The FTSE 250 company recently released impressive results, overshadowed by the negative political climate

Bank of Georgia Group (LSE: BGEO) is a FTSE 250 a stock that just popped up on my radar. It doesn’t usually get a lot of attention but whenever I do watch it, it usually does quite well.

As the name suggests, it is based in Georgia and provides financial services through its subsidiaries in that country and neighboring Armenia.

Located on the other side of the Black Sea, Georgia sits in what is often thought of as Asia. However, it is considered a European country and has applied to join the EU. Recently, it has been in the headlines after protests broke out against the results of last month’s parliamentary elections, which some say were rigged.

Depending on how this political situation unfolds, it can affect the party’s performance.

The price is a rollercoaster

The stock has done well recently, up 20 percent in the past month. However, there is a caveat – volatility has been the theme of share prices this year. In February it rose 30% and lost everything in May before rising in July and falling in September.

I wouldn’t be surprised if this month’s gains diminish again in December.

Still, it’s up 223% over a five-year period with annual growth of 26%, so it’s made impressive gains over the long term. It also sports a healthy 4.9% dividend yield, adding an attractive value proposition to the stock.

A £1,000 investment five years ago could have grown to £3,900 (with dividends reinvested).

However, I wouldn’t count on the profit too much – it has been paying them for a few years with cuts in both 2019 and 2020.

What are the Q3 results?

Third quarter profits rose a whopping 42.5% year-on-year to 509.3m Georgian Lari (GEL), or £145.9m. Return on equity (ROE) divided across sectors now stands at an average of 32.1%.

The group’s loan book increased by 63.4% year-on-year, driven by the consolidation of its Armenian business, Ameriabank, and 23.6% growth in its Georgia division.

All things considered, that’s a pretty good result.

Oh, but the dangers

The main risk facing the bank, as mentioned earlier and mentioned in this earnings announcement, is the local political situation. According to the company, “we don’t expect this time to have a big impact on the economy.” Therefore, it is sufficiently confident in the forecast of GDP growth of 9% this year and 6% in 2025.

The company did not elaborate on why it felt the economic impact would be minimal. Accurately assessing the outcome of a situation is difficult during the first phase of the situation. And after both the UK and US elections this year, I’m frankly done with politics for a while. So I’ll have to take the bank’s word for it.

However, I think it’s safe to say that the increasing political climate may hinder – or at least hinder – growth. So it is understandable why UK investors are hesitant about investing in a bank. While the business itself appears to be doing well, I will need to see tangible evidence of economic recovery before I consider the stock.