PNB Housing Finance Limited analyst Q&A

Thank you very much. We will now begin the question-and-answer session. We will take a first question from the line of Ashwini Agarwal from Demeter Advisors LLP. Please go ahead.

The question I have is that as you look out for the next 2 to 3 years, how do you expect the various levers to move? I mean, I see the revenue mix improving or margin mix improving. At the same time, cost to income should stabilize once your branch rollout is over, but credit costs should normalize. In conjunction to that, where do you see leverage going? What would be an acceptable level of leverage? And therefore, in the medium -term, say 2 to 3 years from now, what kind of ROE expectation would you have, assuming the credit cycle remains without accidents?

Our plan by F Y27 is to take retail book to Rs. 1 lakh crore with the mix of Roshni, which is Affordable 15%, Emerging 25% and 60% Prime. So, you must have noticed since last few quarters we are trying to do more of Affordable and Emerging and trying to reduce our growth rate in Prime to ensure that we are profitable. So, in next three years’ time, we should be able to cross Rs. 1 lakh crore on the retail side. With shift in segment, incremental yield, we are looking at a NIM of over 4%. In terms of credit cost, it will be 0.25 %. We will be pretty comfortable with a leverage of 5.5 to 6 in the next 3 to 4 years’ time. I think this is our plan. In terms of ROE, it should be mid-teens

Second question I had was that what are you seeing on the ground, I mean, I heard the comments from the credit team and there seem to be no worries at this point, but what we're also seeing is a slowdown of industry in general. And in that context, how confident do you feel that the self- employed and the i nformal sector borrower will not be cause for pain point? I mean, are you seeing anything on the horizon that worries you?

I think a couple of things here. If you look at the mortgage industry, I think demand is very good. Demand is robust. So, there were a lot of challenges , I think in Q3 with respect to four states. So, I think we had mentioned that in Karnataka, M.P., Hyderabad, and Andhra. So, there were certain challenges, some to do with the entire city map, I think redefined the city map. In terms of Karnataka and MP there were certain challenges in terms of registration. Maharashtra there was an election and therefore there was lot of challenge in terms of getting the properties registered. I think it's only because of these intermitt ent interventions which were beyond control, the growth probably for the industry looked on a lower side. Otherwise, demand is quite robust. So, in spite of all these challenges, we were able to put up a good show in quarter three. If these challenges weren't there, we would have done probably much more than what we have done. So, I think very clearly we are seeing that this demand is there. Demand will continue for next few years to come. There is absolutely no challenge on the demand. Just to answer y our second question, I know there are certain challenges in the overall financial space with respect to unsecured, stress increasing, especially on the MFI, small ticket personal loans,. So, we are constantly checking our portfolio for stress level. And also, we have a robust process of onboarding self -employed customers. So, we have effective tool of pre -delinquency management. And we also try and check for stress levels when customers are regular or current with us. So far, we have not seen any stress whi ch will worry us on the mortgage book, be it Prime or Emerging or Roshni.

And if I may squeeze the last one in, on the runoff, I mean, how much of these are BTs and are you happy to let the BTs go or are you putting a strategy in place to retain these loans? Any thoughts on that?

So, BT would be in the range of 5.5% to 6% average. So, we have a very strong retention team. So, we also have a repricing policy. So, whenever a customer approaches us for repricing, if it fits into our scheme of things, we retain the customer. And if it doesn't fit, we let customers move out. So, we have a dual strategy here, depending on at what price we need to retain the customer. But having said that, over the last few quarters, we have reduced the overall closures, which is now down to 16.5% to 17%, which is in line with our projection.

And so, out of 17%, 6% are BTs and the remaining are repayment. Would that be the correct understanding?

So, 5.5% to 6% is BT and the remaining would be foreclosure, part closure and natural runoff due to repayments.

Thank you. We will take our next question from the line of Sanket Chheda from DAM Capital. Please go ahead.

My question was, there was a little bit increase in Stage-2 of about Rs. 450 crores. So, what was that account and how should we look at it?

So, I think this was largely driven by one account on the corporate side. So, this account has been in the SMA bucket since last two years. And if you see in this particular account, in the last two years we have collected close to Rs. 200 crores on the principal. So, principal has come down by 200 crores. So, we don't see any challenge at all.

You expect it to get resolved in the quarter?

Yes, we expect this to move bucket back this quarter.

And sir, the second question was on disbursement. So, this side, say, the increase in a couple of states, you have managed to clock Q2 level of disbursement, which overall Q1 was itself a very strong jump and this quarter also, Y-o-Y jump looks good. So, do we expect some of the lost business in this quarter to add to the Q4 which is usually seasonally strong. How do you see it? And if you were to say quantmize the hit that was there in this quarter in terms of the disbursement like if those issues were not to be there, how much we would have done more?

So, as I mentioned, there were challenges in few states, that is Karnataka, then Andhra Pradesh, Telangana, to a small extent in Chennai because of rains, and Maharashtra and MP. So, as we see now, I think most of the states, I think the process has eased. So, we expect that quarter four will be good for the i ndustry as well, not just P NB Housing. And I genuinely believe that whatever business the industry has lost or maybe what we would have left behind because of this procedural delays and changes, I think, should come through in quarter four and quarter one of next year.

Thank you. Next question is from the line of Renish from ICICI. Please go ahead.

The first question is on the Prime housing disbursement on sequential business. If you look at , it actually fell by a couple of percentage point. So, it is right to assume that it’s because of this states wherein we saw some disturbance on temporary basis in Q3 or it was by choice?

So, our plan is to grow the book by 17%, that's the g uidance. So, this has broadly two metrics, one is disbursement and second is loan closures, total closures. So, disbursement would vary depending on the closure to maintain book growth. Now, to a certain extent, yes, I think all these challenges in these states have impacted on the Prime and Emerging side, and also on Roshni to a little extent , but I think broadly our strategy is to grow our Affordable and Emerging book faster. And the growth in Prime is going to be, to that extent, lesser. So, this is in line with our strategy. Having said that, to a small extent, yes, there was the impact on Prime and Emerging because of these interventions in these 4 or 5 states.

My second question is on the OPEX side. I mean, if you look at the other OPEX line item, which has been going at some 15%, 20% on sequential business, which is now at Rs. 90 crores. And when we look at the sequential growth, it's actually much higher than the retail loan book growth. So, while these incremental investments are growing, and where do you see the cost to income ratio settling in near term?

Renish, on the other OPEX actually it is more of a seasonal in nature . So, during the festive season some marketing spend has happened and there is some expense on the general & administrative cost also which is more one of our seasonal in nature . It will normalize back to the same levels of Q1, Q2 next quarter.

See, on a steady -state, w e have guided cost-to-income of 1 % to 1.1%. So, we have been maintaining that, and that will maintain.

And just last question from my side on the sourcing. Now in the entire retail segment disbursement, what percentage of that would be BT-in?

See, we have three segments within retail. So, on Prime and Emerging, the BT-ins would be in the range of 17% to 18%. On Roshni, it will be higher. It will be about 25% to 27%. So, if you can take average, maybe about 21%-22%.

And internally do we have any limits to the extent we restrict BT-in and look for a new to credit kind of a customer or how is it? So, at the point BT-in would impact our yields.

So, I mean, we don't really have a number on BT -in. So, depending on the opportunity and the customer profile, and the financials we take a call. So, we don't have a definitive number. It is more driven by market dynamics. But largely we focus on new to Company, new to credit, and also BT-ins. So, this percentage could vary segment-to-segment, but I think largely BT-in is now more in Roshni because it's a new business and therefore the focus maybe slightly more.

And just a follow up on the Affordable side. So, this 25%- 27% of BT-in which is happening is, try to assume that most of this will be coming from the HFCs. I mean the Affordable?

This would be largely from the Affordable set of companies.

Thank you. We will take our next question from the line of Vir al Shah from IIFL Securities. Please go ahead.

Just one clarification first I wanted was that to the earlier question on the Stage-2 increase, this is just the same account that say even 2 or 3 quarters back had intermittently slipped and then again upgraded in September ‘24?

This is the account which has been in SMA bucket for I think almost two years. So, there is significant development the project has seen. And also, as I mentioned in the last two years, principal has come down by almost close to Rs. 200 crores. So, we don't see any challenge.

And you see this being upgraded in 4Q again?

This quarter.

And the second question I had was with regards to the exposure or state-wise on the retail side. So, we have seen that in this quarter, we had some challenges on the ground in the states of say Karnataka, Telangana. But on a sequential basis, I'm seeing that, of course, its mix has been increasing. So, how did we manage to do this? Because we saw that, at least for our peers, these are one of the major reasons why you saw growth slow down.

So, I think by design, our focus is more on South for all the three segments - Prime, Emerging and Roshni. So, maybe this quarter because see this quarter also there was challenge in West, there was challenge in North and there was challenge in South as well. So, we see challenge across in all the three zones that is South, West and North and therefore the mixed almost I think it remains same , but the focus will be slightly more on South followed by North and then West. And also as I mentioned, if these challenges weren't there, our numbers would have been far higher than what they have shown.

Okay, got it. And in that same light, w ould you want to say, give us I know it's just now one more quarter left, we can do the arithmetic, but same also, raising your eventual loan book targets, given that we are beating this year, and we seem to be on a strong footing. So, are you seeing, say, instead of Rs. 1 lakh crore retail loan book target by FY27, any upgrades to that target?

No, as of now we stick to Rs. 1 lakh crore by FY27. If we can do more or if there is any change in the mix, I think we will be happier. So, as of now, we maintain Rs. 1 lakh crore by FY27.

Right. And the last question was with regards to the corporate book. Last quarter, we announced the hiring of Mr. Rana coming from ICICI Bank to restart the corporate vertical. So, any updates on that because we did not see any disbursements in this quarter?

Yes, hopefully this quarter, we might see a couple of sanctions and if possible one disbursement as well, but from this quarter it will start.

Yes, great and just one last suggestion. Of course, once we start that, it will be really helpful to get much better color on what are we intending to do separately and also maybe you have Mr. Rana, maybe sometime next quarter when we come back?

Absolutely. I think I've already mentioned before, definitely we will give more color on the business, what kind of business we are going to do. I think just to talk about corporate, we will be pick and choosy. The ticket size will be much less, very strong underwriting norms. And we will look at only very safe and strong structure. So, I think once we start, we will give more color on corporate.

Thank you. Next question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead.

Yes, so if you see, we are also resolving a lot of accounts a nd some of the accounts probably will mature in Quarter 4. So, some of the accounts are nearing maturity and therefore, we've seen good repayment happening in the last few quarters and that is why ECL has been calculated accordingly.

The provision cover on Stage-1 was 75 basis points until last quarter. What I am saying is now, will the new normal be at 50-55 basis points or will we go back to 75-80 basis points?

A lot of things are happening. I think we are improving on quality of origination. This we started a little over two years back. And all the accounts which was there as portfolio, we've been trying to manage, maintain them. So, we have an ECL model. So, we run it through the model. And as of now, as I mentioned, o n the retail side, we are talking about credit costs will be denied for next few quarters. And long term, it will be about 25 bps. On corporate, we see a lot of recoveries happening. And a lot of accounts are now nearing maturity. And therefore, depending on the model, if there is a need, only then we will be providing slightly higher. Otherwise, I don't think so we need to work. Do you want to add anything?

Yes. So, Abhijit, this is largely an account of slippage of one account from Stage-1 to Stage-2 corporate accounts. Once it moves back to Stage-1 next quarter, probably the percentages will get restated.

And sir the second question that I had was, during this quarter, what was the total quantum of write-offs that we had?

This quarter hardly anything, very, very small. Nothing material.

And so, have you had the chance to evaluate that because of Karnataka, Telangana, and few other states that you spoke of, how much business did we lose during the quarter? And the related question, what is the status in Karnataka now? Has it improved or are the problems in Karnataka still there?

I think if these challenges were not there, across all the three businesses we should have done at least about Rs. 500- Rs. 600 crores more.

And the status of Karnataka, I mean, has anything improved or still, I mean, those problems continue to be there?

So, in all the states, there is improvement. So, the challenge was there, let's say two months back in Karnataka, I think now there is a lot of improvement and the same thing is true with MP as well. So, I don't think so Quarter 4 should see much of challenge for these regions.

And so then the last question that I had is, now that it is widely expected that we will see some repo rate cuts in India in this calendar year, I just wanted to understand how our liabilities, more particularly for bank term loans, how they're placed with regards to being linked to repo rate, T- Bills or MCLR. And what impact will we see on our NIM, if hypothetically speaking, let's say there's a repo rate cut of 50 basis points in the next….

So, Abhijit on the liability side,70% + of our liabilities are floating, first of all. So, that is one. Secondly, within term loans, around one-third of our term loans are linked to repo or T-bill. So, that will get repriced immediately. And rest are also, again, very short-term benchmark, like one month or three months MCLR so that will also get repriced sooner than later. However, there is always a lag between repo and MCLR so to that extent there could be a timing gap. Depending on the timing, we expect every 25 b ps change in the repo will lead to 10 b ps reduction in our cost of borrowings and we plan to pass it on. So, there should not be any big impact on the NIM from the overall impact perspective.

So, if you could just repeat the last line, for every 25 basis points cut in repo rates, what is the impact on our cost of borrowings?

Around 10 bps. Immediately it will be 10 bps impact.

And that we expect to pass it on. And what you are expecting, then margins can be maintained at current levels, will there not be an impact on the margins?

Yes, there should not be. I mean, that should be, that is our endeavor. We will try to maintain the margin.

Thank you. Next question is from the line of Suraj Das from Sundaram Mutual Fund. Please go ahead.

I think a few questions have already been answered. Just a follow up to Abhijit's question there, what is the written off pool outstanding for you and if you can bifurcate in between retail and corporates? And what kind of recovery are you expecting with t he say over the next 4 to 6 quarters? That would be all from my side.

So, corporate is about Rs. 1250 crores. So, we expect a recovery of about 67% and that we will be able to collect in the next 3 years’ time. Retail, the pool is Rs. 450 crores. So, we expect about Rs. 45 to Rs. 50 crores every quarter for the next 3 quarters.

Next question is from the line of Aditi Nawal from RSPN Ventures. Please go ahead.

So, fee income is not subdued, it has g rown 20% year-on-year. This includes the insurance commission which has grown around 30% year -on-year, so the rest of the line remaining constant. So, that has grown well. On the employee cost perspective, there was one-off related to some actuarial valuation of around Rs. 4-Rs. 5 crore s and rest is, we have brought down overall cost by optimizing the headcount and revisiting certain incentive structures that we have. So, it is based on the overall efforts being put in on the staff cost.

Can you just repeat the insurance part of the same concern?

So, I a m saying on the fee income, overall fee income growth is 21% . Within the fee , t he insurance commission has grown 30% in line with the disbursement growth.

Thank you. Next question is from the line of Kamal Mulchandani from Investec Capital Services. Please go ahead.

Most of the questions were answered, I just would like to understand the path to achieve Rs. 5,000 crores of Affordable Housing book by the end of FY25, I understand that by December it is Rs. 3,800 crores and we have done disbursa ls of around Rs. 900-odd crores this quarter, so like if you could just guide the part to achieving the Affordable Housing area book?

So, on Affordable, if you see as of March, we were at Rs. 1790 crore, so now we are at Rs. 3,838 crore. So, we have doubled the book in 9 months. So, we disbursed about Rs. 920 odd crores in Q3. So, to get to Rs. 5,000 crores, you should disburse Rs. 1,200 crores. It is an average of Rs. 400 per month. So, we see that is quite possible. So, hopefully we should get to Rs. 5,000 crores.

There will be some repayments as well, right?

No, we have taken that into account..

Thank you. Next in line is Mr. Anurag Mantry from Oxbow Capital. Please go ahead.

Just one question. On the overall credit cost, so basically, if I add back maybe the recoveries that you had this quarter both from the retail and wholesale side, I think your PBT mentioned like Rs. 53 crores on the retail and Rs. 58 crores on wholesale, I think eventually get about Rs. 75 crores and if I annualize that it seems like 40-45 bps kind of quarterly run rate, the normal credit cost as such and that is similar to the last couple of quarters. Just wouldn't understand that X off the write off recoveries by running at like 40-50 bps credit cost, because I think bulk of this book is now just retail book assets, which probably shouldn't gain as credit cost?

So, you are saying that only Rs. 30 crores is the normal provision and balance is for retail, is that how we should prepare?

Yes, that is right.

Thank you. We will take our next question from the line of Kunal Shah from Cit i. Please go ahead.

Firstly, if I had to look at it in terms of the OPEX, so if you can just broadly break up this 1.1% OPEX to Assets over three segments, so in maybe Affordable, what is the kind of OPEX that we are seeing and how much would be in the Prime, so broadly, just wanted to gauge in terms of where we are in terms of the profitability in the Affordable Housing, in the Emerging and in the Prime segment and the targets which you have highlighted in terms of the Emerging and Affordable, would that be the additional investment plan to roll out that would be required or it is more in terms of the productivity gains that would happen?

So, if you look at the strategy in terms of starting Affordable, it started over 2 years back. Emerging, we started this year, so I think most of the investment in terms of setting up business is done on Roshni side. On Emerging also, we started off with 50 branches. That was an initial investment, so now g oing forward, every year we will be opening about 50-odd branches. So, that is more of a BAU. So, there is no major investment in terms of branch network as well. So, if you look at OPEX at this point in time, I think we should look at a consolidated basis. I think very soon, we will be able to break it up a se gment by then, we will be able to share, but at a n overall level, we will be able to maintain OPEX to ATA at 1%-1.1% .

So, in Affordable, we would be already at the break even, Affordable and Emerging?

We are already profitable on Affordable, and we are moving towards the steady state ROA which will take maybe one more year for us to get to it steady state ROA.

And secondly in terms of, maybe if there are BT-ins, maybe in RBI FSR, there was an indication that when you look at it for the personal loans over due, they have maybe some kind of retail facility home loans as well. So, any sense in terms of the customers whom we are onboarding, is there any overdue in any of the PL or maybe the small ticket loans and could there be any risk in terms of the reclassification or maybe it is like a clear-cut rejection, if we see any overdue in any of the customer in any of the product segment?

See, the overall bureau score, I think takes into account such behavior on ac count of, any kind of financing of it. So, that is appraised on a case-to-case basis as it comes through. So, we said in the beginning that 84% of our onboardings are above 700 bureau scores. That takes into account such behavior.

So, in fact, irrespective of the segment, whether it is Prime, Emerging or Roshni, we are very particular about credit history. So, when we on-board the customer, we look at the customer’s existing exposure and how is the repayment. So, only with a good repayment tr ack record, we would onboard the customer. Otherwise, it is clear no-go.

My question was largely with respect to 12% or 10% odd which are in NTC and up to 700, particularly on the Affordable and maybe I think you have shared similarly on the other. So, it is not with respect to maybe 75%-80% which is better or maybe more than 700, but for the other part of the portfolio?

No, I think we can't purely go by the score because you w ill have lot of customers who take a small loan of 25,000-30,000 loans being new to credit and within a years’ time they will have a score of more than 725-730. We can't really go by the score, so we need to see whether the customer is new to credit or cus tomer has certain exposures. If so, how is the repayment , for example, 750 is not the same for all the customers, somebody having 750 with Rs. 30,000 loan may not be that good vis-a-vis compared to somebody having 750 score with three or four loans all being servicing properly on time. So, score is one of the parameter which we look into, but we will also get deeper to understand how the strings are and only then we take a call with respect to that.

The question was maybe, since we are building up the book and there could be the risk of spillover from unsecured to secured, so given that we are growing it lately, could that risk be higher for us? That was the primary question?

No, because this is mortgage , this is secured. And know , for example, all the home loans, we know the end us e and in terms of loan against property, we are very particular about end use and only when we are convinced about the end use, only then we take an exposure. So, the chances of replacing mortgage loan with any uns ecured loan, I think the chances are very low.

Thank you. Next question is from the line of Himanshu Taluja from Aditya Birla Sun Life AMC. Please go ahead.

Just one question at my end, if you can just give me the, maybe I am sorry if I am repeating the question, if you can just give the color of the corporate account which got slipped in Stage-2? Secondly, what is the principal outstanding on this, any provisions which you are holding in this because is a past corporate account and lastly, what is the comfort that you have that this account will again get upgraded in the coming quarter?

So, as I mentioned, I think I have mentioned this. So, again, I will mention. So, this is an account which we are watching very closely, seeing very closely since last many years, especially in the last 2 years, it has been an SMA bucket, and the principal has come down by close to Rs. 200 crore in the last 2 years. So, we are very much comfortable about this account. So, there is nothing to worry about.

Any provisions which you are holding on this, any PCR which is there on this particular account?

We are holding as per the stage holding provision for this account as well.

Thank you. We will take our next question from the line of Ankit Minocha from Adezi Ventures Family Office. Please go ahead.

My first question is with regard to a hypothetical rate cut situation, which in earlier participant was alluding to. So, you mentioned that there was 10 bps reduction in the cost of funds with every 25 bps rate cuts, so just wanted to understand is there also a lag involved in this? How quickly are you able to price your assets or how slowly are you able to price your assets versus your liabilities?

You see, 10 bps is immediate, so that we are planning to, we should be able to pass it on quickly and the remaining impact again, it is a matter of timing. So, we should see the rest of the difference also flow through in the next 3-4 months.

So, then would not even be the possibility of any expansion in NIMs for a short period of time, right?

Depending on the competition how they react there could be some minor impact, but largely our endeavor is to ensure that margins are maintained.

See, actually there are 3-4 things. So, one is we are trying to change the mix between Prime, Emerging and Affordable. And with every passing quarter, we are doing more business on the Affordable and Emerging compared to Prime. Number two, in all the three segments, we are trying to up the yield, Prime, Emerging and Affordable. We will be starting corporate from this quarter, which will help us on the yield and profitability. A nd also, obviously we have a large pool of corporate and retail write-off. So, we are expecting good recovery. So, these things we have on the positive side and if there is a rate cut, of course there will be some lag, which we will also pass on. So, I think this differ ential, we feel that we will be able to manage because now we have certain levers which can try to factor rate cut.

And I understand you have given some element of guidance for FY27, but we were in Jan FY25. So, just understanding, how do we see FY26 evolving , if you can just give some color on the potential book value or even how growth kind of seems to be panning out, what you think could be FY26 look like?

So, as I mentioned, demand is quite good , mortgage industry is doing well, I think this year, every quarter there was some challenge or the other Quarter 1 was cyclical and Quarter 2, there was some challenge which some companies in the industry saw or especially on the collection side. And quarter 3, there was some challen ge because of procedural changes in certain states. So, I think throughout the year, first 9 months, there has been some challenge o r the other also coupled with the heat wave and general election and election in Maharashtra . So, otherwise talking about demand, demand is very good. This industry will do well and also with PM AY, Interest Subsidy Scheme, I think demand should only go up for us, especially on the Roshni and Emerging side. So, we see no demand to be qu ite robust for the next few years. A nd I will not be able to comment on what is the plan for next year. We would share with the investor at the appropriate time, but our Rs. 1 lakh crore by FY 27 should be intact and the growth should be slightly better than what we showed this year.

And my next question is about, to get more and more into the Affordable space, what have you observed as the incremental trends in asset quality, when did you start to get into this space and if there are any asset quality issues that might crop up, ideally by when would they start to crop up like in terms of what are the loan tenures if you could help us with that?

So, in terms of credit cost whereas the Prime we say will be in the range of, it will be about 18 bps, Emerging should be about 22-23 bps, I am talking about once the portfolio has matured and for Affordable it should be about 50 bps. So, if you see blended, we should have 25 bps. I think that is what we see, and we have budgeted that. Otherwise, we don't see any incremental risk in any of these segments, including the Affordable.

Thank you. Next question is from the line of Anusha Raheja from Dalal & Broacha. Please go ahead.

Sir, firstly on this credit cost, do you expect that to pan out in Q4? The current run rate of Q3 is likely to continue?

It will continue.

And assuming that if this corporate account gets recovered, it should be better?

No. As I mentioned to you, we are pretty much comfortable on the stage and this quarter it will be a rollback. So, we are pretty comfortable. Credit cost will be on similar line, Quarter 2 to quarter 3.

And s econdly, on this in non -housing loans which sits on Prime, Emerging and Affordable segments, what basically this non-housing loan comprises?

So, do you have any unsecured personal loans?

No, we don't have. We do only secure.

And do you expect any margin pressure to come in on the Prime segment loan assuming that you would be competing with the banks, a nd we would be seeing a decline, repo rate cut next fiscal, so I think this space is quite competitive. Do you expect some sort of margin pressure, because I think you will have to bring down your lending rate as well there?

There is margin pressure on Prime, which is why we moved from Super Prime to Prime. Even in Prime, t here is margin pressure and that is the reason we are growing at a slower pace compared to Emerging and Affordable. So, this margin pressure would be there because this is the space where a lot of banks also would be focusing on. So, this pressure is there and it will continue, but we have planned to overcome that. Our plan is to try and grow the Prime book slower compared to Emerging and Affordable.

And sir, lastly, sorry if I am repetitive, the credit cost guidance for FY26, what that number could be before recoveries and what you have baked in credit cost including recoveries?

So, I think this trend should continue for next few quarters on credit cost because we have good tool of written off book where we expect good recoveries to happen in the next few quarters. So, I think for FY26 also, the credit cost should be very good.

So, the full year guidance of FY26, will you share post Q4?

Definitely we will share.

And sir, lastly, since the growth rate has been quite strong in Emerging and Affordable how do you assess that book in terms of asset quality?

Asset quality on Prime and Emerging should be almost similar. We don't see any change at all. And as far as Affordable is concerned, it will be in line with industry. Today, we are better than the industry. Of course, it is not comparable because our book has not matured, but I think it will be in line with industry once the book matures.

Thank you. We will take our next question from the line of Vijay from Insightful Investment Managers. Please go ahead.

Most questions are answered. Just one thought, sir, for next year, FY26, given that the book mix keeps changing, will the NIMs also be slightly better?

Sir, how much in your estimate should expansion be approximately?

Short term, it is very difficult to predict. We will be sharing plans for FY26, maybe after Quarter 4, but I think long term what we mentioned, I think FY27 when we are talking about retail book of Rs. 1 lakh crores, our NIM should be about 4-4.1.

Thank you. Ladies and gentlemen, we will take that as the last question for today. I now hand the conference over to management for closing comments. Over to you.

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. 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.