Yes Bank Q2 profit rises but AT1 ruling not booked as further appeal weighed

By Ashwin Manikandan

MUMBAI, Oct 17 (Reuters) - Yes Bank YESB.NS on Saturday reported a 65% jump in second-quarter profit to 10.80 billion Indian rupees ($114 million), but said the figure does not reflect the impact of a Supreme Court ruling this week that set aside its 2020 write-off of 84 billion rupees ($884 million) of additional tier-1 (AT1) bonds.

Had the impact been recognised, the bank would have posted a quarterly loss of 52.17 billion rupees, it said in a filing.

The Supreme Court on Thursday upheld a 2023 Bombay High Court judgment that set aside the write-down, dismissing appeals by the lender, the Reserve Bank of India and the federal government.

The Mumbai-based lender, in which Japan's Sumitomo Mitsui Banking Corporation [RIC:RIC:SUMFDS.UL] holds a 24.99% stake, said it was evaluating the implications, including the manner and timing of implementation.

It is also weighing "all legal remedies available", including further proceedings before the Supreme Court.

The figures are indicative and subject to revision, the bank said.

If they were adjusted to reflect the court ruling, the bank's net worth would fall to 469.70 billion rupees from 532.68 billion, and borrowings would rise to 861.49 billion rupees from 777.34 billion, it said.

Its total capital adequacy ratio would stay unaffected at 14.5%, the bank said. It had said in a filing on Friday that its common equity tier-1 ratio would decline about 250 basis points.

AT1 bonds are high-risk debt instruments that can be written off or converted into equity when a bank comes under financial stress.

Yes Bank, a mid-sized lender, was rescued in 2020 under a restructuring scheme that brought in new investors. The bonds were written off by an administrator in charge of the restructuring.

Analysts had forecast a profit of 9.55 billion rupees, according to LSEG data.

The bank's net interest income rose 22.7% to 28.22 billion rupees. Advances grew 23.7% from a year earlier and deposits rose 19.5%.

Provisions for bad loans and other contingencies fell 24.2% to 3.17 billion rupees. Other income rose 14.4% to 18.82 billion rupees.

The gross non-performing asset ratio was 1.2% at end-September, against 1.3% at end-June.
($1 = 94.9600 Indian rupees)