Yes Bank CET1 may fall to 10% if past AT1 coupons are paid: Crisil

Mumbai: ’s core equity capital could fall to around 10% if the lender is required to pay accumulated coupons on the restored Rs 8,415-crore , said, significantly below the roughly 11.5% level estimated after accounting only for reinstatement of the principal. Crisil estimated that recognising the AT1 liability would entail an accounting impact of around Rs 6,200 crore, net of tax, in the period in which the liability is recognised.

“Assuming the bank makes coupon payments for all prior periods, the CET-1 ratio could decline further to around 10.0%,” Crisil said.

The rating agency, however, said Yes Bank should be able to absorb the impact through internal accruals and a potential capital raise. It also factored in expected support from Sumitomo Mitsui Banking Corp, the lender’s largest shareholder. Crisil does not expect the development to materially affect Yes Bank’s overall credit profile or ratings.

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S&P Global Ratings separately estimated that the ruling could reduce Yes Bank’s common equity by about Rs 8,400 crore, although this would be largely offset in its capital assessment by reinstatement of the AT1 instruments. It expects the bank’s risk-adjusted capital ratio to remain in the 8-8.5% range through FY27 and FY28, compared with 9% as of March 2026.

The bigger continuing impact, S&P said, would be on earnings because the restored bonds carry coupons of 9-9.5%. “Going forward, we see this as earnings negative as the AT1s have high coupon payments of 9.0%-9.5%,” S&P said.

Both agencies highlighted uncertainty around the treatment of coupons for the intervening period. While the Supreme Court said coupon payments would have to be governed by the bonds’ information memoranda, S&P noted that the instruments provide for discretionary, non-cumulative coupons, leaving open the question of whether Yes Bank would be required to make payments for the roughly five-and-a-half years since the bonds were written down.

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Importantly, neither Crisil nor S&P expects an immediate ratings impact. Crisil said the bank’s Tier-1 and total capital ratios would remain unchanged at 14% and 15.1%, respectively, under the principal-restatement scenario, because the fall in CET1 would be offset by a corresponding rise in AT1 capital.