Banking

Discovery Bank ‘reward’ for investors in South Africa

Luke Fraser

 ·21 Mar 2026

Discovery’s recent financials were incredibly strong, with the improvements in its bank and international businesses receiving investor approval.

Discovery’s results for the six months ended 31 December 2025 were incredibly strong, with headline earnings increasing 29% to R5.7 billion.

Speaking with Business Day, Grant Nader from Benguela Global Fund Managers chose Discovery as his stock pick, noting that the group is starting to realise the promise of its previous multi-billion-rand investments.

These investments were a key draw for investors in the past, and are now starting to deliver meaningful returns.

This is the case for Discovery Bank, which has become profitable after launching in 2018.

In its recent financial results, the group said that it saw a notable acceleration in the acquisition of “quality and engaged” clients.

The bank’s overall client base grew by 28% to 1.4 million clients over the period, with the group currently adding about 1,500 clients per day.

70% of the customers are also entirely new to the Discovery Group, which Discovery said demonstrates “the bank’s expanding relevance beyond the core Discovery client base.”

The bank’s normalised profit of R75 million was better than the prior-period loss of R145 million, with operating profit before new business acquisition costs improved by R250 million, ahead of plan.

Non-interest revenue at the bank increased 39%, driven by the growth in clients and higher product take-up and engagement across the Vitality model. This increased fee income per client.

Deposits in the bank increased by 21% from December 2024, while advances increased by 42%. This was supported by strong growth in home loans, which reached R2.9 billion at the end of the period.

The bank also benefited from increased efficiency gains from the increased use of AI and automated service channels.

Discovery added that it aims to drive further growth in the bank by tapping into the group’s broader South African client base of 6.5 million customers.

International business

Nader added that Discovery’s UK business, Vitality, is also starting to show improvements following a difficult few years.

Vitality’s normalised operating profit increased by 41% to R2.1 billion, which Discovery said came off the back of exceptional performances in both the UK and China.

Fiscal challenges in the UK are putting pressure on the National Health Service (NHS) and on a higher inheritance tax burden.

These pressures limited economic growth, but Discovery said they also drive increased demand for private health insurance and life insurance for estate planning.

Nader noted that Discovery is starting to rein in its investments as cash flow from its large-scale projects kicks in.

With South Africa having limited growth opportunities, Nader said that Discovery is one of the few examples of a company with “organic growth”

The share has experienced some volatility, but Nader believes it is a good investment for those with a two-to-three-year time horizon.