PNB Housing Finance Ltd (NSE: PNBHOUSING) Q3 2025 Earnings Call dated Jan. 21, 2025
Corporate Participants:
Deepika Gupta Padhi — Investor Relations
Girish Kousgi — Managing Director and Chief Executive Officer
Vinay Gupta — Chief Financial Officer
Dilip Vaitheeswaran — Chief Sales Officer
Anujai Saxena — Business Head – Affordable Business
Bhavya Taneja — National Head – Marketing
Jatul Anand — Chief Credit and Collections Officer
Anubhav Rajput — Chief Technology Officer
Analysts:
Ashwini Agarwal — Analyst
Sanket Chheda — Analyst
Renish Patel — Analyst
Viral Shah — Analyst
Abhijit Tibrewal — Analyst
Suraj Das — Analyst
Aditi Nawal — Analyst
Kamal Mulchandani — Analyst
Anurag Mantry — Analyst
Kunal Shah — Analyst
Himanshu Taluja — Analyst
Ankit Minocha — Analyst
Anusha Raheja — Analyst
Vijay Shah — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the PNB Housing Finance Limited Q3 and Nine Months FY ’24-’25 Earnings Conference Call. 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. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms Dipika from PNB Housing Finance Limited. Thank you, and over to you.
Deepika Gupta Padhi — Investor Relations
Thank you,. Good evening, and welcome, everyone. We are here to discuss P&B Housings Finance Q3 and nine months FY ’25 results. You must-have seen our business and financial performance in the presentation and the press release, which are shared on the Indian Stock exchanges and is also available on our website. With me, we have our management team, led by Mr Girish, our Managing Director and CEO. We’ll begin this call with the performance updated by the team, followed by an interactive Q&A session. Please note, this call may contain forward-looking statements, which exemplify our judgment and future expectations concerning the development of our business. These forward-looking statements involve risks and uncertainties that may cause actual developments and results to differ materially from our expectations. CMB 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. Over to you, sir.
Girish Kousgi — Managing Director and Chief Executive Officer
Hello, good evening to all the investors. Thank you for joining us late evenly. When we started this financial year, we shared our long-term vision of achieving 17% retail loan book growth, increase in-sourcing from affordable and emerging market segments to drive profitable growth and to be one of the best-in the industry with respect to asset quality. Today, I will talk about all these parameters and what we have achieved so-far. During the quarter, the company surpassed its retail book growth guidance of 17% Y-o-Y and registered a growth of 17.5%. This is the highest retail book growth in last 22 quarters. The retail book increased by over INR10,000 crores in last one year and crossed INR70,000 crores to INR70,676 crores as on 31st December 2024. This is the highest retail book ever for the company. This is despite business headwinds in-markets like Karnataka and, impact of Hydra in Hyderabad, elections in Maharashtra and certain weather-related events in Pradesh. As we made an inroads in affordable segment, we have doubled the book in last nine months from INR1790 crores in March ’24 to INR3,838 crores in December ’24. With a focused approach, we aim to take this book to INR5,000 crores by end of this financial year. Our another segment is emerging market is also ramping-up well and has shown a book growth of 23% Y-o-Y at INR13,169 crores. Seeing this growth, we are confident to achieve our stated target of INR1 lakh crores retail book by end of FY ’27 with affordable segment contributing 15%, that is INR15,000 crores, emerging markets 25%, that is INR25,000 crores and the remaining from prime business. Retail disbursement grew by 31% Y-o-Y to INR5,380 crores during quarter three FY ’25. Affordable and emerging market segment contributed 38% to total retail disbursements in-quarter three as compared to 29% in-quarter three of last year. The company registered decline in gross NPA quarter-on-quarter, which stood at 1.19% as on 31st December 2024 as compared to 1.24% on 30th September 2024 and 1.73% as on 31st December 2023. As per ICRA estimates, the GNP of HFCs is expected to remain stable at 2.1% to 2.3% as of March ’25 with the overall resolution approach of the company, that is recoveries, write-offs, et-cetera, our gross NPA is expected to stay much below the industry average., the company works with multiple lenders and received NHP sanction of INR5,000 crores and ECB sanctions of USB 350 million during the first-nine months of the year. These sanctions are partially drawn. Despite tight liquidity conditions in the market, we maintained on-book liquidity of INR6,400 crores and has additional sanctions but undrawn lines of INR8,000 crores as on 31st December 2024. In-quarter three FY ’25, PAT stood at INR483 crores, registering a growth of 43% Y-o-Y. NIM improved to 3.7% during quarter three FY ’25 in comparison to 3.68% in the previous quarter. ROE stood at 2.51% annualized in-quarter three FY ’25 and 2.48% annualized for first-nine months. On loan book, as on 31st December 2024, the retail book is at INR70,676 crores with affordable and emerging market segment shared at 34% compared to 20% in the previous year. On the back of industry growth and the company performance, we maintain a guidance of 17% retail loan book growth for FY ’25, we might surpass 17%. The corporate loan book now stands at INR1,241 crores. The total loan book stood at INR71,917 crores. And asset under management is at INR76,840 crores. During the quarter, disbursements grew by 30% on Y-o-Y basis to INR5,380 crores. On incremental needs, we will continue to work on improving yields in all the three verticals. The incremental yield in the affordable segment increased to 12.14% in the quarter three FY ’25 as compared to 11.6% in-quarter three of last year. This is in-line with our guidance of getting close to 12.5% on incremental yield for this year. The incremental yield in emerging market segment is at 9.8% in-quarter three FY ’25, which is 41 bps more than the prime segment. We currently have a strong network of 305 branches across 20 states and we plan to open 50 branches in-quarter four. Taking affordable branches to 200 from current 161. With this large presence, we are ready to capitalize the opportunity available in affordable and emerging market segment in year two and Tier-3 cities. On asset quality, our overall collection remained strong during the quarter and we recovered INR53 crores from retail written accounts, contributing to reversal in credit cost to minus 19 bps. The company has a written-off pool of around INR1,250 crore in corporate and around INR450 crores in retail. The recent extension of PMFI 2.0 reflects the government’s broader mission of housing for all. We have signed an MOU with National Housing Bank under Urban 2.0 to support the eligible beneficiaries and the interest subsidiary scheme. It is an opportunity for players like us to span India presence and special focus on affordable and emerging market segment. The scheme is applicable from 1st September 2024 and in the last four months, the company has sourced close to 5,000 applications, amounting to about INR675 crores of disbursement, which are eligible under PMFI scheme. On the borrowing mix, our cost of borrowing during the quarter is at 7.83% as compared to 7.84% in the previous quarter and reduced by 24 bps Y-o-Y from quarter three of last year. The incremental cost of borrowing is at 7.82% during the quarter. Return-on-equity is at 11.81% annualized for nine months FY ’25 and capital adequacy is at 28.8% as on 31st December 2024. Overall, the company has achieved key milestones targeted for the year and continues to perform on the same.
Deepika Gupta Padhi — Investor Relations
I will now request Vinay, our CFO to talk about the financial performance.
Vinay Gupta — Chief Financial Officer
Thank you, Depika. Good evening to all the participants. I am happy to report another strong financial performance during Q3, led by robust growth in business. As mentioned by MD, sir, our retail loan book has grown by 17.5% year-on-year and disbursements grew by 31% year-on-year during the quarter. Now 38% of disbursements are contributed by and emerging verticals. Driven by strong growth in retail book, our net interest income for the quarter has grown by 17% year-on-year to INR696 crores. Cost of borrowing has further come down by 1 bp and is now stabilized at around 7.83%. Most of the benefit due to rating upgrade has now been realized in the borrowing cost. During the quarter, company received NHP sanction of INR5,000 crores, which we have drawn partially and plan to draw-down the balance in Q4. Company has also received ECB sanctions of around USD350 million in nine months FY ’25, which is also partially drawn. Spreads have improved sequentially from 2.2% to 2.29% during Q3. NIM has also improved to 3.7% during Q3 in comparison to 3.68% in the previous quarter. Gross margin is stabilized — stable at around 4.07% in Q3 versus 4.09% in Q2 FY ’25. In Q3 FY ’25, operating expenses grew by 22% to INR203 versus INR199 crores. This includes cost of 100 branches opened at the end of last financial year. Our cost to ATA remains stable between 1% to 1.1% as per our guidance. Led by strong revenue growth in this quarter, our pre-provision operating profit has grown in double-digit, that is 16% year-on-year now, even on an overall basis. Operating profit for retail segment has also grown at around 17% year-on-year. And we have also given a split of retail and corporate P&L in the presentation on Page 35. Credit cost remains benign even during Q3 due to recovery of INR53 crores from written-off pool. The credit cost after considering the recovery is a negative 19 bps for Q3. PAT grew 43% year-on-year to INR43 crores. ROA stood at 2.5% in Q3 and ROE is at 11.8% annualized for nine months FY ’25. The company has maintained average daily LCR of 193% for Q3 FY ’25 against the regulatory requirement of 100%. We have maintained SLR of 15% on public deposits as of December ’24 against the regulatory requirement of 13%, the SLR requirement is changed to 14% from Jan ’25. Capital adequacy stays strong at 28.8% with Tier-1 at 28%. With this all-round robust performance during Q3, we are on-track to deliver on our business and profitability guidance for the current financial year. Thank you,.
Deepika Gupta Padhi — Investor Relations
I’ll now request, our Chief Sales Officer for and Emerging business and Deposits to give a performance update.
Dilip Vaitheeswaran — Chief Sales Officer
Thank you, Dipika, and good evening, friends. I appreciate you taking the time-out late in the evening. I’m delighted to share with you that we had another good quarter in the prime and the emerging markets businesses for the company across disbursals, runoffs, asset quality and margins. Like Vinay and Mr explained, our disbursals grew by 30% plus Y-o-Y. The good thing is in-line with our strategy, the margin-accretive businesses grew at a larger pace. So in the businesses that I’m speaking about, the emerging markets and the NHL businesses grew at a better pace. Now this is despite some challenges faced in-markets like Karnataka and Hyderabad on account of Hydra, in AB on account of rails, Maharashtra, etc. I’ll go into detail on prime and emerging markets businesses on how they have fared this quarter. I’ll start with emerging markets first. Just to reiterate, we started-off this business with 50 branches in April 2024, we believe that these markets can grow at a faster pace and also give us better yields on incremental disbursements. These are the branches in non-metro locations outside of the top 15 20 cities. The portfolio here in terms of asset quality is also on par with the prime markets. We are very pleased to report how business is faring in this business after nine months of performance. Disbursals in these markets grew at 7% quarter-on-quarter sequentially, 39% Y-o-Y. This growth rate in the previous quarter was 31%. So not only has the quarter gone well, the growth rate has actually improved. The book in this side of the markets has grown by 23%, is now at almost INR13,000 crores. This business generates a yield premium or an incremental yield of 40 to 45 basis-points over the prime business. This is expected to go up in the quarters to come. Additionally, higher-yielding businesses like NHL, they’re consistently going up. They form about 35% of incremental disbursements in these markets, up from 25% last year. Again, NHL is a business which us 80 to 100 bps of premium over home loans. In these markets, 60% of business is sourced by our internal team and about close to 40% is sourced by our third-party distribution, which is BMS. So end of nine months of this financial year, we are very pleased to have started-off this business with a separate focus. Like Mr explained, the Roshni and emerging markets business put together may form 23% 24% of the portfolio, but are now 38% of the incremental disbursements. So you can see that the shift is towards the higher-margin businesses. So this will only increase in the times to come. Now coming to prime markets, most larger cities of the country, the metropolitan cities like MMR, NCR, Bangalore, Chennai, Hyderabad, Pune,, et-cetera, they fall into the prime markets for us. Now since these are larger markets with larger real-estate sales and volumes, so we witness more pricing pressure here also. The yield on incremental disbursement is a little lower here than the emerging markets. However, they contribute more to growth for us in absolute volumes like they do for most peers as well. On the prime markets also, we had a good quarter on disbursals, runoffs and margin improvement. Our disbursals grew by 15% in these markets. The book grew by about 11% to INR53,700 plus crores. We managed to maintain our runoffs here. The runoffs across prime and emerging markets are below 17% on an annualized basis. This is a good 100 plus basis-points improvement as compared to the last year. We are also working here on increasing our yield on incremental disbursements. So in nine months of this financial year, the yield has gone up in these markets by almost 20 basis-points. Sequentially, within the quarter, the yield went up here by-5 basis-points. We made an investment in new branches across both these businesses. We opened about 35 new branches in Q4 of FY ’24. I’m happy to share that these branches are auguring well. They contributed about 12% of disbursements in the 3rd-quarter of FY ’25. That number was 10% in the previous quarter and 6% in the first-quarter. So clearly, they are shaping up and contributing more to our growth. Since this investment has paid-off well for us, we have desired to open 10 more branches in the emerging markets business. Business. So we will be at 60 branches by the end of this financial year in the emerging market side and about 100 locations in the prime market side. So to summarize, growth in business is auguring well, thanks to our investment in geographies, markets and technology. The growth in the margin aggressive businesses, emerging markets, non-housing loans is happening as per our expectations. The shift in the customer segment and the geography mix is also happening as planned. For the first time, 53% of incremental disbursements across prime and emerging markets put together came from non-metro locations. Again, this number was about 50% last year. So the shift is happening quarter-on-quarter. And the asset quality for these businesses continues to improve quarter-on-quarter. So we believe that this quarter also, our performance is a testimony to the fact that we are on the right path and we will only move forward in these businesses on all three vectors, growth, margins and asset quality. Thank you. And back to you,.
Deepika Gupta Padhi — Investor Relations
Thank you,. We’ll request Anujay, our business head for Affordable Business to update on the performance of.
Anujai Saxena — Business Head – Affordable Business
Thank you, Vipika. Good evening, everyone. It is my pleasure to take you through the excellent outcomes that we have achieved in the last quarter in our business. We have ended the last quarter at a loan book of INR3,838 crores with a year-on-year growth of 234% from INR1,149 crore in Q3 of last year and a 30% growth over the previous quarter. I’m happy to share that we have doubled our loan book in the last nine months from INR1,790 crores in March ’24 to INR3,838 crores in December ’24. Disbursements have been witnessing a robust growth. Our disbursements in Q3 ’25 stood at INR920 crores and year-on-year growth of 127% as we had disbursed INR406 crore in Q3 of last financial year. Disbursements have grown 46% from the previous quarter, wherein we had disbursed INR630 crores. Our journey in the affordable housing finance space started in January ’23 with business disbursing INR5 crores of loans in that month. Executing well on our strategic plan, we reached a monthly disbursement run-rate of around INR100 crores per month-in about six months’ time by July ’23. We reached a loan book of around INR1,000 crore in just 11 months’ time by November ’23. We opened our 100 branch in December ’23. Incidentally, this branch was also our first women only branch that was set-up in Chinai. With increased branch footprint, our loan book growth was even faster from there on, and we ended the FY ’24 at the loan book of INR1,790 crore in March ’24. We eventually crossed the loan book of INR2,000 crore by May ’24. In the last one year, we have opened 61 more branches. I’m happy to share that all these new branches have been fully operationalized. And with these 161 branches across the country, we are catering to 130 plus high-potential targeted districts across 13 states in the country. In the last quarter, we had announced our plan to open 40 new branches by March ’25. I’m happy to share that we are on-track to open all these branches as per the stated plan. In this round of branch expansion, we will be entering two new states, Punjab and Haryana. We look-forward to developing these two high-potential regions for our business. We are operating in three zones and contribution is almost evenly distributed amongst all these three zones. North zone accounts for 34% of our business. Contribution from the West zone is about 36% and South accounts for the remaining 30% of our business. We have a true 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 paneled close to 2,000 connectors through our program. We have also empanneled close to 500 channel partners for DSA partnerships. We have strengthened our vendor support network for legal technical FIRCU-related checks with more than 1,000 apparel 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 logins, sanctions and disbursement. We have been able to build a robust pipeline, which will support the business growth going-forward as we move through the last quarter of this financial year. Our self-employed sourcing has increased to 44% in the last quarter as compared to 42% in the previous quarter and 39% same time last year. Self-employed sourcing now accounts for more than 40% of our portfolio. Share of informal income segment has also gone up to 34% in the last quarter as compared to 25% same time last year. Informal segment now accounts for close to 30% of the portfolio. While we have grown our disbursement significantly in the last few quarters, it is important to note that we have also improved our incremental yields simultaneously. Yields for incremental business has gone up to 12.14% this quarter as compared to 11.6% same time last year and 11.95% in the previous quarter. We have been able to improve our yield through continued focus on higher-yielding segments and products. With most of the new branches getting opened in Tier-3 and Tier-4 locations, we are confident our yields will continue to improve going-forward. On the portfolio quality side, we don’t see any early earnings signs. Our bounce rates are at close to 9%, which is in-line with the expectation in this segment and NPA stands at 0.2% in the last quarter. As I mentioned earlier, we have been able to execute really well on the strategic plan that we have for this business and we are confident we’ll be closing this financial year with a loan book of close to INR5,000 crores. Thank you.
Deepika Gupta Padhi — Investor Relations
Thank you,. I’ll now request Taneja, National Admarketing to talk about key marketing initiatives.
Bhavya Taneja — National Head – Marketing
Thank you, Depika. Good evening all. Considering the dynamic landscape of housing finance industry, PNB housing marketing strategy has played a pivotal role in maximizing growth opportunities for all our businesses. Grounded with deep understanding of our customers’ needs, choices and preferences, we have leveraged the key pillars of marketing through our brand-building, corporate deputation management and digital communication strategies to strengthen our brand positioning. Very happy to report that this quarter, one of the key highlights of our marketing journey was the launch of our very first brand mascot named. Aimed after our affordable housing product, which represents hope and positivity for our aspiring homeowners. We have rolled-out a comprehensive 360 degree marketing campaign spanning television, print, auto media, cinema, digital and social media. Our cross-media collaboration was targeted to capture consumer attention across all touch points, both online and offline. Thank you.
Jatul Anand — Chief Credit and Collections Officer
Thank you for that. I’ll now request, our Chief Credit and Collections Officer, to talk about credit and collection performance. Thank you,, and good evening, everyone. Credit underwriting plays a crucial role in driving business and building a strong portfolio, ensuring sustainable portfolio quality. So the company today manages a robust and seasoned portfolio of over INR70,000 crores, consistently achieving steady growth. The portfolio is well-diversified, having balanced distribution across industry segments, low and mid-ticket sized cases and a healthy mix of salaried and self-employed customer segments. The company witnessed business growth as already have talked about in Q3 of the current financial year. As envisage with respect to the focus area of control, 95% of our fresh sanctioned volumes have ticket sizes of up to INR1 crore. 84% of our incremental business had a bureau score of more than 700. Having all the checks and balances in-place with respect to prudent appraisal norms and managing early mortalities, the delinquency in the book — business booked in the last few quarters is well within the tolerable limits. To give you an idea, as on December ’24, 30 plus from last 12 months origination is 0.11% and NPA is mere 0.03%. If I go back and see the last 24 months behavior, 30 plus is 0.53 and NPA from the last 24 months originations is 0.13% only. So-far, we haven’t witnessed any red flags with respect to our asset qualities. And from asset quality standpoint to ensure effective monitoring of the portfolio and reviewing leading initiatives, we conduct regular data-based industry and peer reviews, market intelligence from Bureau’s Industry partners. This serves us with an effective dip check from the — for the company to measure our portfolio against industry benchmarks. Moving to collections and recoveries, the company continued the trend of ensuring sequential reduction in NPAs on quarter-on-quarter basis. Interventions such as minimization of total bouncing through our revised pre-delinquency model, rigorous reviews on telecalling and field resolution teams helped us deliver the better performance. At the end-of-the collection spectrum is the recovery from written-off pool, which involves resolution of high delinquent accounts, high vintage, accounts imposing some legal challenges, etc. The company continues its drive-to recover better and we recorded a INR53 crore recovery from written-off — technically written-off pool in-quarter three, which is far higher than the recovery in previous two quarters. On the property repossess asset disposal front, we again continue to beat our own performances. 152 successful options were done in-quarter three FY ’25 as against 134 of quarter two. We continued the momentum we gathered over the last few quarters in actions and legal, adding 251 more property possessions in Q3, wherein the customers were NPL. Considering all this, the company feels confident in saying that we have equipped our collections, legal and recovery teams within accessary tools and strategies around to successfully navigate and get to better performances in quarters to come. Thank you.
Deepika Gupta Padhi — Investor Relations
Thank you,. I’ll now request, our Chief Technology Officer, to talk about our tech initiatives and progress.
Anubhav Rajput — Chief Technology Officer
Thank you,, and a very good evening to all you. PNB Finance continues to thrive on the of foundational robust, scalable, high-performing technology enablers and capabilities. All our technology investments are aligned to the business strategy and direction. We have introduce several channels for sales, collections, operations and customer service functions. All the new platforms focus on rich functionality, features, capacity and performance. The new and upgrade platforms are set to deliver long-term robust capabilities for our business segments and customers. Today, I am pleased to share that our technology transformation agenda that was initiated in Q4 FY ’24 is in the final stages of completion now. In the preceding quarter, we have successfully upgraded our core platform loan management system. With this upgrade, we are now upgraded to the latest version of the product with several functional features and capabilities as well as upgrading to the latest tech elements within the architecture. This upgrade was successfully launched across all branches, satellite operations, CPC in a seamless manner. We have also launched a new cloud-based LOS for our prime and emerging business segments, which is currently operating in a pilot mode across select set of branches. Having defined clear-cut measures for monitoring the pilot, we are progressing well and focusing on user adoption and change management for the new platform. The NBHFL has been conscious of the massive change in the process and user experience that the new LOS brings and hence the rollout shall be spread across next few months-to ensure seamless adoption across branches and minimize any potential disruption for business. Same approach was followed for the rollout of LOS for our affordable business segment in-quarter one and quarter two of FY ’25. We continue to focus on evolving into data-driven enterprise and now we have enhanced our capabilities in the analytics domain by having successfully created a cloud-based integrated data platform that has a cumulated data model integrated to all our core systems. This data platform has data services enabled and has been used for generating insights and visualization to better monitor and calibrate business decisions. This data like setup has helped Finance to successfully meet timelines for all regulatory data reporting requirements, which were there in the last quarter. We also continued to expand the footprint of robotic process automation through bots and have recently introduced two new automations developed in-house for enhancing productivity of operations and financings respectively. Lastly, we remain focused on the threats of cybersecurity and 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 set landscape. Information access for users is also controlled using relevant tools, which work purely on our zero-trust architecture model. We have recently further augmented our information security capabilities by introducing additional AI-based monitoring capabilities for our email language as well as for our internal network traffic monitoring. Thank you.
Deepika Gupta Padhi — Investor Relations
Thank you, Ananda. Yes,, we can open the floor for Q&A, please.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press R&1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press R&2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Thank you. We’ll take our first question from the line of Agarwal from D-meter Advisors LLP. Please go-ahead.
Ashwini Agarwal
Good. Good evening, Mr and team. This is a phenomenal set of numbers. Congratulations to all of you.
Operator
MR. Garwal, can you use your handset mode? Your voice is breaking.
Ashwini Agarwal
Is this better now?
Operator
Yes. Please go-ahead.
Ashwini Agarwal
Yeah. No, I said, Mr and team, congratulations on delivering a fantastic set of numbers. And the question I have is that as you look out for the next two to three years, how do you expect the various levers to move? I mean, I see revenue mix improving or margin mix improving. At the same time, cost-to-income should stabilize once your branch rollout is over, but credit cost should normalize. In conjunction to that, where do you see leverage going? What would be an acceptable leverage — level of leverage and therefore, in the medium-term, say, two to three years from now, what kind of an ROE expectation would you have, assuming the credit cycle remains without accident.
Girish Kousgi
So a plan by FY ’27 is to take retail book to INR1 lakh crores with the mix of, which is affordable, 15%, emerging 25% and 60% prime. So you must-have noticed now 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 next three years’ time, we should be able to cross lakh crores 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 are — we’ll be pretty comfortable with the leverage of 5.5% to 6 in next three to four years time. I think so this is our plan. In terms of ROE, it should be mid-teens and
Ashwini Agarwal
Okay. Thank you so much for that. Second question I had was that what I’m 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 are also seeing is a slowdown of industry in general? And in that context, how confident do you feel that the self-employed and the informal borrowers will not be cause for pain point? I mean, are you seeing any anything on the horizon that worries you.
Girish Kousgi
Yes, I think couple of things here. If you look at the mortgage industry, I think demand is very good. Demand is robust. So there were lot of challenges, I think in-quarter three with respect to four states. So I think we had mentioned that in Karnataka, in MP, Hyderabad and Andra. So there were certain challenges, some no to do with the entire city maps — I think redefining the city map. In terms of Karnataka and MPs, there were certain challenges in terms of registration. Maharashtra, there was election and therefore, there was lot of challenge in terms of getting the properties registered. I think it’s only because of these intermittent interventions, which were beyond control, the growth probably for the industry will look on a lower side. Otherwise, demand is quite robust. So in-spite of all these calendars, we were able to put 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.
Ashwini Agarwal
Thank you, sir. And last, last if I may.
Girish Kousgi
And yeah, I think just to answer your second question, yeah. I know there are certain challenges in the overall financial space with respect to unsecured, though stress increasing, especially on the MFI, small-ticket personal loans, personal loan. So we are constantly though checking our portfolio for stress levels. 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 which will worry us on the mortgage book, be it prime or or?
Ashwini Agarwal
Thank you so much. And if I may squeeze the last one in on the runoffs 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, please?
Girish Kousgi
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.
Ashwini Agarwal
And so out of 17%, 6% or so is BTs and the remaining is up prepayment. Would that be the correct understanding the remaining would be —
Girish Kousgi
Yeah, so 6% — and 6% is BD and the remaining would be foreclosure, part closure and natural runoff due to repayments.
Ashwini Agarwal
Okay. Okay. Thank you, sir, so much and all the best to you and your team for a fantastic job. Once again, congratulations.
Girish Kousgi
Thank you so much.
Operator
Thank you. We’ll take our next question from the line of Sanket Chheda from DAM Capital. Please go-ahead.
Sanket Chheda
Yeah, hi, sir. Congrats on good set of numbers on most of the fronts. My question was there was a little bit increase in Stage 2 of about INR450 crores. So what was that account? And how should we look at it?
Girish Kousgi
So I think this was largely driven by one account on the corporate side. So this account has been in SMO bucket since last two years. And if you see in this particular account, in last two years, we have connected close to INR200 crores on the principal. So principal has come down by INR200 crores. So we don’t see any challenges okay.
Sanket Chheda
Okay. You expect it to get resolved in the quarter or two?
Girish Kousgi
Yes. Yeah, we expect this to move bucket back this quarter.
Sanket Chheda
Okay. Okay. And sir, the second question was on disbursement. So besides, say registration issues in couple of states, you have managed to clock a Q2 level of disbursement, which over the Q1 was itself a very strong jump and this quarter also Y-o-Y jump look 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 we — how do you see it? And if you were to say quantumize 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?
Girish Kousgi
So as I mentioned, there were challenges in few states such as Karnataka, then Andhra Pradesh, Telangana towards a small extent in Chennai because of rains and Bharashtra 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 industry as well, not just P&D 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, the wood, I think should come through in-quarter four and quarter one of next year.
Sanket Chheda
Sure, sir. That’s all from me and wish you all the best for the continued success here.
Girish Kousgi
Thank you.
Operator
Thank you. Next question is from the line of Renesh from ICICI. Please go-ahead.
Renish Patel
Yeah, hi, sir. Congrats on a great set of numbers. Sir, my first question is on the prime housing disbursement on sequential basis. If you look at it actually fell by a couple of percentage points. So it is fair to assume that it’s because of these states wherein we saw some disturbance on temporary basis in Q3 or it is by choice?
Girish Kousgi
Yeah. So our plan is to grow the book by 17%, that’s the guidance. So this has broadly two metrics. One is disbursement and second is loan closures, total closures. So disbursements would vary depending on the closures to maintain book growth. Now to a certain extent, yes, I think all these challenges in these states, you know has impacted on the prime and emerging side and also on 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 — this is in-line with our strategy. Having said that, to a small extent, yes, yes, there was impact on prime and emerging because of these interventions in these four states.
Renish Patel
Got it. And sir, my second question is on the opex side. I mean, if you look at the other opex line-item, which has been growing at some 15%, 20 odd percent on sequential basis, which is now at INR90 crores. And when we look at the sequential growth, it’s actually much higher than the retail loan book growth. So while this incremental investments are growing and why do you see the cost-income ratio settling in near-term?
Vinay Gupta
Renesh, on the other opex, actually it is more of a seasonal in nature. So during festive season, some marketing spend has happened and there is some expense on the general administrative cost also, which is more one-off or a seasonal in nature. It will normalize back to the same levels of Q1, Q2 next quarter.
Renish Patel
Okay. And would you want to guide us for a steady-state cost-to-income ratio?
Vinay Gupta
See, on a steady-state, we have guided cost to ATA of 1% to 1.1%. So we have been maintaining that and that will maintain.
Renish Patel
Okay. And sir, just last question from my side on the sourcing. Now in the entire retail segment, what percentage of that would be BT in.
Girish Kousgi
It will be around — see, we have three segments within retail. So on the prime and emerging, the would be in the range of 17% to 18%. On, it will be higher, it will be about 25% to 27%. So if you can take average maybe about 21% 20%.
Renish Patel
Okay, okay. And any — I mean, internally, do we have any limits to the extent will restrict BTN and look for a, let’s say, new to credit kind of a customer or how is it? At some point, BT would impact our yields.
Girish Kousgi
I mean, we don’t really have a number on BT yields. 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. So this percentage could vary segment to segment, but I think largely BTM is now more in because it’s a new business and therefore, the focus to be slightly more.
Renish Patel
Okay. And just a follow-up on the affordable side. So this 25% 27% of BT which is happening is fair to assume that most of this would be coming from the HFCs. I mean the affordable —
Girish Kousgi
This will be largely from the affordable set of companies.
Renish Patel
Okay. Okay. That’s it from my side. Thank you and best of thank you.
Girish Kousgi
Thank you.
Operator
We’ll take our next question from the line of Viral Shah from IIFL Securities. Please go-ahead.
Viral Shah
Yeah. Hi, congrats on good set of numbers. 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 two or 3/4 back had intermittently slipped and then again upgraded in September ’24.
Girish Kousgi
Yes, this is the account which has been in the semi bucket for I think almost two years. So there is significant development in the project and the sale. And also, as I mentioned in last two years, principal has come down by almost close to INR200 crores. So we don’t see any damage. Okay. And you see this being upgraded in 4Q again this quarter.
Viral Shah
Yeah. Okay, fair enough. And the second question I had was with regards to your — on the exposure 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, Talangana. 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 were one of the major reasons why you saw a growth slowdown.
Girish Kousgi
So I think by design, our focus is more on South for all the three segments, prime, emerging and Roshmi. 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 mix almost no — I think it remains the same. But the focus will be slightly more on South, followed by North and then west.
Viral Shah
Okay. Got it.
Girish Kousgi
And so you asked question as I mentioned and also as I mentioned, if these challenges were in there, our numbers would have been far higher than what we have shown.
Viral Shah
Okay, got it. And in that same light, would you want to say give us — I know it’s just now one more quarter left, we can do the arithmetics, but say more so on raising your eventual say 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 INR1 lakh crore retail loan book target by FY ’27. Any upgrades to that target?
Girish Kousgi
No, as of now, we stick to INR1 lakh crore by FY ’27. If you can do more or if there is any change in the mix, I think we’ll be happier. So as of now, we maintain INR1 lakh crore by crore business.
Viral Shah
Right. And sir, 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?
Girish Kousgi
Yeah. Hopefully this quarter we might see a couple of sanctions and possible one disbursement as well. But from this quarter, it will start.
Viral Shah
Yeah. Yeah, great. And just one last suggestion. Of course, once we start that, but it will be really helpful to get much better color on what are we intending to do separately and also maybe hear from Mr Rana, maybe sometime next quarter when we come back.
Girish Kousgi
Absolutely. I think I’ve already mentioned before, definitely, we will give more color on the business, what kind of business we’re going to do. I think just to talk about corporate will be pick 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’ll give more color on corporate.
Viral Shah
Sure, sir. Great and all the best. Thank you.
Girish Kousgi
Thank you.
Operator
Thank you. Next question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go-ahead.
Abhijit Tibrewal
Yeah. Thank you and good evening, everyone. Sir, I mean, just trying to understand even this Stage 1 provision cover decline of 20 basis-points is because of the same corporate accounts slipping into Stage 2?
Girish Kousgi
Yeah. So if you see, we are also resolving a lot of accounts. And some of the accounts probably will mature in-quarter four. So some of the accounts are nearing maturity. And therefore, we’ve seen good repayments happening in last few quarters and that is why ECL has been calculated accordingly.
Abhijit Tibrewal
Got it. And sir, I mean, going-forward, will it remain at these levels or do you think it will go back to the 75 basis-points where we were at please come again provision? The provision cover on Stage 1 was 75 basis-points until last quarter. What I’m saying is now will the new normal be this 50 55 basis-points or will we go back to 75 80 basis-points.
Girish Kousgi
Lot of — a lot of things are happening. I think we are improving on a quality of origination. This we started 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 a ECL model. So we run it through the model. And no, as of now, as I mentioned on the retail side, we are talking about credit costs will be benign 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 clearing maturity. And therefore, depending on the model, if there is a need, only then we would be kind of providing slightly higher. Otherwise, no, I don’t think so. We need to continue on that.
Vinay Gupta
Yeah. So Abhijit, this is largely on 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 reasonable.
Abhijit Tibrewal
Got it. And sir, the second question that I had was during this quarter, what was the total quantum of write-offs that I had that we had have.
Girish Kousgi
This could hardly, hardly anything, very, very small nothing to, nothing material
Abhijit Tibrewal
Got it. And so I mean, have you had the chance to kind of evaluate that because of Karnata, Telangna 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 Karnata now? Has it improved or are the problems in Karnata still there.
Girish Kousgi
I think if these challenges weren’t there across all the three businesses, we should have done at least about INR500 INR600 crores more.
Abhijit Tibrewal
Got it. And sir, status of Karnatka, I mean, has anything improved or still — I mean those problems continue to.
Girish Kousgi
So in all the states, there is improvement. So the challenge what was there, let’s say, two months back-in Karnataka, I think now there is a lot of improvement and same thing is true with NPSL. So I don’t think so quarter-four should see much of challenge for these reasons.
Abhijit Tibrewal
Got it. And sir, 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, just wanted to understand how our liabilities, more particularly your bank term loans, how are they 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 is a repo rate cut of 50 basis-points in the next three years?
Vinay Gupta
So Abhijit, on the liability side, 70% plus 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 the rest are also again very short-term benchmark like one month or Three-Month 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 you know the timing we expect 25 bps every 25 bps change in the repo will lead to 10 bps 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 of that?
Abhijit Tibrewal
Soon as 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 and 10 bps and that we expect to pass it on. And what you are expecting then margins can be maintained at current levels, there will not be an impact on the margins.
Vinay Gupta
Yeah, there should not be. I mean that should be — that is our endeavor. We’ll try to maintain the margin.
Abhijit Tibrewal
Got it. This is useful. Thank you very much for the detailed answers. Wish you and your team the very best. Thank you.
Vinay Gupta
Thank you.
Operator
Thank you. Next question is from the line of Suraj Dhas from Sundaram Mutual Fund. Please go-ahead.
Suraj Das
Yeah, hi, sir. Thanks for the opportunity. I think few questions have already been answered. And just a follow-up to question, sir, what is the return of pool outstanding for you and if you can bifurculate between retail and corporate? And what kind of recovery you are expecting, let’s say, over the next four to six quarters? That would be all from my side.
Girish Kousgi
The corporate is about INR1,250 crores. So we expect a recovery of about 67% and that we’ll be able to collect in next three years’ time. Retail, the pool is INR450 crores. So we expect about INR45 crores to INR50 crores every quarter for the next few quarters.
Suraj Das
Okay, sir. Thank you, sir.
Operator
Next question is from the line of Adity Nawal from RSPN Ventures. Please go-ahead
Aditi Nawal
Yeah, hi. Thanks for taking my question. I just had a few datakeeping questions. So one is, sequentially your employee expenses have dropped. So what could possibly be the reason for that? And second would be on fee income on — so fee income has been sort of subdued in this quarter as well. So any light on that as well? Thanks.
Vinay Gupta
So fee income is not subdued, it has grown 20% year-on-year. This includes the insurance commission, which has grown around 30% year-ago. So rest of the line remaining constant. So that has grown well. On the employee cost perspective, there was a one-off related to some actual valuations of around INR45 crores. And rest is we have brought down overall cost by optimizing the headcount and revisiting certain incentive structure that we have. So it is based on the overall efforts being putting on the staff cost.
Aditi Nawal
Can you just repeat the insurance part in the fee income, sir?
Vinay Gupta
No, I’m saying on the fee income, overall fee income growth is 21%. Within the fee, the insurance commission has grown 30%, in-line with the disbursement growth.
Aditi Nawal
Okay, that is me. Thank you so much.
Operator
Thank you. Next question is from the line of Kamal Mulchandani from Investec Capital Services. Please go-ahead.
Kamal Mulchandani
Hello, sir. Thank you for the opportunity. Firstly, congrats on a good set of numbers. Most of my questions were answered. Just would like to understand the path to achieve INR5,000 crore of affordable housing book by the end of FY ’25. I understand that by December, it’s INR3,800 crores and we have done disbursals of around INR900 odd crores this quarter. So like, like if you could just guide the part to achieving the affordable housing AUM book.
Girish Kousgi
So on affordable, if you see, as of March, we were at 70 90. So now we are at 38. So we have doubled the book in nine months. So we disbursed about INR925 odd crores in-quarter three. So to get to INR5,000 crores, we should disburse INR1,200 crores, which is an average of INR400 per month. So we see that is quite possible. So hopefully, we should get to INR5,000 crores.
Kamal Mulchandani
But there will be some repayments as well, right?
Girish Kousgi
No, we have taken that.
Kamal Mulchandani
Okay. Okay. Sure. That’s all sir. Thank you.
Girish Kousgi
Thank you.
Operator
Thank you. Next in-line is Mr Anurag Manthri from Capital. Please go-ahead.
Anurag Mantry
Yeah, hi. Just one question on the overall credit cost. So basically, if I add-back maybe the recoveries that you’ve had this quarter both from the retail and wholesale side, I think your PBT mentioned like INR53 crores on retail and maybe stay on wholesale. I think eventually I get about INR75 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 similar trend is there for the last couple of quarters as well. So just wanted to understand that ex of the write-off recoveries, why are we running at like 40 bps 50 bps credit cost? Because I think bulk of this book is now just a retail book as such, which probably should retain much lower credit costs. Thanks.
Vinay Gupta
It’s not 40 bps, it is somewhere around INR30 crores roughly on account of the ECL strengthening under Stage 1, Stage 2, which translates to around 20 basis-points annualized.
Anurag Mantry
So I mean, so you’re saying that only INR30 crores is the normal provisioning as the balance is for ECL strengthening. Is that how we should prepare it?
Vinay Gupta
Yeah, that’s right.
Anurag Mantry
Okay, got it. Thank you so much.
Operator
Thank you. We’ll take our next question from the line of Kunal Shah from Citi. Please go-ahead.
Kunal Shah
Yeah. Hi, thanks for taking the question. Firstly, if I were to look at it in terms of the opex, so if you can just broadly break — 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 there be the additional investment branch rollouts that would be required or it’s more in terms of the productivity gains that would happen.
Girish Kousgi
So if you look at strategy in terms of starting affordable, it started over two years back. Emerging started this year. So I think most of the investment in terms of setting up business is done on the side. On emerging also, we started-off with 50 branches. That was initial investment. So now going-forward, every year we’ll be opening about 50 odd branches. So that is more of a BAU. So no major investment in terms of branch network as well. So if we look at the OpEx, at this point in time, I think we should look at a consolidated basis. I think very soon, we will see — I think we’ll be able to break it up segment by then we’ll be able to share. But at overall level, we’ll be able to maintain opex at 1% to 1.1% to.
Kunal Shah
Okay. So in affordable, we would be already at a breakeven affordable and emerging.
Girish Kousgi
Yeah, affordable we are already — we are profitable. We are yet to get to the mature stage, which will take one or two.
Kunal Shah
Sorry.
Girish Kousgi
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.
Kunal Shah
Okay. Okay, got it. And secondly, in terms of the — maybe when we are — if there are BT ins maybe in RBI FSR, there was an indication that when you look at it for the personal loans overdue, 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 we can — it’s like a clear clear-cut rejection, okay, if we see any overdue in any of the customer in any of the product segment.
Vinay Gupta
See, the overall bureau score, I think takes into account such behavior on account of any kind of financing of it. So that is be appraised on a case-to-case basis as it comes through. So we said in the beginning that 84% of our onboardings are above INR700 scores. So that takes into account such behavior. So in fact, irrespect of the segment, whether it is prime emerging or, we are very particular about credit history. So when we onboard the customer, we look at customers’ existing exposures and how is the repayment. So only with good repayment track report, we would onboard the customer rather it’s a clear Q.
Kunal Shah
Okay. So the question was largely with respect to 12 and 10 odd percent which are in NTC and up to 700, okay, particularly on the affordable and maybe I think you have shared similarly on the other. So it’s not with respect to maybe 75%, 80%, which are any which ways better or maybe more than 700, but for the other part of the portfolio, yeah.
Girish Kousgi
I think we can’t — we don’t purely go by the score because you will have lot of customers who take a small loan of about 25,000 30,000 loans being new to credit. And within a year’s time, they would now they’ll have a score of more than 725, 730. So we can’t really — we can’t really go by the score. So we need to see whether customer is new to credit or customer has certain exposures. If so, how is the repayment? So we will not go, for example, 750 is not same for all the customers. Somebody having INR750 with INR30,000 loan may not be that good vis-a-vis compared to somebody having INR750 score with three or four loans, all being servicing properly on-time. So score is one of the parameter which we look looking to, but we will also get deeper to understand how are the things and only then we take to business.
Kunal Shah
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 and lately, could that risk be higher for us, yeah, that was the primary question, yeah.
Girish Kousgi
No, because this is — this is mortgage, this is secured. And no, for example, all the home loans, we know the end-use 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. Okay. So the chances of replacing no mortgage loan with any unsecured loan, I think the chances are very, very low.
Kunal Shah
Okay, got it. Okay. Thank you.
Operator
Thank you. Next question is from the line of Himanshu Taluja from Adity Birla Sun Life AMC. Please go-ahead.
Himanshu Taluja
Your line is. Hi, sir. Thanks for the opportunity. Just one question at my end. If you can just give me the — if maybe I’m sorry if I’m 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 — this 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? Thanks.
Girish Kousgi
So as I mentioned, I think I’ve mentioned this. So again, I mentioned. So this is an account now which we are watching very closely, seeing very closely since last many years, especially in last two years, there has been an SME market and the principal has come down by close to INR200 crores in last two years. So we are very much comfortable about this account. So there is nothing to worry about.
Himanshu Taluja
Okay. Any provisions which you are holding on this, any PCR which is there in this account, particular account?
Girish Kousgi
We are holding as per the stateholding provision. What’s up on that?
Himanshu Taluja
Okay. Okay. Cool. Thanks, sir. Thanks. Yeah.
Operator
Thank you. We’ll take our next question from the line of Ankit Minoka from Adezi Ventures Family Office. Please go-ahead.
Ankit Minocha
Yeah, hi, good evening. My first question is with regard to a hypothetical rate cut situation, which an earlier participant was alluding to. So you mentioned that there was a 10 bps reduction in the cost of funds with the 25 — every 25 bps rate cut. But just wanted to understand, is there also a lag involved in this? I mean how quickly are you able to price your assets or how slowly are you able to price your assets versus the liabilities?
Girish Kousgi
So see this 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’s a matter of timing. So we should see rest of the difference also to flow-through in the next three to four months.
Ankit Minocha
Okay. So I mean would not even be the possibility of any expansion in NIMs for a short period of time, right.
Vinay Gupta
But depending on the competition, how they react, there could be some minor impact, but largely we — our endeavor is to ensure that
Girish Kousgi
Actually there are three, four things happening. 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 crime. Number two, in all the three segments, we are trying to off the yield, crime emerging and affordable. We will be starting corporate from this quarter, which will help us on the yield and profitability. So in the — and also we have — obviously, we have a large pool on 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 differential, we feel that we’ll be able to manage because we have certain levers which can try to factor rate cut.
Ankit Minocha
Right. Thanks. Very helpful. And I understand you’ve given some element of guidance for FY ’27, but I mean, we are in Jan FY ’25. So just understanding how do we see FY ’26 evolving? I mean, if you can just give some color on color on the potential book-value or I mean, even how growth kind of seems to be panning out, what do you think could be FY ’26 could look like?
Girish Kousgi
So as I mentioned, no, demand is quite good, mortgage industry is doing well. I think this year, every quarter there was some challenge or the other quarter one was cyclical and quarter two, there was some challenge which some companies in the industry saw, especially on the collection side. And quarter three, there was some challenge because of procedural changes in certain states. So I think throughout the year, first-nine months, there has been some challenge or the other also coupled with the heat wave and gender reduction and election in Maharashtra. So otherwise, talking about demand, demand is very good. This industry will do well. And also with PMAY, intersubsidiary scheme, I think demand should only go up for us, especially on the and emerging side. So we see no demand to be quite robust for next few years. And I’ll not be able to comment on what’s the plan for next year. We would share with the investors at the appropriate time, but our INR1 lakh crore by FY ’27 should be intact and the growth should be slightly better than what we show this year.
Ankit Minocha
Okay. Yeah. Thanks for that. And my next question is about the — what would be the — as you get more-and-more into the affordable space, what have you observed as the incremental trends in asset quality? I mean, when did you start to get into this space? And I mean if there are any asset quality issues that might crop up ideally by when would they start to drop up, like in terms of what are the loan tenure, etc., if you could just help us with that.
Vinay Gupta
So in terms of credit cost of the — whereas a prime we say it will be in the range of it will be about 18 bps. Emerging should be about 20 to 23 bps. I’m talking about once the portfolio is matured and for affordable, it should be about 50 bps. So if you see blended, we should be about 25 bps. I think that is the risk what we see and we have budgeted that. Otherwise, we don’t see any incremental risk in any of these segments, including affordable.
Ankit Minocha
Okay. Okay. Fair enough. Thank you and all the best.
Operator
Thank you. Next question is from the line of Anushha Raheja from Dalal Rosha. Please go-ahead.
Anusha Raheja
Yeah, thanks and good evening. Sir, firstly on the credit cost, how do you expect that to pan-out in Q4? I mean, the current run-rate of Q3 is likely to continue
Girish Kousgi
, it will continue.
Anusha Raheja
Okay. And assuming that if this account gets — corporate account gets tricker, but it shall be better.
Girish Kousgi
No, as I mentioned to you, we are pretty much comfortable on the stage. And this quarter it will be a roll-back. So we are pretty comfortable. Credit cost will be on similar lines what you’re seeing quality.
Anusha Raheja
Okay. And secondly on this in non-housing loans, you know which sits on prime emerging and affordable segments. So what — you know what basically this non-housing loans comprise of?
Girish Kousgi
So non-housing would have three products. One is loan against property. Second is rental discounting. And the third one is funding for corporate offer sales commercial space. But largely for us, non-home is loan against property. Okay, all right. So do you have any unsecured personal loans? No, we don’t have it. No, we don’t have we do only secure.
Anusha Raheja
Okay. And so do you expect any margin pressure to come in on the prime segment loans assuming that you would be competing with the banks and we would be seeing a decline — repo rate cut next fiscal. So I think this space is quite competitive. So you expect some sort of margin pressure because I think rates you will have to bring down the — your lending rate as well there.
Vinay Gupta
So there is margin pressure on prime, which is why we move — we moved from super-prime to prime. Even in prime, there is margin pressure and that is the reason we are growing at a slower pace compared to emerging and upwards. So this margin pressure would be this because this is a space where lot of banks also would be focusing on. So this pressure is there and it will continue, but we have planned to overcome that. So our plan is to try and grow the prime book slower compared to emerging and affordability.
Anusha Raheja
Okay. And sir, lastly, sorry if I’m repeated, the credit cost guidance for FY ’26, what that number could be before recoveries, I mean and what you have baked-in credit cost including recoveries.
Vinay Gupta
So I think this trend should continue for next few quarters on credit cost because we have good pool of written-off book where we expect good recoveries to happen in next few quarters. So I think for FY ’26 also, credit cost should be very good.
Anusha Raheja
Okay. So the full-year guidance for FY ’26, you will share post Q4
Girish Kousgi
Definitely will differently.
Anusha Raheja
Okay. And sir, lastly, since the growth rate has been quite strong and emerging and affordable, how do you assess that book in terms of asset quality
Girish Kousgi
And see asset quality on 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’s not comparable because our book has not matured, though, but I think it will be in-line with the book matures.
Anusha Raheja
Okay. Okay, sir. Thank you.
Operator
Thank you. Thank you. We’ll take our next question from the line of Vijay from Insightful Investment Managers. Please go-ahead.
Vijay Shah
Yeah. Thank you so much for the opportunity. Most questions are answered. Just one thought. Sir, for next year FY ’26, given that the book mix keeps changing, will the NIMs also be slightly better in FY ’22?
Girish Kousgi
Yes, definitely, yes. Definitely yes. NIMs will be better.
Vijay Shah
And sir, how much in your estimate should the expansion be approximately?
Girish Kousgi
No, short-term it is very difficult to predict. We’ll be sharing plans for FY ’26, maybe after quarter-four. But I think long-term what we mentioned in FY ’27, when we’re talking about season book of INR1 lakh crore, our NIM should be about INR4 to 4.1.
Vijay Shah
Sure. Thank you so much, sir. Appreciate it. All the best.
Operator
Thank you. Ladies and gentlemen, we’ll take that as the last question for today. I now hand the conference over to management for closing comments. Over to you.
Deepika Gupta Padhi
Thank you everyone for joining us on the call. If you have any questions-and-answers, please feel free-to get-in touch with Investor Relations. The transcript of this call will be uploaded on our website. Thank you.
Operator
Thank you very much. On behalf of P&D Housing Finance Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.