Discovery Bank breaks even ahead of plan

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 20 Mar 2024
The focused investment in Discovery Bank has positioned it as a strong platform for continued growth, says the group.
The focused investment in Discovery Bank has positioned it as a strong platform for continued growth, says the group.

Digital bank Discovery Bank has reached its monthly operational break-even ahead of the group’s target date.

This was divulged when insurance group Discovery today announced its financial results for the six months ended 31 December 2023.

The break-even milestone comes after Discovery Bank had been making losses since going live to take on the traditional banks.

Discovery Bank was first announced in November 2018 and launched publicly in 2020, billing itself as the “world’s first behavioural bank”. Its digital banking peers include TymeBank and Bank Zero.

In South Africa, the insurer says Discovery Health, Discovery Bank, Discovery Life, Discovery Invest and Discovery Insure’s normalised operating profit increased by 9% to R4.3 billion and new business by 29% to R11.1 billion.

During the reporting period, Discovery says it continued its focus on achieving growth, cash generation and capital resilience, while ensuring platforms geared for accelerated future growth (Discovery Bank and Vitality Global) were scaled further.

Group chief executive Adrian Gore comments: “We’ve been disciplined in our strategy of diligent capital allocation, growing cash generation and balance sheet strength. Growth in core businesses remained robust over the period, and the focused investment in Discovery Bank and Vitality Global manifested in exceptional performance, with these businesses being positioned as strong platforms for continued growth.”

According to the group, the banking business delivered excellent results, achieving its stated target of monthly operational break-even, before acquisition costs during the period, ahead of plan.

For the six months under review, Discovery Bank’s operating loss, before new business acquisition costs, improved by 40% and the bank had more than 825 000 clients as of December 2023.

The firm notes the bank is growing rapidly through the acquisition of quality clients on a scalable platform and its exceptional customer engagement position is set to play a central role in advancing the group’s South African business through integrated ecosystems.