Shares of YES Bank dipped 3.44 per cent at Rs 24.55 a per share on the BSE in Thursday’s intraday trade. This came after YES Bank revealed on Thursday that it has received a service tax demand order imposing a penalty of over Rs 6.42 crore.
The bank stated that this ordern was received from the Office of the Commissioner of GST & Central Excise, Maharashtra, on May 2, 2024. It confirmed a tax liability on a service tax issue, along with interest and a penalty of Rs 6,41,84,437.
While acknowledging the demand, the bank mentioned that it falls below the material threshold limit applicable to the bank currently, thus not expecting any significant impact on its financial or operational activities. YES Bank intends to appeal against this order.
Additionally, on May 1, 2024, the bank received two GST demand orders, with penalties totaling over Rs 6.87 lakh, from the GST departments of Manipur and Punjab. These penalties were for the reversal of input tax credit (ITC), along with interest.
YES Bank indicated that these demands also fall below the material threshold limit and expects no significant impact on its operations. Similar to the service tax order, the bank plans to appeal against these orders as well.
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The standalone net profit of the Mumbai-based private lender more than doubled to Rs 452 crore for the financial fourth quarter, up from Rs 202 crore in the same period a year earlier. Its gross non-performing asset ratio improved to 1.7 per cent at the end of March from 2 per cent at the end of December.
The bank's other income, the fees earned from providing non-lending services to customers rose 56.2 per cent on year.
Net interest income, the difference between the interest earned on loans and paid to depositors, rose 2.3 per cent to Rs 2,153 crore. Net interest margin, a key profitability measure for banks, dropped to 2.4 per cent from 2.80 per cent a year earlier, and was flat on a quarterly basis.
The bank’s reported profitability has been on an improving trajectory though remains burdened by bulky rural investment development fund (RIDF) investment (11 per cent of total assets), the brokerage firm ICICI Securities said in an result update.
It further noted that the bank is making concerted efforts in organic priority sector lending origination, which should ease incremental RIDF burden, aiding yields and return on assets (RoA) trajectory.
“We estimate improvement in RoA to 1.0 per cent by FY26E versus current FY24 RoA of 0.3 per cent, led by improving NIM trajectory (on the back of easing RIDF) and benign credit cost. Valuation, however, remains unattractive with the stock trading at 1.9/1.8/1.6x FY24/25E/26E ABV. We retain SELL with a revised target price of INR 20 (vs INR 17 earlier),” analysts at ICICI Securities wrote in a report.
At 12:50 PM, YES Bank was trading at 1.81 per cent lower at Rs 24.98 per share on the BSE. In comparison, the S&P BSE was down 0.81 per cent at 74,010 levels. The stock is presently trading at a price to earnings multiple of 58 times.
