Covid provisioning knocks off 27% of private banks' profit in Q1

While the banks are additionally providing towards the pandemic, analysts believe credit cost to remain elevated

Private banks continued to shore up their Covid-19 provisioning in the June 2020 quarter (Q1FY21), even as the moratorium on loan repayments masked asset quality stress with fewer slippages and insignificant change in gross non-performing assets (NPAs).

An analysis of top private lenders’ Q1 earnings shows on an aggregate basis, contingent provisioning made towards likely deterioration in the asset quality because of the Covid pandemic shaved about 27 per cent of their operating profit. The impact, however, varies across banks, based on segmental and customer exposure and internal risk assessment, as well as the quantum of Covid-19-related provisioning made in the