Does PNB disclose its prepayment rate? It appears to be high based on disbursements and growth in AUM and loan book.
Source: PNBHF Company Presentations
PNB’s portfolio rundown for FY18 was 12,435 Cr which is approximately equal to its AUM as of H1FY15. Thus PNB’s rundown rate is approximately 3.5 years compared to LICHFL’s 9 years and Canfin’s 6-7 years. This means there are lot of prepayments because average maturity of a loan must be about 15 years. A higher prepayments means PNBHF loans have high interest rates and people are switching over to cheaper loans. If high interest loans are prepaid, only low interest loans will remain on the book and this will affect spreads in a rising rate environment. LICHFL is already facing this even though its prepayment rate is lower.
Same calculation for LICHFL is below
Source: LICHFL Company Presentations
LIC’s rundown period of 9 years means approximately 11% of the beginning portfolio runs off in a year. This is also mentioned in the presentation.
Source: LICHFL Company Presentation for FY18
Calculation for Canfin are here
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