Yes Bank May Face ₹5,400 Crore Earnings Hit After SC order Quashes ₹8,415 Crore AT1 Bond Write-Off

Yes Bank may suffer a one-time earnings hit of ₹5,300 crore to ₹5,400 crore after the Supreme Court invalidated the write-off of AT1 bonds worth ₹8,415 crore, CNBC-TV18 reported citing informed sources. The Mumbai-based private bank is currently evaluating the financial and accounting implications of the judgment. The adjustment could impact the September or December quarters of FY27, according to the report.

The decision upholds a January 2023 Bombay High Court ruling that dismissed Yes Bank's March 2020 bond write-off, stating the Administrator lacked authority under the final reconstruction scheme. The AT1 bonds were written off during the RBI-led restructuring following a severe financial crisis. State Bank of India and other institutions provided capital support under the rescue plan.

However, the bank had previously written down AT1 bonds to zero, sparking legal challenges from bondholders. The Supreme Court ruling reignites debates over the bank's treatment of the outstanding bond liability. Reinstating the AT1 instruments may require reversing the earlier write-off and reinstating the amount to the bank's capital accounts, potentially affecting its profit and loss statement based on the accounting treatment.

The ₹5,300 crore to ₹5,400 crore impact factor considers Yes Bank's typical quarterly earnings of around ₹1,000 crore. The lender reported a net profit of ₹1,071 crore in the June quarter, making the potential adjustment significantly larger than recent profitability. However, these estimates are preliminary and not formally disclosed losses.

The final financial impact will depend on Yes Bank's interpretation of the judgment, accounting requirements, and any associated coupon obligations.