How are you looking at the overall numbers and more importantly the higher prudential provisioning?
It was a very strong set of numbers in line with what we had expected at the operational level, other than minor disappointments in treasury income. The provisioning that they have made towards Covid in this quarter is about Rs 1,000 crore and the whole number has gone close to about Rs 8,000 crore on discretionary Covid provisioning. The balance sheet is a lot more muted. Also that problem is a lot more capped as against the open situation one saw about a year back when uncertainty was far higher.
The uncertainty last year was in terms of how long it could go on and whether there was light at the end of the tunnel. The current uncertainties are operational in nature even though the intensity of infections are higher. Once that distinction is made, I will have to agree with the management assessment on adequacy of provisions.
I would also point out that if there had not been a second wave, instead of this Rs 1,000 crore addition to provisioning, one might have easily seen a Rs 1,000-1,500 crore unwinding of provisioning. That would have meant about Rs 1,300-1,500 crore extra PAT in the quarter and that unwind would have provided a tailwind to profits for the next four-five quarters. Now that trade will happen but that part of the story probably gets pushed out by a quarter or two. We see absolutely no worries whatsoever.
