In the name of prudential measures, most banks that have announced their results so far have pushed up their bad debt provisions substantially.

Bankers have good reason to be pessimistic about their loans and will never be hauled up by the central bank for being too cautious.

They have lost their camouflage that concealed their real earnings by transferring to inner reserves.

Besides, the low bad debt rate in Hong Kong could not possibly go lower, as a central banker put it.

The uncertainties in the economies of the territory and China further exacerbated the fear that loan quality would deteriorate.

That is indirectly an endorsement of higher loan provisionings.

For Union Bank, for instance, there could hardly be much difference between posting a 38 per cent profit rise and one of more than 40 per cent.

Either way, the figures represent strong results.

So, why not put something away for a rainy day, especially when it is always possible to write amounts back during the good times? While enlightened shareholders now know how much they have missed out on in dividend payouts during previous years, they should start wondering how much they are likely to miss if banks make very heavy provisions for bad debts.

Consistency should be shown in both the transfers to inner reserves as well as loan provisionings.

Where is the line between a conservative practice and excessive provisions that may hurt share holders' interests? But for the regulator, it is always a pleasant scenario to see conservative banks than banks that cater too much for share holders' returns.