on book.

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [139]

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Just on book, it is -- basically, home loans are at 9.74. LAP loans are at 10.88. Construction finance is at 12.77. LRDs are at 10.36.

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Subramanian Iyer, Morgan Stanley, Research Division - Equity Analyst [140]

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And these are annualized yields?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [141]

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These are annualized yields.

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Subramanian Iyer, Morgan Stanley, Research Division - Equity Analyst [142]

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Okay. And any sense of incremental?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [143]

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Incremental, I will tell you. Home loan is 9.83. LAP is 10.39. Incremental CF is at 12.31 -- 12.36. And LRDs are 10.20.

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Operator [144]

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We take the last question, which is from the line of [Omar Kulkarni], an individual investor.

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Unidentified Analyst, [145]

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When can we expect the appointment of the new Chairman?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [146]

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Sir, that has to be approved by the Ministry of Finance. It has been sent for their approval. Once that comes, he will get appointed. The NRC has already approved his appointment. And it's just a matter of, I would say, formality.

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Unidentified Analyst, [147]

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Okay. And there is a delay in capital raising because of external environment. Does it -- like everyone know that is the significant deterioration in the company's market capitalization. So it is more to do with that you are pushing the issue? Or any other external factors we are talking about here?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [148]

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No. It is more of external rather than anything to do internally. Internally, the company is very robust, as you have seen quarter-on-quarter. So I think -- but we will have to be brave. We will find a sort of a solution in another 2 to 3 weeks, and we will hit the market.

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Unidentified Analyst, [149]

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So it has nothing to do with the deterioration of the share of the company? The market capitalization?

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [150]

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No, no, no.

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Unidentified Analyst, [151]

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Because ultimately, you have to shell out -- capitalize -- you will get the next -- I mean, it will be higher...

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [152]

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The market cap is muted. Then you should -- the existing shareholders will remain.

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Unidentified Analyst, [153]

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Yes, so that's what I'm asking. So is it more to do with that? You are pushing...

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [154]

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No, no. It has nothing to do with that. The hesitation of the Board is not because of the market cap.

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Operator [155]

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Thank you. I now hand the conference over to Ms. Deepika Gupta Padhi for closing comments.

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Deepika Gupta Padhi, PNB Housing Finance Limited - Head of IR [156]

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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 of this call will be uploaded on our website. That is www.pnbhousing.com. Thank you.

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Sanjaya Gupta, PNB Housing Finance Limited - CEO, MD & Director [157]

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Thank you. Goodnight. Thank you all.

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Operator [158]

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Thank you. Ladies and gentlemen, on behalf of PNB Housing Finance Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.