Lion Finance (LSE:BGEO) roars with a 7% surge, but is it the UK's top banking stock?
The Lion Finance share price has soared, making it the FTSE 250's star on February 25th. At £110.40 per share, this banking powerhouse has climbed 7% in a single day.
Investors have grown accustomed to these remarkable performances. Formerly known as Bank of Georgia, the stock has skyrocketed over 1,000% in value in the last five years, leaving competitors in the dust.
But wait, there's more context to uncover. While Lloyds' share price rose 165% during this period, Barclays and NatWest soared even higher, with increases of 191% and 206%, respectively. So, is Lion Finance the ultimate banking stock on London's stock market?
The answer lies in its profits. Lion Finance's trading numbers for 2025 exceeded forecasts, propelling its share price upward. The company, operating in Georgia and Armenia, witnessed a 26% leap in net interest income to GEL3bn. Robust economic growth in these markets fueled a 20% and 17% rise in customer loans and deposits, respectively.
Consequently, underlying profits surged 28% year-on-year to GEL2.2m. Lion Finance attributed this success to its expanding loan book, growing customer base, and sustained profitability across all core divisions.
Lion Finance boasts strong financial foundations, similar to the FTSE 100's major banks. As of 2025, its Common Equity Tier 1 (CET1) capital ratio stood at an impressive 17.6%, providing substantial financial might for growth investments.
But that's not all. This financial prowess also enables Lion Finance to offer substantial dividends and initiate significant share buybacks.
Lion Finance increased its full-year dividend by 16.7% for 2025 and announced an additional GEL53.5m share repurchase, bringing the total for the year to GEL203m. This aligns with the bank's commitment to return 30% to 50% of annual profits to shareholders, further boosting its share price.
So, is Lion Finance the best bank? Opinions may vary, and the concept of 'the best' is subjective. However, I believe it has a strong case. Personally, I favor it over UK-centric banks like Lloyds due to its exceptional growth potential and the likelihood of sustained share price outperformance.
But let's not overlook potential challenges. Political tensions in Georgia between pro-Russia and EU-aligned factions create policy uncertainty, and a resolution doesn't seem imminent. The eventual outcome could significantly impact Georgia's economy and, by extension, Lion Finance's profits.
However, this uncertainty might be reflected in the bank's current share price, which boasts a price-to-earnings (P/E) ratio of 7.7 times, significantly lower than its FTSE 100 peers.
In my view, Lion Finance is a top FTSE 250 stock to consider right now, but it's not the only growth stock that has caught my attention.
Controversial Take: While Lion Finance's growth is impressive, the political situation in Georgia could be a significant risk factor. Is this a concern for long-term investors, or is the potential reward worth the risk? Share your thoughts in the comments below!
