YES Bank's Q2 profit jumps 65%, yet an AT1 ruling could turn it into a loss

what happened

YES Bank's net profit for the three months to September rose 65% to 1,080 crore, according to TradingView, which cites its Mumbai bureau. The bank's own pro-forma estimate, however, includes the likely hit from an 8,415 crore Additional Tier-1 bond judgment and shows a post-tax loss of 5,217 crore.

Auditors said the accounts do not capture the financial effect of the ruling and warned that reported performance could look materially different if it were recognised. On October 15 the Supreme Court upheld a Bombay High Court decision that overturned the bank's 2020 write-down of AT1 bonds, dismissing appeals from the bank, its former administrator, the RBI and the central government. On a pro-forma basis, net worth would fall to 46,970 crore from 53,268 crore, while borrowings would rise to 86,149 crore from 77,734 crore. CEO Vinay Tonse said: "We are examining it in detail and will take appropriate steps in accordance with the applicable legal and regulatory requirements."

why it matters

The key issue for markets is the capital hit rather than the headline profit. A lower net worth and higher borrowings strain the bank's balance sheet and could weigh on sentiment toward Indian private lenders and AT1 instruments. Reports say the bank and the RBI are weighing a review of the ruling, so the outcome is still open.

market impact

YES Bank and AT1 bonds: possible capital write-down and higher borrowings pressure the lender's valuation

tags

instruments