PNB Housing Finance Ltd (NSE: PNBHOUSING) Q2 2025 Earnings Call dated Oct. 24, 2024
Corporate Participants:
Deepika Gupta Padhi — National Head (Investor Relations and Treasury)
Girish Kousgi — Managing Director and Chief Executive Officer
Vinay Gupta — Chief Financial Officer
Dilip Vaitheeswaran — Chief Sales Officer
Anujai Saxena — Business Head for Affordable Business
Jatul Anand — Chief Credit and Collections Officer
Anubhav Rajput — Chief Technology Officer
Analysts:
Abhijit Tibrewal — Analyst
Renish Bhuva — Analyst
Nilesh Jethani — Analyst
Harshit Toshniwal — Analyst
Viral Shah — Analyst
Omkar Shinde — Analyst
Nikhil Kumar Agarwal — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the PNB Housing Finance Limited Q2 and H1 FY ’24-’25 Conference Call of PNB Housing Finance Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Ms. Deepika from PNB Housing Finance Limited. Thank you, and over to you, ma’am.
Deepika Gupta Padhi — National Head (Investor Relations and Treasury)
Thank you. Good evening, and welcome, everyone. We are here to discuss PNB Housing Finance Q2 and H1 FY ’24-’25 results. You must have seen our business and financial numbers in the presentation and the press release shared with the Indian Stock Exchanges and is also available on our website. We would like to apologize because we could upload the presentation and the press release just few minutes back due to some technical error. We will try to cover maximum in the update to be given by the management team.
We have the entire management sitting over here led by Mr. Girish Kousgi, our Managing Director and CEO. We’ll begin this call with the performance update by the team. 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 51 of the investor presentation.
With that, I will now hand over the call to Mr. Girish Kousgi. Over to you, sir.
Girish Kousgi — Managing Director and Chief Executive Officer
Good evening to all the investors. Welcome to the earnings call. Before I get into quarter two and H1 FY ’25 performance, I would like to highlight that our affordable segment Roshni loan book has crossed INR3,000 crores mark this month, making us the fastest-growing HFC in affordable segment. It is a significant milestone towards the stated target of INR15,000 crore affordable loan growth by FY27.
On the loan book, last year, the retail loan book grew by 14.1%. Quarter one FY25, the book grew by 14.4%. And this quarter, the retail loan book grew by 16.2% to INR67,970 crore as on 30th September 2024. This is against the stated guidance of 17% for the financial year. The corporate book is at INR1,531 crore as on 30th September 2024. The total loan book stood at INR69,501 crore and assets under management is at INR74,724 crore. The total live account serviced by the company crossed 3 lakhs. The affordable and emerging market segment share in the retail loan book is witnessing increasing trend and is at 23% as on 30th September. The affordable segment has shown a remarkable growth of 300% on a Y-o-Y in loan book at INR2,959 crore. We have crossed INR3,000 crore loan book as of now.
The emerging markets segment has shown a loan book growth of 22% Y-o-Y at INR12,545 crore. As per the strategy, the growth in the prime book is a balancing number and the prime book grew by 11% as on 30th September 2024. In terms of reach, we currently have a strong network of 303 branches across 20 states and we plan to open 15 branches in this financial year with majority to be opened for affordable business. With this large presence, we are ready to capitalize the opportunity available in affordable and emerging market segments in Tier 2 and 3 cities.
We had a phenomenal quarter with disbursement of INR5,341 crore in quarter two FY25, representing a growth of 28.2% on a Y-o-Y basis and 21.5% on a quarter-on-quarter basis. As laid out in our strategy, we continue to focus on affordable and emerging market segments. Both these segments contribute 31% of the total retail disbursement of quarter two FY25. The disbursement in affordable segment grew at a rapid pace of 68.5% Y-o-Y to INR630 crore in quarter two FY25. The disbursement for the emerging markets segment registered a healthy growth of 31% Y-o-Y at INR1,035 crores. The prime segment business grew by 23% Y-o-Y at INR3,676 crore in quarter two FY ’25.
The company is expected to start corporate business in the next few months. The Corporate segment will further help us in yield and retail business. The incremental yield in the affordable segment increased to almost 12% in quarter two FY25 as compared to 11.4% in quarter two of the previous year. We are consciously increasing the yield in affordable segment. The incremental yield in the emerging markets segment is 9.8% in quarter two, which is 45 bps more than Prime segment.
On PMAY Interest Subsidy Scheme with the government focus on the Affordable segment, that is EWS and mid-income group and the PMAY Interest Subsidy Scheme close to 1 crore customers are expected to benefit over next five years. This leads to a huge opportunity for players like us with PAN India presence and special focus on affordable and emerging market segments. The company is geared up to source business from all its 303 branches under interest subsidy scheme.
On asset quality, GNPA improved by 11 bps to 1.24% this quarter. Last quarter, the GNPA was 1.35%. During the quarter, we recovered INR48 crore from retail written-off pool in comparison to INR28 crore in quarter 1. We expect to continue recovery from the written-off pool from both retail and corporate book. The company has a written-off pool of around INR1,250 crores in corporate and INR500 crores in retail. Our cost of borrowing has reduced by 8 bps sequentially to 7.84% in quarter two. In quarter two, PAT stood at INR470 crore, registering a growth of 22.6% on a Y-o-Y basis.
Net interest margin increased marginally at 3.68% during the quarter as compared to previous quarter. We reiterate our guidance is 3.5% on NIM. We will be able to manage NIM at the current level for the next couple of quarters. Our efforts across parameters aided in improving the profitability. Our return on assets improved to 2.54% in quarter two and H1 at 2.45%. Return on equity was at 12.42% annualized for quarter two.
Now I hand over to Vinay to cover on financials.
Vinay Gupta — Chief Financial Officer
Hello. Good Evening to all, and welcome to Q2 and H1 FY ’24-’25 earnings call. I’m happy to report a strong financial performance across all parameters during this quarter, driven by strong business performance with disbursement growth of 28% and loan book growth of 14%, and retail loan book growth of 16.2%. Our overall PAT has grown 23% year-on-year and 9% quarter-on-quarter to INR470 crores in Q2 FY25.
Overall interest income has grown 4.5% year-on-year in Q2. However, this is colored by declining corporate book over the years. Kindly refer Page 35 of the deck, wherein we have shared separate P&L by segment for retail and corporate. The retail segment gross income has actually grown by 17% year-on-year, and operating profit that is pre-provision operating profit grew by 16.4% year-on-year in Q2. Cost of borrowings reduced by 8 bps sequentially to 7.84% in Q2. The decline in cost of borrowings is driven by the benefits of rating upgrades, leading to competitive borrowing from debt capital market.
Company also received ECB sanction of $125 million, which is at a very competitive rate. This has ensured that the spreads have improved from 2.1% to 2.2% during Q2. NIMs have also improved to 3.68% during Q2 versus 3.65% in the previous quarter, largely driven by the lower cost of volumes. However, we reiterate we maintain our guidance of 3.5% NIM for the current year. With higher contribution of business now coming from affordable and emerging verticals, NIM should start improving from the next year onwards. Gross margin is maintained at 4.1% versus around 4.03% in previous quarter.
In Q2 FY ’25, operating expenses have grown by 19% year-on-year to INR199 crores. This is largely due to branch expansion done in Roshni and emerging vertical during Q4 of the last financial year, wherein we have added 100 branches. Excluding fresh investments done in these 100 branches, operating expenses would have grown by around 9%. This fresh investment will definitely help in profitable growth going forward. On credit cost, as mentioned earlier, it remains benign, even during Q2 due to recovery of INR48 crores from the retail written-off pool in this quarter. Overall credit cost remains [Indecipherable] 24 bps for Q2 FY25.
Our ROA improved by 30 bps year-on-year to 2.54%, which was 2.38% in the previous quarter. ROE has also reached to 12% for Q2 FY25. Company has maintained average daily LCR of 193% against the regulatory requirement of 85%. We have also maintained SLR of 15% on public deposits as of 30th September against the regulatory requirement of 13%. The capital adequacy stands strong at 29.16% with Tier 1 at 28.1%. With this strong all-round performance during Q2, we are on track now to deliver on our business growth guidance for the current financial year.
Deepika Gupta Padhi — National Head (Investor Relations and Treasury)
Thank you, Vinay. I will now request Dilip, our Chief Sales Officer for Prime and Emerging business and deposits to give segmental performance updates.
Dilip Vaitheeswaran — Chief Sales Officer
Thank you Deepika, and good evening friends. Welcome to the call. Appreciate you taking the time out late in the evening. I’m delighted to share with you that we had a really good quarter in the prime and emerging markets businesses for the company. You’ve heard some of the numbers from Vinay and Mr. Kousgi. You’ll see them in the investor presentation as well. Over the next few minutes, let me try and give you some color of these businesses as to what they are and how they have fared in this quarter for us.
I’ll start with emerging markets first. See, we took this decision to reorganize our branches and teams into prime and emerging markets because we believe that these set of geographies or branches have room to, number one, grow at faster pace, number two, also give us higher yields on incremental disbursals. So we carved out 50 branches. We started off this business as a separate one, about two quarters back. Firstly, let me speak of which are these markets. About 60% of these branches are in South as on date. So we are talking of most of Tamil Nadu except Chennai, branches in AP but not Telangana or Hyderabad, all of Kerala. Even in the North, we consciously chose our Tier 2 markets so that some parts of UP but not Lucknow, large share of Rajasthan, but not Jaipur. So in these markets, our ticket size is around INR25 lakhs, whereas our ticket size on the prime side of the business is about INR35 lakhs.
So at the end of two quarters, we’re very pleased to see how the business has started off here. Disbursal in these markets, like you heard, has grown at 31% Y-o-Y. The book has grown at 22%. It’s crossed INR12,500 crores. We had set out a guidance saying over the period of two to three years, we will have a difference in yield of 75 to 100 basis points between the prime and the emerging market side. In two quarters, we have already achieved 45 bps. So the difference in incremental yields between prime and emerging markets is now 45 bps. In fact, in these emerging markets, we took the yield up by 40 bps in six months as compared to what it was at the end of Q4.
In terms of product mix, NHL gives us about 35% of incremental disbursements in these markets. Again, this is a yield-accretive business. It fetches us a good 100-plus bps of premium over home loans. In these markets, 63% to 64% of our business is sourced by our internal team, which is our in-house origination team. About 37% is originated by our third-party distribution DMS. And when we’re doing all this and we are wanting to grow this business more, the asset quality in these set of branches, the NPA level is on par with those in the prime branches, if not better. So we’re very pleased to have made this decision. It seems to be paying off well. It’s taken off very well. We only see this business becoming bigger for the company, along with Roshni in the quarters to come. Mr. Kousgi mentioned that emerging markets and Roshni are now at about 31% of the company’s retail loan disbursements as of Q2. Now this number or this metric by design will only go up in the quarters to come.
Now coming to the prime markets. So most larger cities of the country, the metropolitan cities like MMR, NCR, Bangalore, Chennai, Hyderabad, Pune, even the bigger cities like Lucknow, Chandigarh, et cetera, they fall into what we classify as prime markets. Now since these markets have a higher share of contribution to the economy itself, they are larger markets for housing loan demand as well. So obviously, we witnessed more competition in terms of pricing in these markets. That’s why the yield on incremental disbursements in these markets will be a little lower. But owing to the sheer size of these markets, they will continue to contribute more to the growth for most lenders as is the case with us.
So on the prime side, also on the prime market side, we had a very good quarter on disbursal, on runoffs as well as margin improvement. We managed to grow our disbursements by 22-plus percent in these markets. The book grew by about 11% to INR52,000 plus crores. And on this side of the business, we’re working on growth, we’re also working hard on restricting our runoffs. So our runoff share came down to below 17% on an annualized basis. Now this is a good 2-plus percent reduction Y-o-Y. This improved 40-plus bps Q-o-Q sequentially as well. And while we are wanting to grow in these markets for bottom line reasons, we are also making a shift down the income pyramid from HNIs or super prime to the prime or the mass affluent segments.
So the incremental disbursals are more granular in nature. Just to give you a metric, 97% of the disbursements in these markets stood at loans below INR3 crores, which is much lower than what the company has used to historically. In these markets, also, we managed to take the yield up. Incremental disbursement yield moved up by 15 basis points in six months. I’d also like to share an update on investments in new branches. We opened about 35 new branches in quarter four of FY24. Happy to share that all these branches are now fully operational. They are active on incremental disbursements for us. They contributed to 10% of the disbursements across prime and emerging markets for Q2 for us. This number was 6% in the previous quarter. So they should only go up in the coming quarters.
So to summarize, growth in business is auguring well on the back of investments in geographies and technology. We wanted to grow more in the margin-accretive businesses. We had emerging markets, be it NHL, we are seeing that happen. The shift in the customer segment in prime markets is happening as planned. The shift in the geography mix is also trending in the direction we want. Just to give you an update, across prime and emerging markets, 50-plus percent of the incremental disbursements are now coming from non-metros. This is the first time across these businesses. And the asset quality for these businesses continues to hold up and improve quarter-on-quarter. So we believe that our good performance in Q2 is a testimony to the fact that we are on the right path, and we’ll only move forward on these businesses on all our imperatives, growth, margins, and asset quality.
Thank you. And back to Deepika.
Deepika Gupta Padhi — National Head (Investor Relations and Treasury)
Thank you, Dilip. I will now request Anujai, our Business Head for Affordable Business to update on the affordable business performance.
Anujai Saxena — Business Head for Affordable Business
Thank you, Deepika. Good evening, everyone. It is my pleasure to take you through the excellent outcomes that we have achieved in the last quarter in our Roshni business. We have ended the last quarter at a loan book of INR2,959 crore, and I’m happy to share that we have become the fastest business in the affordable housing space to cross the loan book of INR3,000 crores earlier this month. We have achieved this milestone in the 22nd month of our operation.
Our journey in the affordable housing finance space started in January ’23, with Roshni business disbursing INR5 crore of loans in that month. Executing well on our strategic plan, we reached a monthly disbursement rate of around INR100 crore per month in about six months’ time by July ’23. We were the fastest in the affordable housing finance space to reach a loan book of INR1,000 crore in just 11 month’s time by November ’23. We opened our 100th branch in December ’23. Incidentally, this branch was also our first women-only branch that was set up in Chennai. With increased branch footprint, our loan book growth was even faster from there on, and we ended the FY24 at a loan book of INR1,790 crore in March ’24.
As I mentioned, we crossed INR1,000 crore of loan book in November ’23. The next INR1,000 crore came even faster, and we crossed loan book of INR2,000 crore in the next six months by May ’24. We also opened 60 more branches in Q4 of last financial year. I’m happy to share that all these new branches have been fully operationalized in the last few months. With these 160 branches across the country, we are catering to 130-plus high-potential targeted districts across 13 states in the country.
We are operating in the three zones and contribution is evenly distributed amongst all these three zones. North zone accounts for 34% of our business. Contribution from West Zone is about 36% and South accounts for 30% of our business. We have a national presence, and this helps us in scaling up faster across all regions in the country. In the last few quarters, we have worked hard to expand and strengthen our distribution. We have impaneled close to 2,000 connectors through our Roshni Darsi program. We have also impaneled close to 500 channel partners for DSA partnership. We have also strengthened our vendor support network for legal, technical, FI and FQ related checks with more than 1,000 impaneled vendors across the country.
We have also used technology solutions extensively to strengthen our operational framework. The last quarter has been our best-ever quarter in terms of log-ins and sanctions, and we have been able to build a robust pipeline, which will support the business growth going forward.
Roshni loan book has witnessed a 3x year-on-year growth as we have ended the last quarter at a loan book size of INR2,959 crore as compared to INR745 crore that we had at the end of quarter 2 of last finical year. Quarter-on-quarter growth in the loan book stands at 25% plus. Roshni disbursements have also seen a robust growth, year-on-year growth of 58.4% as we disbursed INR630 crore of loans in the last quarter as compared to INR374 crore of loans, same time last year. While we have grown our disbursement significantly, it is important to note that we have also improved our incremental yield simultaneously. Yields for incremental business have gone up to close to 12% this quarter as compared to 11.4% same time last year and 11.58% in the previous quarter.
We have been able to improve our yields through an increased focus on high-yielding segments and products. Self-employed sourcing has gone up to 43% in the last quarter as compared to 35% last year. Sourcing from informal income segment has gone up to 29% in the last quarter as compared to 23% previous quarter. Our non-home loan sourcing has also gone up to 35% in the last quarter as compared to 25% same time last year. With most of the new branches getting opened in Tier 3 and Tier 4 locations, this will become an additional factor, and we are confident our yields will continue to improve. On the portfolio quality side, we don’t see any early warning signs. As I mentioned earlier, we have been able to execute really well on the strategic plan that we have for Roshni business, and we are confident that we will be closing this financial year with a loan book of close to INR5,000 crore. Thank you.
Deepika Gupta Padhi — National Head (Investor Relations and Treasury)
Thank you, Anujai. I’ll now request Jatul, our Chief Credit and Collections Officer for retail to talk about credit and collection performance.
Jatul Anand — Chief Credit and Collections Officer
Yes. Good evening, everyone. Moving on to cover the portfolio quality and credit. Well, I can say that our PNB housing is risk first in business mix. Credit underwriting plays a crucial role in driving business and building a strong portfolio, ensuring sustainable portfolio quality. This function here operates independently assessing both the financial capability and collateral through dedicated legal and technical units.
The company today manages a robust and seasoned portfolio of around INR68,000 crore, consistently achieving steady year-on-year growth. With a deep understanding of the various facets of the mortgage industry and the relevant experience of our team, we make informed onboarding decisions. This expertise allows us to build a diversified portfolio, maintaining a balanced distribution across various industry segments, low and mid-ticket size cases being focused, and a healthy mix of salaried and self-employed customer segments.
As the business grows organically, our well-established centralized monitoring mechanism conducts periodic dip testing of the portfolio on us and off us, providing an eagle-eye view of our business health. So as we speak, our portfolio shows no sign of stress. Covering the credit process flow evolving around login, credit appraisal, collateral assessment, and finally, the disbursement, each of these stages ensure that the lending process is thorough, minimizing the risk and maximizing the profitability of repayment. Right from the loan application submission, which is done through our digital platform till disbursement at each stage of the appraisal, one or another digital tool deployed by the company, be it the e-verification of documents to automated cams and bank statement verification, et cetera, this ensures faster and timely delivery to the customer.
Now moving to the portfolio highlights for quarter two of the current year. The company witnessed business growth, as already mentioned. As envisaged with respect to focus areas of control, 94% of the fresh sanction volume ticket size of up to INR1 crore, 87% of our incremental business had bureau score of more than 700, having all the checks and balances in place with respect to prudent appraisal and managing early mortality, the delinquency in the business booked in the last few quarters is well within the tolerable limits. To give you an idea as on 30th September, 30-plus from last 12 months origination is 0.1% and with the marred NPA that is 90-plus is 0.02%. If I go back and see the last 24 months also, 30-plus is 0.43% and NPA is at 0.09%. So that gives us the confidence to enable business growth with sustainable portfolio quality.
Now moving further to collections and recoveries. The company has been witnessing a successful trend over the past few quarters with complete grip on delinquent accounts, various approaches of curing methods put to use, ensuring sequential reduction in NPA quarter-on-quarter. The strategy which we designed in the recent past and implemented at ground is yielding desired results as per our plan. Resolutions across buckets have been improving, driven by strategic interventions, both from a process excellence and technology leverage point of view. The focus continues to remain on early delinquency management through leveraging deeper analytics and focus to increase self-curing of early delinquency, deployment of predictive AI models to improve accuracy on pre-delinquency management, and ongoing monitoring and prompt resolution of any early mortality cases arising from the recent acquisitions.
And the next focus area, which is to arrest the vintage delinquency is control over the NPAs and recovery from the written-off pool. This is being enabled with the use of effective legal tools or measures to restrain delinquency, leverage of end-to-end technology through a collection application, which is being used to track the collection field performance, digital capturing of payments, and enables us to review through dashboards and various analytics. Optimizing the process for one-time settlements and reserve price fixations et cetera, strengthened our auctioning process. I will just cover the numbers in a minute to ago and month-on-month consistency of sale of repossessed assets by taking one of its kind industry-wide initiatives, which has really helped us to get to the desired results.
Over to quarterly update, the company closed the second quarter building on the momentum we established in Q1. Performance was robust in Q2, whereby we beat our Q1 numbers on almost all the measurable success metrics. Our ongoing rigor on SARFAESI saw us take over 300 possessions in quarter two, which is far more than what we did in quarter 1, close to 170-odd positions. Further to dispose of these assets, we successfully sold out 134 properties in Q2 as against 98 in Q1 through the auctioning channel. So this vertical — this has been a very — success in disposing of the assets as well as the reduction in NPAs by taking one of its kind initiatives, as I talked about, be it marketing, be it creating awareness to dispose of these assets.
In terms of recovery from the technically written-off pool, we collected almost around INR50 crores in quarter two as against INR28 crores in quarter one. So the strong control over recovery and resolution mechanism has set a growth trajectory in terms of robust portfolio with even lower delinquency. Given the proficiency in handling all aspects of collections, recoveries, to sale of assets, and overall resolution mechanism over the last few quarters, the company has set a path for reducing NPAs further and build a robust portfolio with steady growth. Thank you.
Deepika Gupta Padhi — National Head (Investor Relations and Treasury)
Thank you, Jatul. I’ll now request Anubhav, our Chief Technology Officer, to talk about our tech initiatives and its progress.
Anubhav Rajput — Chief Technology Officer
Thank you, Deepika, and a very good evening to all. PNB Housing Finance technology function continues to evolve on the part of transformation agenda that was initiated in quarter four of FY24. I’m pleased to share that as part of our transformation journey, we have upgraded and replaced our key core platforms like CRM, dialer, LOS, website, and deposit. We have also reduced additional tech-led channels for sales, collections, operations, and customer service functions. All the new platforms are high performing in terms of functionalities, features, capacity, and performance. The new and upgraded platforms are set to deliver long-term robust tech capabilities for our business segments and customers. Our long-term technology vision is to be recognized as a large tech-led digital player in the HF ecosystem, partnering with various fintech banks and aggregators through scalable digital platforms and tech services, which are integrated end-to-end.
All our technology investments are aligned to the business strategy and direction and focus on five strategic pillars. The first is delivering a frictionless customer experience. This aims to simplify and enhance experience for our customers across all channels and touchpoints. We have launched a new website that provides far more information and the same is disseminated to our customers and prospects. We have introduced self-service channels like chatbots and WhatsApp bots where almost 17% to 18% of customer requests are being self-serviced 24/7.
Our second strategic pillar is end-to-end sales enablement. Initiatives like introducing a sales mobile app for our frontline, automated lead scoring and allocation have been implemented. We have also introduced a fully functional app for our collection agents to be better equipped with all data and details in a secured manner to improve collection efficiency. The third pillar is creating underwriting at scale. This focuses on our credit function, where we have built several calculators. Automation for underwriting includes digitalization of complete underwriting rules using a robust rule engine and the same have been implemented and used widely.
Our fourth pillar and focus area is to evolve into a data-driven enterprise. We continue to invest in building data analytics capabilities across organization. We are in the process of setting up a vast data lake to build an integrated analytics view and enterprise and business segments, which will be used for developing numerous analytical models for prediction of risk, delinquency, conversion propensity, and MIS reporting across hierarchy for better management and control of the business. And our last pillar of focus is tech innovation and performance. While delivering superior business capability, we are also focusing on building internal tech skills and capabilities, specifically in areas around cloud, mobility, engineering, performance engineering, tech monitoring, and information security, which are very relevant in the technology landscape of today.
In recent quarters, we have automated a considerable part of our customer service touchpoints and reduced digital channel for customers who connect with us. As on date, these self-service channels are working well for us and have led to improvement in CCAC as well as unlock better productivity for our operations teams. Sales enablement initiatives include introducing modern and integrated LOS platform that has better control workflows and improved form-filling capabilities through automation and integrations. During the onboarding journey, we are now more than 80% digitized for the affordable segment, and we are launching the pilot phase for prime and emerging business segments.
Entire field collection team is enabled with a robust mobile app that provides all details on delinquent cases, field tracking, complete payment automation workflow, and associated capabilities for collection agents to leverage. Lastly, we have set up 24/7 information security monitoring capabilities and continue to build resilience on our technology platforms in line with the new and emerging cyber threat landscape. Information access for users is also controlled using relevant tools, which were purely on a zero trust architecture model. Thank you.
Operator
Thank you, Anubhav. Fazal, you can open the forum for the Q&A.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] Our first question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead.
Abhijit Tibrewal
Hi, yeah. Good evening, everyone. Thank you for taking my question. First of all, congratulations on a good quarter and again congratulations to Girish sir for recently completing I think two years at PNB Housing. So first of all, I mean, thank you for, I think, very enhanced disclosures that we are giving in the presentation. I think we also started reading out incremental yields. So I think that’s where my first question also was that in terms of incremental yields that we’ve given out in prime, emerging, and affordable, what proportion of this increase in incremental yield that we’ve seen over the last two quarters? What proportion has come from a product mix change? And what percentage has come from an increase in yields that you have been able to take in home loans?
Girish Kousgi
Thank you so much. Thanks for the compliment. So the plan this year was to increase the yields on all the three segments starting from affordable, emerging, and prime. So we started focusing on increasing yields, let’s say, from June of this year because quarter one, given the constraints and cyclical, and therefore, we started this a couple of months late, and we are seeing good traction. So if you look at any of the segments whether it is affordable, emerging, or prime, yield is driven largely by customer segment, geography, product, and the program mix. So these four things have driven towards increased yield in all the three businesses, prime, emerging, and affordable.
Abhijit Tibrewal
Got it. And sir, I mean just a related question on yields again. I mean, emerging, affordable, I mean we can understand, but the fact that you’re also able to take yield improvements in prime, which is commendable given the kind of competitive landscape that we have in the country. So what is allowing us to improve yields even in prime?
Girish Kousgi
So as I mentioned, even on the prime side, we are where we are and we will be always exploring opportunities, subsegment within prime so that we try and increase yield. It’s also a combination of the program and the product mix and customer segmentation within the prime.
Dilip Vaitheeswaran
Yes. To add to what Mr. Kousgi said, I believe the two bigger levers in prime side of the business, which have helped improve yields is one is shift down the pyramid. So we have vacated the sort of ultra-HNI kind of customer segment. We see possibility to charge better premiums when you go down the income segment. That is number one. Second is a little bit of product mix as well. We’re doing a little more NHL than what we used to earlier. We are also trying to see if we can move up that ladder. Combination of these and some of the factors, which Mr. Kousgi explained is helping us increase our yields.
Abhijit Tibrewal
Got it. Thanks, Dilip. And my second question was on margins. When Vinay sir was giving out his opening remarks. I think I heard that, I mean, while I mean, margins have been good for the first half of the year are you still guiding for a margin of 3.5%? So I mean, should we then conclude that maybe for next two quarters, we could see some new volatility and then as per your guidance, NIM should start improving from the next year onwards?
Girish Kousgi
See NIMs will start improving maybe after two, three quarters, right, as I’ve been mentioning since a very, very long time. We are putting in all the efforts to protect the NIM. We have given guidance of 3.5%, that is a threshold. So NIMs will be upwards of 3.5% while the endeavor will be to try and maintain at around 3.64%, 3.65%.
Abhijit Tibrewal
Got it, sir. That’s good. Sir, last question again is — I mean, I think you’ve guided that for the next four to six quarters, we’ll continue to see recoveries from the written-off pool. I think — I mean this was the second quarter where we took a provision write-off — provision write-backs in the P&L. So two things I want to understand in terms of recoveries, one is, when will we go for repossessions and auctions in retail? What is the recovery that we see, in other words, what is the haircut that we are seeing in retail when we go for recoveries? And secondly, given that you spoke about almost INR1,250 crores of written-off pool in corporate and corporate recoveries can be lumpy. Anything happening on the corporate recoveries? And are you expecting any corporate recoveries in the second half of this fiscal year?
Girish Kousgi
Yes. So as of now, we have INR1,250 crores written-off on the corporate side and INR500 crores on the retail side. And if you look at quarter one and quarter two, I think together, we’ve done about INR28 crores plus INR48 crores in quarter one and quarter two, little over INR75-odd crores. So this story will continue for next four to five quarters. On the corporate side, as I had mentioned in the last earnings call, we were able to recover a bit in quarter one. So in H1, we can expect good recovery on the corporate side, also on the written-off pool.
Abhijit Tibrewal
Got it, sir. Sir, this is useful. Thank you so much and I wish you and your team the very best.
Girish Kousgi
Thank you. I think I didn’t mention H1. I think in H2, we are expecting recovery from corporate also and retail recovery would continue for next five to six quarters.
Abhijit Tibrewal
Okay. All right. Thank you so much.
Operator
Thank you. The next question is from the line of Renish from ICICI. Please go ahead.
Renish Bhuva
Yeah. Hi. Hi, team. Congrats on a good set of numbers. First question, again, on the credit cost side. So of course, we need to understand that the revamp of collection, underwriting structure is helping us in better recoveries, et cetera. But on a normalized basis, given now corporate is only 2% so what kind of a steady state credit cost one should assume in retail business, especially when we are, let’s say, over the next couple of years affordable and emerging will be larger piece than prime? In a way, these two segments would be slightly more vulnerable than prime. So what steady state credit cost one should assume for PNB Housing going ahead?
Jatul Anand
So on a steady state, for example, we have given a guidance in terms of retail book growth, reaching INR1 lakh crore by FY ’27 with a mix of 15% in affordable, 25% in emerging, and the balance in prime. So on a steady state, given the mix between these three segments, we should look at credit cost of about 40 to 42 bps.
Renish Bhuva
Sorry, 40 to 45 basis points?
Jatul Anand
Yes. 40 to 42. 41, 42 bps.
Renish Bhuva
Got it.
Jatul Anand
So I think — see on prime, we are expecting on a steady state credit cost of about 18 bps, on emerging around 20 to 24 bps, on affordable since we are focusing on the low risk and within this segment we are expecting about 50 bps. So as a combination blended within retail, we’re expecting credit cost around 41, 42 bps.
Renish Bhuva
Okay. Maybe I think if we go by this mix and the kind of credit cost you highlighted, I think the blended should be lower, but anyways, we’ll discuss separately. Sir, second question, again, on the yield side in the prime segment. As Abhijit was mentioning, this is one of the most competitive product per se. And in that segment, from last two, three quarters, we are seeing a steady improvement on the business module as well as the book yield as well. So I mean, I do hear that we are vacating ultra-HNI and sort of going down the pyramid. But structurally, what are we doing to sustain this kind of yields on a more sustainable basis?
Dilip Vaitheeswaran
Yes. Dilip here, like I said, we are trying to be on the fringes of the outskirts of the city. We are trying to cater to middle-income customers, we are trying to do a little more of NHL as compared to earlier. Within these two, three levers, we are trying — we are able to fetch higher yields than before. And this is a journey, we have just started off. We have worked about 15 bps in the last six months. We believe there is still room for improvement here. I remember mentioning this in our earlier conversations as well, even if you take a city like Bombay, Delhi, NCR, the yields that the ultra-HNIs give us in the middle of the city are very different from what you get when you go to the outskirts of the city even to catering to salaried middle-income customers or self-employed customers gets us better yields. So between these two, three things and a little bit of product mix, NHL. We believe that we will be able to take the yields up. And early results seem to be showing that we are in the right direction. We will be moving ahead on this path.
Renish Bhuva
Got it. So I mean does that mean there is a significant change in the ticket size?
Dilip Vaitheeswaran
Not really. It’s come down a little bit. On the prime side of the business, we are in the range of INR35 lakhs. We’re trying to be more granular. We used — four, five years back historically we used to do many more cases which were sort of INR5 crores plus, and that has come down.
Renish Bhuva
Yes, that’s what, okay. Got it. So earlier maybe we were in crores, now we are in lakhs.
Dilip Vaitheeswaran
Yes, a little.
Renish Bhuva
Okay, got it. And my last question on the cost of borrowing side. So despite the rating upgrade, incremental cost of fund has increased maybe marginally by certain basis points. But ideally, your incremental cost of funds should have come down, right? I mean, post-rating upgrade. So what am I missing here?
Vinay Gupta
It is basically, Renish, due to some mix as the bank mix between short term and long term do keep changing quarter-on-quarter. That has led to some impact between Q1 and Q2. We have also got some ECBs and NCDs traction starting from Q2 which is also playing out from improving the diversity and mix perspective.
Renish Bhuva
Got it. Got it. So basically, just a mix change, which is impacting this, there is nothing much to read?
Girish Kousgi
And also, if you see, we got the rating upgrade in quarter four of last year and quarter one of this year. So that will play out. And also, if you look at the difference between us in terms of cost of borrowing and some of the leadership for companies in terms of cost in the space, I think the gap is not much. So we’ll be able to cover that up, but also in the next three to four quarters time, it is a question of time. Now we are also looking at possible upgrade, and we should further improve on the cost.
Vinay Gupta
However, having said that, I mean, overall borrowing costs on the portfolio has improved by 8 bps. So there, we have worked across all the instruments.
Renish Bhuva
Got it, got it, sir. No, this is very helpful, sir. Thank you and best of luck, sir.
Vinay Gupta
Thank you.
Operator
Thank you. Next question comes from Nilesh Jethani from Bank of India Mutual Fund. Please go ahead.
Nilesh Jethani
Yeah. Hi, sir. Thanks for the opportunity. My first question is on the [Technical Issues]
Operator
Sorry to interrupt, Mr. Jethani, your line is breaking in between.
Nilesh Jethani
Am I audible now?
Operator
This is much better, sir. Please go ahead.
Nilesh Jethani
Okay. Thank you. My first question was on the affordable side. Just wanted to understand, considering these 160 locations that our branches are present, any sense or any understanding the corporates, which are operating around us, what could be typical even for branch for them? And of course, what kind of AUM per branch are we aspiring to when the target today is INR15,000 crore AUM by FY27? That is question number one.
Question number two is on what are you planning to do on the affordable side, trying to garner market share in Tier 2, Tier 3 cities or we are targeting a mix of virgin and market share gains? Just wanted to understand the philosophy.
Girish Kousgi
See, in terms of growth, we had guided 17%. So this could improve in the next couple of years. We are trying to scale up in all the three segments within retail. Now looking at CAGR in terms of all the three businesses and what we have spoken. So we are expecting to reach a book of about INR1 lakh crores by FY27. So this — by FY27, today, we are at 303 branches. So in the next three years, starting from this year, we will be able to reach to a level of 500 branches. So the split is going to be all the branches, what we’re going to open in future I think 75% to 80% would be on the affordable side and the rest would be on emerging side. I think 500 branches, INR1 lakh crores retail book by FY27, that’s the plan. And we plan to grow it about let’s say, this year, we have guided 17%, next couple of years would be slightly higher. I think that’s the plan.
In terms of affordable specifically, I would request Anujai to…
Anujai Saxena
Yes. On the affordable side, I’ll just try to set some context when we were working on the distribution blueprint for this business, we realized that there are about 155 districts across the country out of 550 to 600 districts that we had at that point in time. So around 155 districts were found to be high-potential districts for our kind of targeted business and out of these 155 districts, so far through these 160 branches, we are catering to about 130-plus districts already. These districts are concentrated in about 14 to 15 states in the country. Out of these 14, 15 states, we are already in some form, we are present in about 13 states. Within these 13 states and plus there are a couple of more states which we want to target, there is ample opportunity to open about 150 to 200 more branches.
Nilesh Jethani
Okay. And on the AUM per branch, just wanted to understand currently the locations where we are operating, our competition would be operating at what kind of AUM. Just wanted to understand, today our AUM per branch optically looks much lower considering the faster growth in branch addition what we have seen. Just wanted to understand say from tomorrow itself hypothetically we stop adding branches, so what could be AUM per branch potential for us in the current location itself?
Girish Kousgi
So I think talking about affordable if you see, some of the mature branches for us, we have reached now a little over INR2 crores per month. So we feel that on the affordable side, on an average, our branch could reach a potential of about doing INR3.5 crore disbursement every month. So that is, let’s say, after 12 to 15 months from the start. So depending on the vintage of the branch and the location potential, I think the branch could reach at, let’s say, about INR3.5 crores on an average.
Nilesh Jethani
Got it. And sorry to again circle back on the question. So when — sir, you mentioned that in the current branch — current location, there is scope to add even 150 more branches. So this refers to those are underserved areas or we can capture a higher market share in a decent size market? What’s the thought process?
Girish Kousgi
See, it will be a combination of Tier 2, Tier 3 and Tier 4, right, it will be a combination of yield and volume. So it will be a mix of these two. For example, Tier 2 and Tier 3 would get us more volume and part of Tier 3 and Tier 4 would give us a better yield. So it’s a combination of these two, which is why I mentioned, I think one branch in the month can reach to the max potential of, on an average, INR3.5 crores. So some of the — for example, some of the affordable branches, let’s say, in cities like Bangalore, Chennai, Hyderabad, could do even INR7 crores, INR8 crores per month. And some of the branches in Tier 4, they could do, let’s say, INR1 crores to INR1.5 crores, but the yield is going to be much higher. So it’s a combination of both yield and volume.
Nilesh Jethani
Okay. Got it. And one question on the corporate side. I wanted to understand the plan to rebuild up or refocus on corporate from next quarter onwards or maybe next two. Just wanted to understand how different this is going to be versus the earlier avatar where PNB used to fund lot of builder finance or something like that. So how different are we this time?
Girish Kousgi
Two things, we’ll be starting corporate in the next couple of months. And this time, it will be very different, we will stick to basics. And we’ll focus on ticket size around INR200 odd crores, we will not get into chunky deals, and this will be only into construction finance. And in terms of scale and size, corporate business at any given point in time would be less than 10% of the overall portfolio.
Nilesh Jethani
Okay. Got it. It was really helpful and thank you so much.
Girish Kousgi
Thank you.
Operator
Thank you. The next question is from Harshit Toshniwal from Premji.
Harshit Toshniwal
Yeah. Hi, sir. Am I audible?
Girish Kousgi
Yes, you are audible.
Harshit Toshniwal
Sir, on this affordable piece itself you mentioned that the incremental yield, which we are having is roughly around 12%, 12.5% right now. But if you look at this segment and the other peers, now do you think that this is a good enough yield to charge for that customer segment that can cover our OpEx and possible sustainable cyclical credit cost? That is the one. And the second part, sir, so how much of our new disbursements in this segment is through DSAs, specifically the affordable one? If you can help on that aspect? And when I say DSA, when you say that in-house, I mean, employee sourcing mostly through DSAs, I would also want to look at that mix, direct versus DSA part. And third, sir, if you can just give a breakup of the employees between the prime, emerging, and affordable as on today?
Girish Kousgi
So in terms of — see, within affordable, there are three segments. So low risk, medium risk, and high risk. So if you look at our yield in the first year, let’s say, till last year, the yield was about 11.4%, 11.5%. And this year, we have guided yield of about 12.6%. And for next year, the yield is going to be more than 13%. So this would be largely driven by no change in segment and change in profile both in salaried and self-employed, right? And we will be focusing on low-risk and medium-risk so we would not really focus on high-yield segment. And, therefore, according to us, I think yield from affordable segment would be a little over 13% is what we would focus on. There could be an opportunity at lower yield, there could be an opportunity at higher yield, but I think our focus would be on low risk and medium risk, and in terms of yield, next year, it’s going to be a little over 13%.
Harshit Toshniwal
Sir, just to hear that, at this point of time, when we look at our disbursement, are — basically customers would have otherwise gone to AHFCs like Aptus, Awaas, although the larger set of AHFCs, is our customer segment there very overlapping? And the second part was related to this itself of the incremental disbursement, how much is BT in our case, where we are basically — where basically it’s not a new loan, but it’s more coming from somewhere else.
Girish Kousgi
So in terms of the customer profile, I think, to a large extent, if we talk about low-risk and medium-risk I think the customer segment is same, number one. Number two, in terms of BT for affordable, it’s about 25%, 26%. And one more question you had asked in terms of what is the mix between direct and DSA. DSA is 31% in the affordable and the rest is direct.
Harshit Toshniwal
Got it. Got it. And sir, one last thing. I think on the employee part, can you give the breakup of employees between the three, specifically the sales or basically the branch employees?
Girish Kousgi
See, I think for us, whether it is credit or sales, basically, we have a branch structure. So in branch, we have different categories, low potential, medium potential and high potential. So low potential would have one sales manager, one credit manager and one ops resource. So if it is the mid-size, then we would have one sales manager and probably one ASM and one underwriter. If it is a big branch, then we could have two underwriters and we could have two ASMs and one salesmen. This is our structure. In terms of total headcount…
Vinay Gupta
Total headcount on, say, sales side on an overall basis, around 25% would be Roshni, affordable. The rest is between prime and emerging.
Harshit Toshniwal
Okay. 25% would be affordable. So I remember, sir, you last time mentioned that there were 333 employees in the affordable segment.
Anujai Saxena
Yes. Now we have a little over 400 employees in Roshni.
Harshit Toshniwal
Okay. Got it. Thank you.
Operator
Thank you. Next question is from Viral Shah from IIFL Securities.
Viral Shah
Yeah, hi. Thank you for the opportunity to ask questions. And congratulations on a good set of numbers. So, Girish, first question was on the point of with regards to the NIM. I know that this was asked. But wanted to check, given where we are, does it make sense for us to say, raise the guidance? Or as you mentioned that this is the threshold, is it after taking into account, say, any impact of potential rate cut?
Vinay Gupta
Yes. That’s right, Viral. The environment is slightly volatile. So we are baking in the impact of the rate cut that can come in. Our endeavor is to maintain 3.6% plus. But yes, the guidance we would like to maintain 3.5% for the year.
Viral Shah
Got it, Vinay. And Vinay, as we go ahead as the mix kind of changes a bit more in terms of borrowings, do you see the cost of funds further inching up?
Vinay Gupta
No, not really. Cost of fund for us should remain in the similar range. Actually, it should see a downward trajectory.
Viral Shah
Got it. And the last question I had was with regards to the asset quality front. So you have given this data with regards to the 12 months and the 24-month MOB, how the delinquencies have trended on 30 and 90 plus. Can you help us with whatever these numbers say a couple of quarters back? And also, secondly, if you can help me with regard to the affordable segment of this piece?
Jatul Anand
See, Viral, early mortality always have been the focus of the company to monitor the early delinquencies of 12 months, which we have strengthened now to cover even up to 24 months. So if I look back a couple of quarters, I think these numbers are a shade better than the earlier times. And having said that — and even on the Roshni, Roshni is a pretty new book around INR3,000 odd crores. So there is hardly, I think, 10, 12 number of cases into NPAs, which are resolution is in process with sufficient cover available. So that’s not a significant number as of now.
Viral Shah
Got it, Jatul. Jatul, when you said that these overall numbers are a shade better than what they were. Are you referring to say versus two or three years back? Or are you referring to, say, two or three quarters back?
Jatul Anand
So around six to eight quarters back, and this I’m talking only on aspect of early mortality. And overall, also, as you can see the graph quarter-on-quarter on NPAs particularly coming down each quarter. So that is on NPS. But having said that the pre-delinquency management has been strengthened because the business is on a growing spree now. So we need to have stronger controls to restrict flows. If our flows are restricted and we have a well-defined strong mechanism in terms of taking properties to SARFAESI and then auctioning it on a regular basis, almost, we are selling two properties a day now. So that machinery will take care.
Viral Shah
Got it. That makes senses and thank you so much. And all the best.
Jatul Anand
Thank you.
Operator
Thank you. The next question is from Omkar Shinde, who is an Individual Investor. Please go ahead.
Omkar Shinde
Yeah. Thank you for taking my question. I have a few clarifications before I ask my question. So we said that we target INR1 lakh crore AUM by FY ’27 and 15% of it will be affordable, was that correct?
Vinay Gupta
Yes, that’s right.
Omkar Shinde
And two more clarifications. In one of the previous questions, you had said that credit cost in the affordable segment could be somewhere in the region of 50 bps, 50 or was that 15, I did not get that properly.
Vinay Gupta
50.
Omkar Shinde
50, okay. And now coming to the question. So again, with respect to the branch structure, you had said the small branch will have one salesperson, one credit person for the small branch. So is this also applicable for our affordable branches? Because now as you said, 12 to 15 months is the gestation period for a branch to reach INR3.5 crore disbursement per month. So some of our earlier branches would have reached that. So would they still — so where in the small, medium, large would these earlier branches be now? And how — could you just reconfirm the medium and large structure?
Girish Kousgi
What I had mentioned was for affordable. And what would happen is that, let’s say, you open a branch, okay? And depending on the potential, you will increase the manpower and then the branch could peak to a peak level of INR3.5 crores. So this also has a combination of, A, geography, B, in terms of potential. So on an average, every — let’s say, we have, let’s say, 300, 400 branches with a vintage of, let’s say, 15 to 18 months’ time. OI an average, I think the peak could be about INR3.5 crores. So the branch structure, what I mentioned was for affordable. On the emerging and on the prime, one branch could have multiple ASMs, multiple ROs for field executives, sales executives, and one branch manager. When I say branch managers, sales manager, and then we would have credit and ops.
Omkar Shinde
Understood. So I was asking with respect to that only, for affordable itself. So when the branch reaches its peak level of INR3.5 crores, INR4 crores, what is the structure? And like is that at that point of time, it is like a large branch or a medium branch that I wanted to understand.
Girish Kousgi
So let us say, we’ll categorize A, B, C category, right? A category branches would be doing, let’s say, about INR6 crores to INR7 crores. B category branches would do about, let’s say, between INR4 crores to INR4.5 crores. And C category branches at its peak would be at INR1.5 crores, INR1.8 crores only. So it depends on the category of branches, which is to the potential and the geography. And therefore, I always talk about average.
Omkar Shinde
Understood. Now with respect to sanction to disbursement, now what I have seen is on a quarter-on-quarter basis from the — what is mentioned in slide number 21, our sanctions have — sanction to disbursement ratio has dropped to 56% approximately from 75% in Q2 last year. Why is there such a big drop in the sanction to disbursement? And do we — are we going to see some spillover effect in the coming quarters for this? Just wanted to understand this.
Girish Kousgi
This, you are referring to the affordable business?
Omkar Shinde
Correct. Yes, slide number 21, so INR630 crores of disbursement against INR1,100 crores of sanction, 56%. So there is a big drop from last year where it was approximately 75%. So why is there a decline?
Anujai Saxena
Yes. So there is a decline only because of some process-related changes that we have done in July. But if I look at my — so the quarterly numbers are lower as compared to the previous quarter. However, if I look at standalone numbers for August and September month, our conversions are back in order. And from next quarter onwards, we’ll be able to see the similar conversions upwards of 70% as we move forward.
Omkar Shinde
Understood. And finally, with respect to the incremental yield, we are at approximately 12% as per the slide mentioned. Where does the incremental yield settle over the next three to four quarters because when the rate cut starts to come from RBI, we will also have some — very little headroom. So what do you think that the incremental yield and the overall yield will peak out in the affordable segment?
Anujai Saxena
So when it comes to incremental yield, we are confident we will move towards close to 13% of yield.
Girish Kousgi
See, I think the context is today to look at our cost of borrowing is around 7.8%, 7.85%, right? With this cost of borrowing level, we are talking about affordable yield of 13% from next year. Suppose let’s say the rate goes down, let’s say, by 100 bps, so then the 13% would slightly moderate to that extent, it might slightly come down. So what we are saying is we will protect the margin. So for affordable business on a steady state the yield is going to be 13-plus percent, 13% to 13.1%, 13.2% given the current cost of borrowing, so if there is any change in the cost of borrowing, accordingly, even the yield would vary.
Omkar Shinde
Okay. Understood. And just finally, one last one. The overall OpEx to AUM is also increasing, that is, I think, as a function of us expanding the branches very fast. So where does that finally settle over, say, by FY ’27 when we reach the INR1 lakh crore AUM, can you guide where in the ballpark range would that OpEx to AUM be?
Vinay Gupta
See, we are expecting it to settle at the current levels of 1% to 1.1% where it is right now. A large part of the upfront investment is done. Now it will be a minor investment of 40, 50 branches every year, which we will manage through the economies of scale in other business.
Omkar Shinde
Okay, thank you. That was helpful.
Operator
Thank you. The next question is from Nikhil Kumar Agarwal from VT Capital. Please go ahead.
Nikhil Kumar Agarwal
Hi, thank you for taking my question. I just had one question. You said that NIM will start improving after a few quarters. And since cost of funds is going — like incremental cost of funds is going to be at the current level of 7.8% and yields are improving across products, then NIM should ideally start improving right now, right, as in from next quarter itself. So it should go very well as per whatever you have said about yields and cost of funds. So can you please give more light on this?
Girish Kousgi
So there are a couple of things. So one is we will be starting corporate shortly. Once we start corporate business then it will add to yield, number one — into margins. Number two, we also have book depletion on prime, emerging, and very, very small extent on the affordable. So that is one which will again impact revenue and therefore, the margin. Number three, we also have a repricing policy where we try to retain the customer and switch from a higher interest rate to a slightly lower interest rate. Now these things would pull the yield down, while on one side, the yield would come down because of foreclosure, because of repricing, on the other side, we are changing segments. We are moving more towards affordable and emerging. We are increasing the mix change which would come at a higher yield so this would though ensure that the yield would go up. So because — I think this balancing would play out in the next two to three quarters and post which the yield will start going up.
Nikhil Kumar Agarwal
Okay. So because of the dragging effect of the things that you mentioned, the current yield will be maintained for a few quarters. And then net-net, yield should start improving after two to three quarters is what you’re saying?
Girish Kousgi
Yes.
Nikhil Kumar Agarwal
Got it. And one last — one clarification, you have already mentioned this, but I couldn’t get it earlier. You said that once we start corporate book in a few months, the difference between this new corporate book and the one we used to have is in terms of ticket size. So if you could please mention the differential ticket size that you did mention earlier as well? And the other thing that you said was — so what was the other thing? Ticket size and the other thing was?
Girish Kousgi
So one is we will start this business in very few select cities. We would focus on good quality developers category A and category B. Third, we would do largely construction finance business, we’ll keep the ticket size lower. So basically, we would focus on very good quality of developers and good projects. There the yields could be lower compared to what normally this business would fetch. We are looking at a yield of about around 12%, 12.25%, so yields would be lower, much safer business. So these are the changes.
Nikhil Kumar Agarwal
Okay. Yield would be 12% to 12.25%?
Girish Kousgi
Yes.
Nikhil Kumar Agarwal
And ticket size would be?
Girish Kousgi
About INR200 crores.
Nikhil Kumar Agarwal
INR200 crores. And ticket size in the corporate book that we used to have earlier, that was?
Girish Kousgi
That was about INR350 crores, INR400 crores.
Nikhil Kumar Agarwal
Okay, perfect. Thank you so much. Best of luck for the upcoming quarters and congratulations on a good quarter.
Girish Kousgi
Thank you.
Operator
Thank you. The next follow-up question is from Harshit Toshniwal from Premji. Please go ahead.
Harshit Toshniwal
Hi, sir, sorry, one thing which is left. Sir, I’m just trying to do a calculation that we have INR630 crores of quarterly disbursement in affordable, roughly INR200 crore per month, and you said 70% is in-house. So that converts to INR150 crore of disbursal per month in the affordable. Am I right till here?
Girish Kousgi
Yes, you are right.
Harshit Toshniwal
Just one question is that if you say that 400 employees is what we have in this segment sales, then that — to something like INR3.7 million per employee per month disbursal, which is, say, 2x, 3x of any other year. So if you can help me that is our direct sourcing or basically non-in-house sourcing much higher than 30%? Or where am I going wrong? Because INR3 million to INR4 million disbursement per employee per month would mean sourcing of at least INR7 million, INR8 million.
Anujai Saxena
Yes. Harshit, I’ll just clarify that. So 400 employees that we talked about, these are like all the full-time employees in Roshni business, they are spread across sales, credit, operations, legal, technical, all the various functions, right? Plus on the top of that, we — see, when it comes to our DST team, the feet on field that we have, the sales staff, the front line sales staff, that is managed through our subsidiary which is PHFL and that number for sales right now is around 900. So just to clarify further, if I take a monthly volume of about — so September, we did INR275 crores. Out of that, about 59%, close to 70% of business was sourced in-house through these 900 people. My average productivity per sales staff, per sales employee, typically is around INR20 lakh to INR25 lakh per month. I hope that clarifies.
Harshit Toshniwal
Yes, that helps, sir. Because this 900 is basically are — so it’s a 100% subsidiary which does — for us.
Anujai Saxena
That’s correct.
Harshit Toshniwal
Okay. And the cost of this will be more the — I just wanted to understand more about the subsidiary. Does this source purely for PNB Housing Finance in affordable or…
Anujai Saxena
Yes. No, not specifically for affordable. They support all the three businesses, prime, emerging markets as well as affordable. But these 900 people are dedicated affordable business sales staff.
Deepika Gupta Padhi
And they do business only for PNB Housing.
Anujai Saxena
Yes.
Harshit Toshniwal
Got it. Okay.
Operator
Thank you. Ladies and gentlemen, we’ll take that as our last question. I would now like to hand the conference over to the management for closing comments.
Deepika Gupta Padhi
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 and the audio of this call will be uploaded on our website, that is www.pnbhousing.com. Thank you.
Operator
[Operator Closing Remarks]