Discovery Bank continues to grow its weekly average new-to-bank clients, the group said in a trading statement for the six months ended December 2020.
“Discovery Bank made pleasing progress over the period, growing to over 287,000 clients with more than 540,000 accounts, with weekly average new-to-bank clients
continuing to grow,” it said on Thursday (25 February).
Retail deposits reached R5.7 billion, as at 31 December 2020, with advances more stable at R3.8 billion reflecting the conservative lending strategy, resulting in a 69% lower arrears rate compared with the market, it said.
The group said that following the successful completion of its accounts migration process, where it moved over FNB Discovery Card clients to its platform, just over half (53%), have upgraded to Discovery Bank.
Following early teething problems, the group said that the IT systems are managing the growing customer and transactional volumes well and proved very stable over the 2020 year-end period, maintaining a systems uptime of >99.9%.
Discovery said that normalised operating profit for the group increased by 19% to R4.5 billion, for the six months ended December 2020, while normalised headline earnings decreased by 1% to R2.3 billion and total new business was up 8% to R10.9 billion.
Investment in new initiatives was at 22% of earnings, compared with 26% in the previous period. Discovery Bank reported a loss of R611 million for the period under review, down from R530 million it lost in the prior period.
Overall, Discovery Group achieved the following results for the six months ended December 2020:
- Normalised profit from operations increased 19% to R4.5 billion
- Profit for the period decreased 10% to R1.9 billion
- Gross income of the group increased 9% to R34.9 billion
- Headline earnings per share decreased 10% to 280.3 cents per share
Due to the uncertain and potentially volatile economic environment caused by the Covid-19 pandemic, Discovery has not declared an interim ordinary share dividend. The reintroduction of dividends will be considered when appropriate, it said.
- Discovery Health reported a 6% increase in normalised profit to R1.67 billion
- Discovery Life was up 3% to R1.9 billion
- Discovery Invest declined 3% to R471 million
- VitalityHealth was up 24% to R613 million
- VitalityLife was up 206% to R327 million
- Discovery Insure was up 43% to R107 million
- Vitality Group was up 116% to R238 million.
Discovery said that its business model “has proven to be highly relevant” during the Covid-19 pandemic and the trends that are are likely to accentuate this relevance in a post
“The group is confident in its ability to capitalise on these emerging opportunities,” it said.
As a result, Discovery’s earnings per share (basic) and headline earnings per share (basic), for the period ending June 2021, are expected to be at least 20% higher (17.8 cents and 54.0 cents, respectively) than that reported for the year ended June 2020, it said.