The share bucking the FTSE 250 gloom

A FTSE 250-listed bank whose shares are up 200% in just over a year continues to stand out from the rest of the sector after delivering more forecast-busting results today.

Tbilisi-based Bank of Georgia Group (LSE:BGEO), which serves 2.6 million customers, jumped another 450p to a fresh record of 3,660p as the best performer in an otherwise gloomy mid-cap session.

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The wider FTSE 250 index reached mid-afternoon 117 points lower at 18,463.78, with UK and US-focused magazine and online publisher Future (LSE:FUTR) among those impacted by the prospect of Federal Reserve interest rates staying higher for longer.

Corporate merchandise firm 4imprint Group (LSE:FOUR), which generates most of its revenues from North America, fell 150p to 4930p and private equity business Bridgepoint Group  (LSE:BPT) lost 7.6p to 177.4p.

TI Fluid Systems (LSE:TIFS), the supplier of brake and fuel lines for global vehicle manufacturers, shed 6.4p to 127.6p due to its exposure to the faltering China economy.

In contrast, Bank of Georgia has reaped the benefit of an improving home market that grew 7.6% year-on-year during the first six months of the year, driven by robust external inflows and increased investment spending.

Inflation has also reduced significantly, from 9.8% in December 2022 to 0.3% in July. Interest rates stood at 10.25%, down by 75 basis points over the last few months as the National Bank of Georgia makes a gradual exit from tight monetary policy.

The cuts will have an impact on industry profitability, but the company still reported a net interest margin 20 basis points higher than the previous three months at 6.6%.

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Loan portfolio growth was 17.6% year-on-year in the second quarter in constant currency, which compares with a medium-term target of 10%. Deposits grew 38.1%, reflecting high levels of local economic activity and a strong customer franchise.

Costs rose 11.5% but this compared with a rise in revenues of 34.8% as profits for the second quarter came in 48% higher than a year earlier.

The interim dividend due for payment on 27 October has increased by 65% to 3.06 Georgian Lari (92p) while the company has approved a further share buyback programme. 

Peel Hunt said the second-quarter figures were exceptionally strong and likely to lead to an upgrade of up to 10% for full-year numbers. Prior to making these changes, it noted that the shares trade on about four times earnings and with the dividend yield above 8%. 

The broker, which has a “buy” recommendation and price target of 4,000p, added: “The momentum behind these consensus-busting results remains positive and low valuation multiples allow for material share price upside.”