Lloyds‘ shares continue to be incredibly popular in the UK. Indeed, the Black Horse bank has been the second most bought stock on AJ Bell over the past month, with only Legal & General beating it (though I suspect SpaceX might soon change that!).
Perhaps this isn’t surprising, given Lloyds’ status as the UK’s largest mortgage lender. Investors favour its perceived stability, reliable dividends, and entrenched competitive position. Fair do’s.
However, I personally find the following pair of bank stocks more attractive today. Here’s why.
FTSE 250
The first one is TBC Bank (LSE:TBCG), a leading lender in Georgia. I’m bullish on this FTSE 250 stock for a few reasons.
Firstly, TBC has high long-term growth potential due to the emerging markets in which it operates (Georgia and Uzbekistan). Unlike the UK, these economies are growing quickly but still in the earlier stages of financial services penetration.
Plus, TBC enjoys a duopolistic position within the Georgian banking system, alongside the FTSE 100‘s Lion Finance. This dynamic (37% share of both loans and deposits) has helped the bank consistently deliver a high return on equity (ROE). We’re talking about mid-20s, which is excellent.
We operate across two highly attractive and complementary markets. Georgia provides a strong, well-established platform
where we generate consistently high returns, while Uzbekistan offers significant long-term growth potential as one of Central
Asia’s most dynamic and underpenetrated banking markets.TBC Bank
Next is the dividend yield, which currently stands at 6.8% on a forward-looking basis. That’s significantly ahead of Lloyds’ 4.5% yield, while dividend cover is also slightly higher.
Finally, the stock’s valuation is much lower, with a forward price-to-earnings (P/E) ratio of 5.3 versus 9.3 for Lloyds.
Of course, the difference in valuation and yield probably reflect the higher risk profile (particularly political risk in Georgia). And while Uzbekistan is expected to record strong GDP growth of 6%+ this year, it’s also a bit of a wildcard.
On balance though, I like TBC’s high yield, low valuation, robust profitability, and strong long-term growth prospects.
FTSE 100
The second stock I prefer is HSBC (LSE:HSBA), which is up 57% in the past year.
Unlike Lloyds, Europe’s largest lender by market-cap operates in the world’s largest and second-largest economies (US and China/Hong Kong), as well as India (which is on track to become the third-largest within the next few years).
Therefore, HSBC has a truly global presence, and should capture some of the growth of the world’s largest economies moving forward. This includes high-net-worth individuals who have complex tax planning and cross-border needs.
According to Mordor Intelligence, the Asia-Pacific wealth market is projected to reach $41.8trn by 2031, up from $27.6trn in 2025. To capture this opportunity, HSBC has set up wealth hubs in China, Hong Kong, Singapore, Taiwan and Malaysia.
Admittedly, the flip side to HSBC’s Asia-focused strategy is that new regulations can come out of left field, especially in China. This adds political and regulatory risk that Lloyds’ shareholders don’t have to worry about.
But HSBC also offers a slightly higher forward yield of 4.8%, which I find attractive. Add in the banking giant’s long-term growth prospects alongside the dividend, and I think the stock is well worth considering.
Should you invest £5,000 in HSBC Holdings right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if HSBC Holdings made the list?
Ben McPoland owns shares in HSBC and Legal & General.
