The FTSE 100 has rewarded traders with a 4.5% rise over the previous month. However the momentum’s nothing in comparison with this inventory. TBC Financial institution‘s (LSE:TBCG) been one of many standout performers on the London Inventory Change in latest weeks.
Shares of the FTSE 250 firm are up roughly 20% prior to now month alone, pushing the Georgian lender’s market-cap ever nearer to FTSE 100 territory. And regardless of that rally, the inventory nonetheless trades on simply 5.9 instances earnings with a dividend yield of 5.9%. In different phrases, it nonetheless appears to be like low cost versus friends.
At round £2.6bn, TBC’s market-cap nonetheless falls effectively wanting Rightmove — the present smallest FTSE 100 constituent at roughly £3.3bn. Below FTSE Russell’s guidelines, an organization must rank ninetieth or above by full market capitalisation at a quarterly evaluate to achieve entry. It’s at present the 138th largest firm with some type of UK itemizing, though round 15 above it are eligible for the FTSE 100. So TBC has some floor to make up, however not that a lot.
What’s extra, I don’t assume there are lots of firms above it which might be as low cost and have such sturdy operation momentum. So what’s driving the momentum?
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A rock-solid This autumn
Fourth-quarter outcomes, launched earlier this month, had been spectacular. Internet revenue jumped 16% 12 months on 12 months to GEL387m (£1’s round 3.6 GEL/Lari), delivering a return on fairness (ROE) of 24.9% — comfortably forward of administration’s 23%+ goal.
The Georgian core enterprise — which accounts for the huge bulk of earnings — was the engine room. Internet curiosity revenue grew 23.3% in This autumn, whereas working bills rose simply 9.6%, pulling the cost-to-income ratio right down to 37.3%. That type of operational leverage is uncommon in European banking.
The dividend image is equally sturdy. The board proposed a complete payout of GEL8.87 per share for 2025, up 10% on the prior 12 months. Together with a GEL75m buyback, complete capital returns hit GEL564m — round 40% of internet revenue.
For revenue traders, it is a genuinely engaging proposition.
The Uzbek query mark
However I’d be doing readers a disservice if I didn’t flag the dangers, and Uzbekistan is the plain one. TBC’s Uzbek operation is rising quickly — the mortgage e-book surged 45% 12 months on 12 months and working revenue jumped 67% for the total 12 months. However profitability’s being squeezed by rising provisions. The price of threat in Uzbekistan climbed to 10.2%, up from 6.3% in 2024. Fourth-quarter internet revenue really fell 13% regardless of that top-line progress.
Administration’s acknowledged the challenges. The Uzbek banking market is much less mature, credit score infrastructure continues to be growing, and the chance profile is inherently totally different to Georgia. If provisions proceed to escalate, it may weigh on group-level returns — even when the Georgian enterprise retains firing on all cylinders.
My take
I feel TBC Financial institution is without doubt one of the most attention-grabbing alternatives on the London market proper now. A sub-6 instances earnings a number of and near-6% yield for a financial institution producing 24%+ ROE is, frankly, low cost by any affordable measure. In comparison with FTSE 100 banks, it’s buying and selling at a near-50% low cost, primarily based purely on the earnings a number of and the dividend yield.
The FTSE 100 promotion narrative provides a possible catalyst too, as index trackers can be compelled consumers. I completely assume it’s price contemplating.
