The Motley Fool

2 banking stocks at incredibly low prices

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Dial being turned up to 'high'
Image source: Getty Images.

Earnings multiples are currently relatively low across the banking sector but FTSE 250 banks Virgin Money Holdings (LSE: VM), BGEO Group (LSE: BGEO) and TBC Bank Group are the lowest of the lot. Are their incredibly cheap prices too compelling to ignore or too good to be true? Let’s look at two of them.

Rising challenger

Shares of Virgin Money climbed as much as 6% higher in morning trading today after the challenger bank released forecast-beating annual results.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Underlying pre-tax profit of £273m was 28% ahead of the prior year and comfortably exceeded a City consensus of £259m. Underlying earnings per share (EPS) increased 22% to 39.8p versus forecasts of 37.5p. Statutory numbers weren’t much lower than underlying, as excluded costs were relatively small and genuinely one-off. As management noted, the bank is “unburdened by legacy issues.”

Customer balances continued to grow. At the year-end, retail deposit balances stood at £31bn, mortgage balances at £34bn and credit card balances at £3bn. The group is also developing SME and digital banking propositions, which provide additional drivers for future growth.

I like Virgin’s strong balance sheet, “uncompromising focus on asset quality” and very good efficiency metrics, which enabled it to deliver a healthy 14% return on tangible equity for the year. These qualities stand the group in good stead should the UK economy face headwinds. I believe the share price of 279p — representing a 6% discount to book value and seven times earnings — is too cheap to ignore. As such, I rate Virgin a ‘buy’.

No Brexit worries

Concerns about Brexit are doubtless a significant factor in Virgin’s depressed share price. However, the UK economy is not something to bother investors in BGEO, which is the holding company of the JSC Bank of Georgia.

The group released its annual results earlier this month, and performance reflected its leading position in one of Europe’s fastest-growing emerging economies. Strong growth across all its businesses produced a year-on-year increase of 23.7% in revenue and an 11.5% rise in EPS. City forecasts have earnings growth accelerating more than 20% this year, which puts the company on a forward price-to-earnings (P/E) ratio of under nine.


BGEO has a significant corporate event in the offing. At a general meeting in April, shareholders will be asked to approve a demerger of the group into two separately London-listed businesses: a banking business, Bank of Georgia Group plc, and an investment business, Georgia Capital plc.

The former will comprise retail banking and payment services, corporate investment banking and wealth management operations, and banking operations in Belarus. The latter will comprise stakes in a number of businesses, including FTSE-listed Georgia Healthcare Group and a number of other plays on Georgia’s fast-growing economy, ranging from utilities and energy to real estate and beverages.

If you’re attracted by the favourable economic backdrop in Georgia you’d probably want to decide whether you’re interested in holding both a banking group and an investment group or whether only one or the other of them appeals to you. If you’re happy to hold both, you may want to consider investing today. If you only want one of them, you could still consider investing today but it would be simpler to wait until after the demerger.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

G A Chester has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.