PNB Housing Finance MD and CEO Ajai Shukla said the Reserve Bank’s recent rate hike will lead to a 5-8 basis points gain in net interest margin. Shukla noted that the firm also got a credit rating upgrade to AAA/Stable from Crisil, which will help them offer cheaper loans soon.

PNB Housing Finance anticipates a minor enhancement in net interest margin due to the Reserve Bank's recent rate hike. The lender's margin improvement is expected to be between 5 to 8 basis points and will benefit customers through cheaper loans. The company is also experiencing positive demand momentum in the housing finance sector. Additionally, PNB Housing Finance has received a credit rating upgrade to AAA/Stable from Crisil.

New Delhi: PNB Housing Finance MD and CEO Ajai Shukla said the recent rate hike by the Reserve Bank would lead to a marginal improvement in net interest margin (NIM).

After a gap of almost four years, the Reserve Bank raised its benchmark lending rate by 25 basis points to 5.5 per cent, making borrowing from the central bank costlier to contain inflation fuelled by the West Asia crisis.

"Some benefit will go to the lender because all of the borrowing of the lender is not on the repo rate. It is a combination of Marginal Cost of Funds-based Lending Rate (MCLR), commercial paper, refinance from National Housing Bank and non-convertible debentures," Shukla told PTI.

Asked about the quantum jump in margin improvement for the mortgage firm, he said the benefit will not be 25 basis points immediately on the book, but it may be 5-8 basis points.

Talking about the demand for housing finance, Shukla said, "We have seen some good traction...Momentum is already there. Usually the mortgage business starts picking up from Ganesh Chaturthi...so H2 (second half) of the financial year is going to be much better than the first half".

Meanwhile,

PNB Housing Finance received a rating upgrade from Crisil to AAA/Stable from AA+/Stable. With this upgrade, PNB Housing Finance now holds AAA ratings from all four leading domestic credit rating agencies -- Crisil, India Ratings, CARE Ratings and ICRA, across relevant long-term instruments and facilities.

This will bring down the cost of borrowing, especially term loans from banks, which are 40 per cent of total resources, Shukla said.

Besides, he said, lower cost of borrowing would translate into cheaper loans for customers.

The successive rating upgrades underscore the sustained strengthening of the company's financial and operating fundamentals, including improving asset quality, strong capitalisation, enhanced profitability, a granular retail-focused mortgage portfolio, and a diversified funding profile, he added.