Yes Bank expects its core capital ratio to take a hit of 250 basis points following a Supreme Court order overturning the cancellation of Rs 8,400 crore worth of additional tier-1 (AT1) bonds issued by the lender as part of its 2020 rescue.
The bank said on Friday that its Tier-1 capital ratio would stand at 14% on a pro forma basis. It is assessing the implications of Thursday's ruling and said further disclosures would be made in due course.
Also read: SBI helped save YES Bank, Japan came aboard, and now an ₹8,415-crore ghost is crashing its comeback
The Supreme Court's decision reverses the write-off of the bonds during the bank's rescue, a move that had been defended by regulators. The development has financial implications for the lender, although credit rating agency S&P Global Ratings does not expect it to affect Yes Bank's ratings.
S&P expects bank to absorb capital impact
S&P said Yes Bank's capital position remained adequate to withstand the ruling, with its common equity Tier-1 (CET1) ratio at 13.87% at the end of March 2026. The agency said the expected impact would leave the ratio well above the stated minimum requirement of 5.5%.
The ratings agency expects the estimated Rs 8,400 crore impact on common equity to be largely offset by the reinstatement of the AT1 bonds. It said the bank's credit profile could withstand the ruling, which concerns procedural lapses in the 2020 write-down.
S&P does not expect an immediate ratings impact but said the development could weigh on future earnings.
Also read: Supreme Court upholds Bombay HC ruling quashing YES Bank's Rs 8,415 crore AT1 bond write-off
Risk-adjusted capital ratio seen lower
The bank is expected to remain adequately capitalised, although its risk-adjusted capital ratio is projected to moderate over the coming years.
S&P expects the ratio to range between 8% and 8.5% through March 2028, down from 9% in March 2026.
The ratings agency said it was unclear whether Yes Bank would challenge the Supreme Court's ruling.
(With inputs from Reuters)