The FTSE 100 may be famous for the ‘Big Four’ banks, but smaller players on the FTSE 250 are making gains.
Georgia-based bank TBC Bank Group (LSE: TBCG) has been moving up the rankings, with a share price that’s up 380% in the past five years. The rapid growth far outshines major high street banks such as Lloyds, HSBC and NatWest.
Just in the last year alone it’s seen an 82.7% gain — more than any other bank listed on the London Stock Exchange.
What’s driving the growth?
Georgia is a small transcontinental country bordering both Eastern Europe and West Asia. The post-Soviet nation’s a growing tourist hotspot and is listed as a potential candidate to join the EU.
I visited last December and despite the biting cold, I enjoyed the rich culture and impressive local cuisine. The country’s GDP grew 9% year on year in Q1 2025, driven in part by tourism and credit growth.
Along with Lion Finance (previously Bank of Georgia), it’s one of two Georgian banks listed in the UK. This helps to enhance their access to capital and liquidity while broadening their investor base.
Its recent success could be attributed to growth in neighbouring Uzbekistan, where it commands 17% of the consumer lending market. A successful transition to digitisation has streamlined onboarding, leading to a 25% rise in total operating income in Q1 2025.
An undervalued dividend gem
TBC’s more than just a small foreign bank that’s doing well — it’s an attractive investment to consider. With a 5% dividend yield that’s grown in recent years, it could emerge as a strong income stock. But while the dividend’s well covered for now, payouts have varied historically. They may be inconsistent during periods of economic stress.
It also looks somewhat undervalued, with a price-to-earnings (P/E) ratio of 6.58 — slightly higher than Barclays but still well below the industry average. This suggests growth potential if earnings don’t falter.
Risk to consider
Naturally, being based in its particular region, TBC’s operations are heavily exposed to regional geopolitical and macroeconomic instability. This includes currency fluctuations and shifting regulations in emerging markets. The bank’s been flagged high-risk by some analysts, particularly due to political polarisation between pro-Russia and pro-Western supporters.
With almost twice as much debt as equity, it could struggle to make payments if profits take a dip. For a major bank, a debt-to-equity (D/E) ratio of 1.88 wouldn’t be a concern, but it’s slightly high for a less established bank like TBC.
My opinion
Despite the risks, I think TBC presents a compelling investment to consider for those seeking growth and income. While there are some geopolitical risks, it offers an attractive yield and a moat in digital expansion.
It’s not guaranteed and super-fast growth is hard to maintain but at the current trajectory, its £2.5bn market cap could reach £4.3bn in the next 12 months, making it eligible to join the FTSE 100. That would certainly add to its legitimacy as a major player in the UK banking industry. Overall, it combines strong fundamentals with high regional risk — a mix that may suit risk-tolerant investors.
