London’s listed banks like Lloyd Banking Group are some of the most popular shares among UK stock investors. I’ve resisted the urge to buy the FTSE 100 bank or any of its fellow UK-focussed rivals, given the prospect of sluggish economic growth over the medium-to-long term. I’d be much happier to invest in TBC Bank Group (LSE: TBCG) today.
This particular banking giant is the largest in Georgia, meaning it’s in great shape to exploit soaring economic growth there in the 2020s. The experts at Statista, for example, think the economy there will grow between 5.2% and 5.8% each year between 2022 and 2026. By comparison, the British economy is tipped to grow closer to 2% towards the middle of the decade.
TBC Bank has been expanding into other emerging markets in recent years too, to boost profits growth. It operates Uzbekistan’s only digital bank.
Better value than the Lloyds share price
I’m also taken by the better value for money that TBC offers compared with Lloyds. The Georgian bank trades on a price-to-earnings (P/E) ratio of 4.9 times for 2022, far better than the 8 times the Lloyds share price currently commands.
Moreover, TBC Bank also offers superior value when it comes to dividends. The yield here sits at a mighty 6.3% for next year. This is much better than the 5.2% that Lloyds offers and smashes the broader 1.9% average for FTSE 250 shares.
Why I’d buy TBC Bank today
Clearly, Lloyds still offers terrific value for money. And I can understand why many UK share investors might prefer to invest in the FTSE 100 bank instead of TBC.
It’s a well-established name and a giant in the British banking industry, whereas its Georgian counterpart is less familiar to most. Furthermore, banking regulations are much more stringent in the UK than in Georgia. This perhaps provides better peace of mind over the robustness of its operations and the quality of its investments.
That said, the National Bank of Georgia has taken significant steps over the past few years to improve risk management processes and overall stability in the country’s banking system and the broader economy. More work is needed, but I’m encouraged by the central bank’s commitment to keep rapidly modernising its financial sector.
I also like the fact TBC is a leader in areas like digital banking. This compares with Lloyds which is fighting a rearguard action to see off the online-led challenger banks like Starling and Monzo. It faces high costs as a result and a steady loss of market share.
Of course, TBC isn’t totally immune to the threat of competition. Bank of Georgia, for example, is another major player in the country’s banking sector. But the competitive pressures are much less suffocating here than those faced by Lloyds. I think TBC Bank could help me make a lot of money and would much rather buy it over Lloyds shares.
