{"id":790830,"date":"2024-09-12T15:20:00","date_gmt":"2024-09-12T13:20:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=790830"},"modified":"2024-09-12T16:05:05","modified_gmt":"2024-09-12T14:05:05","slug":"discovery-bank-exceeding-expectations","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/banking\/790830\/discovery-bank-exceeding-expectations\/","title":{"rendered":"Discovery Bank exceeding expectations"},"content":{"rendered":"\n

Discovery says that its bank has seen strong progress, but its results will be impacted by its struggles in the UK.<\/p>\n\n\n\n

In a trading statement for the year ended 30 June 2024, the group said Discovery Bank exceeded expectations and made excellent progress across all of its metrics. <\/p>\n\n\n\n

The acquisition of quality clients also continued to accelerate, which resulted in solid revenue growth.<\/p>\n\n\n\n

The bank’s operating loss is expected to be lower by 38% to 43% for the financial year. <\/p>\n\n\n\n

Discovery Life also showed strong earnings despite the elevated group life result over the last year. <\/p>\n\n\n\n

Discovery Health also generated strong earnings growth while continuing to invest in technology, innovation, and artificial intelligence (AI). <\/p>\n\n\n\n

Discovery Invest also saw strong profit growth following an increase in the value of assets under management. In addition, the earnings profile of specific contracts was amended in line with the group\u2019s approach to reporting under IFRS 17.<\/p>\n\n\n\n

Discovery Insure also delivered a strong recovery in the second half of the reporting period after previous management actions took effect. <\/p>\n\n\n\n

“Vitality UK achieved strong customer growth, new business and earned premiums. Normalised
operating profit was impacted by two specific issues: claims experience in VitalityHealth and a basis
strengthening for the back book under VitalityLife,” said the group. <\/p>\n\n\n\n

“VitalityHealth\u2019s membership reached 1 million during the reporting year, having grown strongly
from the increased demand for private medical insurance (PMI), given the backlogs experienced
by the National Health Service (NHS).”<\/p>\n\n\n\n

“There was a concomitant increase in claims during the reporting period, which negatively impacted earnings by \u00a330 million, given the lag of premium increases.” <\/p>\n\n\n\n

“VitalityHealth has significantly increased prices in response to the higher claims, in line with the market, with little impact on observed lapse rates. Post the reporting period, claim levels are in line with actuarial expectation. As such, margins are expected to recover strongly in the 2025 financial year.”<\/p>\n\n\n\n

VitalityLife’s underlying performance was also strong, with new business value generation improving in the second half of the financial year. <\/p>\n\n\n\n

Looking at Vitality Global, Chinese-based Ping An Health Insurance delivered a solid operating result. The company paid dividends at a payout ratio of 30% of distributable profits. <\/p>\n\n\n\n

Vitality also generated substantial profit and membership growth and improved margins.<\/p>\n\n\n\n

Vitality Health International is also a key growth area for the group, with investment made during FY24 to capitalise on the opportunity. <\/p>\n\n\n\n

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Financials <\/strong><\/p>\n\n\n\n

Some of the financials in the prior year were restated following the introduction of the IFRS accounting standard. For instance, VitalityLife’s normalised operating profit for FY23 has been restated to R468 million (previously restated to R589 million). <\/p>\n\n\n\n

Overall, Discovery expects the following results for FY24. <\/p>\n\n\n\n