Lion Finance Group

This is The Conviction Play. Lion Finance Group, banking. Part of our Capital Formation series, which looks at the businesses that build and allocate capital in frontier and emerging markets. This is the piece we published on it in June 2025, and the figures in it are from then.

Lion Finance Group, which most people still know as Bank of Georgia, is listed in London and runs one of the two dominant banks in Georgia. More than one point seven million customers in a country of just under four million people, across retail, small business and corporate banking. Over ninety-five per cent of its retail transactions now happen digitally, which is a level of adoption most European banks are still talking about.

The number that made people look twice was return on equity, which measures how efficiently a bank turns shareholder capital into profit. At the time it was running near twenty-nine per cent. Many large European banks target ten to fifteen and do not always get there. That is an exceptional return on equity by any standard a bank is measured against, and there is no reason to say it any more carefully than that. Nor is it one number standing on its own. The cost-to-income ratio was thirty-five per cent, which is lean by any comparison you care to draw. Net income was up thirty-nine per cent on the year. And book value per share, which is the thing a bank actually compounds for the people who own it, rose close to twenty-six per cent. It has grown its customer base and its loan book year after year while doing all of that.

Georgia's economy is open. Through the years the piece covers it grew at around seven per cent annually, with low public debt and a well-regulated banking sector. It also has one of the oldest winemaking traditions in the world, and it sits in the Caucasus, where the mountains draw enough visitors that tourism is a real line in the economy rather than a footnote. Which is a bank's business as much as anybody's. It borders Russia, Turkey, Armenia and Azerbaijan, which is most of what international investors know about it. The economic record has run ahead of that reputation for years.

And it is no longer only a Georgian bank, which is what the name change was about. In 2024 it acquired Ameriabank in neighbouring Armenia, a genuine second country rather than a branch office, and Bank of Georgia had stopped describing the whole of it. Both banks keep their own identity and operations. What the group gets is a second home market to grow in, and the same digital playbook to run there.

That is the real question. Why does a bank earning these returns attract so little attention from international investors? The piece argues that the reasons are structural rather than operational. A small market capitalisation. Thin trading volumes. Limited index representation. And a regional risk perception that does not distinguish between neighbours. Those things screen a bank out of institutional mandates without saying anything about how it is run.

One of those structural barriers has since gone. The article was headlined around a question: is this the best FTSE 250 stock most British readers have never heard of. Lion Finance has since joined the FTSE 100, which decides not what a company is worth but which funds are obliged to hold it at all.

Real, and worth naming. Integrating Ameriabank brings execution risk and a second regulator. The lari can move against sterling or the dollar. Geopolitics moves sentiment here whatever the bank is doing, and the thin liquidity that keeps the shares overlooked also makes a position hard to leave. The one that matters most: a loan book is only as good as the cycle it has been tested through, and a fast-growing book in an open economy has more of its testing ahead of it than behind. One question remains: how much of those returns comes from the market it grew up in, and how much from the bank itself? The record does not settle that either way. What the record does show is a bank that has traded through volatile periods before and stayed profitable and disciplined through them.

Strip out everything else and this is a bank earning close to thirty per cent on equity, in an economy that has been growing at seven, with a cost base most European banks cannot match, now compounding in a second country as well as its first. The risks above are real and worth holding in mind. Stating them plainly is not a hedge against any of that.

Three things to declare, and they all point the same way. The author owns shares in Lion Finance Group, may buy more or sell them without saying so, and holds it with conviction rather than as a trade. He banks with them, which is how he came to look at the company at all. And he has sat in one of their results presentations, which is a public event, and nothing was said in it that the market did not already have. All three are reasons to put what you have just heard in context. They are also the reason it is not a desk view.

The full piece on Lion Finance Group is on the site. Free, no email address, no paywall, at the conviction play dot com.

A note before we finish. This episode is narrated by a synthetic voice, not by the author. It is an assessment of business quality, not a view on the share price: nothing here is a valuation, a price target, or a recommendation to buy or sell anything. A company can sit outside one of our frameworks and still be a fine business and a fine investment, and we publish those too, with the reason, because an assessment that only speaks about its winners is marketing. The Conviction Play publishes general commentary for information only. It is not investment advice, and capital is at risk. This reflects what was known on the day it was recorded.

That was Lion Finance Group, from The Conviction Play. Thank you for listening.