N※N

PNB Housing Finance Shifts to Conservative Corporate Lending

  //business-finance.news-articles.net/content/202 .. ce-shifts-to-conservative-corporate-lending.html
  Published in Business and Finance on Wednesday, January 28th 2026 at 5:47 GMT by moneycontrol.com
      Locales: Delhi, INDIA

Mumbai, January 28th, 2026 - PNB Housing Finance (PNB HF) is undertaking a strategic overhaul of its corporate loan portfolio, aiming for an 8-10% share in the market over the next 2-3 years, according to CEO Ajai Shukla. The move signals a clear pivot towards sustainable growth and enhanced asset quality, a departure from potentially riskier strategies of the past. This recalibration comes at a time of moderate economic headwinds and increasing scrutiny of financial institutions' lending practices.

Shukla, in a recent interview, emphasized the company's commitment to rebuilding its corporate loan book with a more conservative and discerning approach. This isn't simply about expanding the volume of loans; it's about ensuring those loans are based on solid foundations and contribute to long-term stability. The implication is that PNB HF is actively addressing past issues with its corporate lending - issues that likely contributed to a decline in net interest margin (NIM) observed in late 2023.

While the specific details of past performance aren't fully detailed in recent statements, the drop in NIM from 3.3% in September 2022 to 2.93% in September 2023 is a clear indicator that the previous strategy wasn't yielding optimal results. Improving NIM is now a key priority, and the strategic shift in corporate lending is a significant component of that effort. A lower NIM signifies reduced profitability on each loan, and reversing this trend is crucial for sustaining shareholder value.

However, PNB HF isn't simply retrenching. The company is actively exploring growth opportunities in strategically chosen segments: affordable housing and loans against property (LAP). These areas are considered relatively stable and offer strong potential for expansion, particularly given the ongoing demand for housing in India. Affordable housing, in particular, benefits from government initiatives and a large, underserved population, while LAP provides a secured lending option backed by real estate.

The focus on LAP is interesting, representing a balance between risk and return. While secured, these loans still carry inherent risks related to property valuation and potential borrower defaults. PNB HF will need to carefully manage these risks to avoid repeating past mistakes. The growth in these segments suggests a move away from potentially larger, but riskier, corporate loans towards a more diversified and potentially more sustainable portfolio.

Shukla acknowledged the presence of macroeconomic headwinds, a common concern amongst financial institutions currently. Global economic uncertainty, fluctuating interest rates, and potential inflationary pressures all pose challenges to the housing finance sector. However, he expressed optimism regarding the long-term outlook, likely based on underlying demographic trends and the continued urbanization of India. The demand for housing is projected to remain robust, driven by a growing middle class and increasing disposable incomes.

The market reaction to this news has been mixed, with shares of PNB HF experiencing a slight dip (1.25% lower at INR1,368.15 as of 12:12 pm today) - a reflection of investor caution and a desire for concrete evidence of successful implementation of this new strategy. Investors will be closely watching key performance indicators in the coming quarters, including asset quality ratios, NIM, and the growth rate of the affordable housing and LAP portfolios.

The success of PNB HF's turnaround will depend not only on its strategic decisions but also on its ability to effectively manage risk, adapt to changing market conditions, and build trust with investors and stakeholders. The coming years will be crucial in determining whether this rebuilding effort delivers sustainable growth and solidifies PNB HF's position in the competitive housing finance landscape. The emphasis on sustainable growth suggests a long-term commitment to responsible lending and a more cautious, but ultimately more resilient, business model.