{"id":517916,"date":"2021-09-02T09:40:57","date_gmt":"2021-09-02T07:40:57","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=517916"},"modified":"2021-09-06T13:50:24","modified_gmt":"2021-09-06T11:50:24","slug":"discovery-bank-narrows-operating-loss-as-it-gains-traction","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/banking\/517916\/discovery-bank-narrows-operating-loss-as-it-gains-traction\/","title":{"rendered":"Discovery Bank narrows operating loss as it gains traction"},"content":{"rendered":"

On Thursday (2 September), Discovery Bank reported an operating loss for the year ended June 2021 of R1 094 million, 7% lower than the prior period.<\/p>\n

The bank continued to gain traction with 362,000 clients and 649,000 accounts, versus 274,000 clients and 505,000 accounts in July 2020.<\/p>\n

The group expanded its existing Discovery and non-Discovery client base and achieved 500 average daily new-to-bank sales, in line with the medium-term forecast, it said.<\/p>\n

The group said that there was a steady improvement in product mix over the year, with transaction accounts and credit cards making up over 80% of new business. Retail deposits grew by 167% to R8.18 billion.<\/p>\n

“A deliberate decision to pursue a prudent credit strategy resulted in moderate advances growth of 5% to R3.83 billion at 30 June 2021. The quality-focused credit strategy was evidenced by the low credit loss ratio of 4.6%, which includes a Covid-19 overlay, and high average client non-interest revenue (NIR) levels,” Discovery said.<\/p>\n

The bank continued to focus on product innovation and building a differentiated and sophisticated digital platform.<\/p>\n

This included the rollout of payment platforms like Apple Pay and Discovery Pay; an enhanced account origination journey with unique features such as Virtual Cards; a more valuable Discovery Miles currency; enhancements to travel benefits; and more differentiated products in the pipeline, Discovery said.<\/p>\n

There was a big improvement in utilisation over the period. Compared to July 2020, clients depositing their salary, initiating debit orders and making digital payments grew substantially, it added.<\/p>\n

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\nFor the group, Discovery reported a 7% increase in normalised profit from operations to R6 494 million, notwithstanding a R2.4 billion Covid-19-related impact for Discovery Life (R1.1 billion in the prior year).<\/p>\n

“The impact of Covid-19 has been significantly worse than expected in SA, and we estimate that the SA epidemic has turned out to be five times more severe, on a risk-adjusted basis, than in the UK,” the financial services firm said.<\/p>\n

Normalised headline earnings (NHE), however, decreased by 9% to R3 406 million.\u00a0 This growth was impacted by R389 million pre-tax mark-to-market foreign currency losses (R578 million pre-tax gains in the prior year)\u00a0 arising from a rand recovery during the year under review.<\/p>\n