The FTSE 100 has rewarded buyers 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% previously 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 occasions 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 properly in need of 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 realize entry. It’s at the moment 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 suppose there are a lot of corporations above it which might be as low-cost and have such robust operation momentum. So what’s driving the momentum?
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A rock-solid This fall
Fourth-quarter outcomes, launched earlier this month, have been spectacular. Web revenue jumped 16% yr on yr 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. Web curiosity revenue grew 23.3% in This fall, whereas working bills rose simply 9.6%, pulling the cost-to-income ratio right down to 37.3%. That form of operational leverage is uncommon in European banking.
The dividend image is equally robust. The board proposed a complete payout of GEL8.87 per share for 2025, up 10% on the prior yr. Together with a GEL75m buyback, whole capital returns hit GEL564m — round 40% of internet revenue.
For revenue buyers, it is a genuinely enticing 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 ebook surged 45% yr on yr and working revenue jumped 67% for the total yr. However profitability’s being squeezed by rising provisions. The price of danger in Uzbekistan climbed to 10.2%, up from 6.3% in 2024. Fourth-quarter internet revenue truly fell 13% regardless of that top-line development.
Administration’s acknowledged the challenges. The Uzbek banking market is much less mature, credit score infrastructure continues to be growing, and the danger profile is inherently completely 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 among the most fascinating alternatives on the London market proper now. A sub-6 occasions earnings a number of and near-6% yield for a financial institution producing 24%+ ROE is, frankly, low-cost by any cheap measure. In comparison with FTSE 100 banks, it’s buying and selling at a near-50% low cost, based mostly purely on the earnings a number of and the dividend yield.
The FTSE 100 promotion narrative provides a possible catalyst too, as index trackers could be pressured consumers. I completely suppose it’s value contemplating.
