Consider smaller bank stocks for maximum value in investments.
Headline: Booming Banks: A Look at Global Financial Giants
In the dynamic world of finance, several banks have made significant strides over the past two decades. Here's a snapshot of some notable performances and developments.
DBS Bank, Singapore
DBS, based in Singapore, has seen its revenues surge fivefold in US dollar terms over the past 20 years. With a market cap of £83 billion, the bank is three times the size of Bank Rakyat, the largest bank in Indonesia. DBS's Tangible Book Value (TBV) per share is up five times, and its shares trade on a multiple of almost 2.1 times. Notably, DBS embarked on a digitization strategy in 2014, under the leadership of its former CEO, Piyush Gupta, following a meeting with Jack Ma, the founder of Alibaba.
Lion Finance, Tbilisi, Georgia
Lion Finance, a bank based in Tbilisi, has experienced remarkable growth. Over the past 20 years, its revenue in US dollar terms has grown 58 times to $1.3 billion. The bank has recently made strategic acquisitions, including the purchase of an Armenian bank for $300 million. Lion Finance currently trades at 0.65 times historic book value or 2.6 times 2023 earnings. The bank is forecast to grow revenue and earnings by 15% this year, trading on just five times forecast earnings for 2026 and 1.3 times forecast TBV.
UK Banks
In the UK, household debt currently stands at about 80% of GDP. Despite this, UK banks have shown resilience. Loss-absorbing equity funding has been restored for UK banks, and they are trading at roughly 1.1 times TBV currently. Interest rates have risen well above post-crisis lows, and UK banks are seeing growth. For instance, Metro Bank is up 196% and NatWest is up 147% over the past 18 months.
Regional Banks in the US
The S&P Regional Banks index in the US is up 12% since the start of 2024, reflecting the robust performance of regional banks in the US. This growth is also evident in the Nasdaq, which is up 35% since the start of 2024.
Competition in Georgia
In Georgia, banks like Bank of Georgia and TBC Bank have been actively involved in acquisitions. For example, TBC Bank formed a joint venture to acquire OLX Uzbekistan. Both banks have shares listed publicly, with Bank of Georgia shares traded, showing a free float of 51.55% and ownership including institutional investors like JPMorgan and BlackRock.
Upcoming IPO
Shawbrook, a small business lender, may float later this year and is targeting a £2 billion valuation.
Meanwhile, HSBC and Standard Chartered have seen their share prices fail to keep pace with inflation over the past 20 years. However, the story of growth and transformation in the banking sector continues to unfold, with many banks adapting to the digital age and seizing opportunities for expansion.
