Financial services group Discovery expects its digital banking business to become profitable in 2025 after narrowing losses in the past year and reaching a target of a million clients ahead of schedule, CEO Adrian Gore said on Thursday.
Discovery, which reported annual results, said the digital bank, launched in 2021, narrowed its loss by 41% to R454-million and said customer growth had driven revenue.
Gore said in an interview that he expects the bank to turn a profit next year and generate R400-million in operating profit per year as it works towards a target of R3-billion in operating profit by 2029.
The bank, which serves the mass affluent population between the ages of 25 and 50, said its total client base grew 36% during the year, hitting its goal of one million clients well ahead of a 2026 target.
“You can’t grow organically unless you have a repeatable, scalable model, so our approach has been to actually grow organically, not to make acquisitions,” said Gore.
Discovery Bank, which specialises in personal banking, expanded its product range by launching a revolving credit facility in December 2023 and home loans in May 2024. The company said both had had “pleasing initial take-up”.
The digital bank’s competitors include the likes of Absa Bank, FirstRand’s First National Bank, Standard Bank, Capitec Bank and Old Mutual Bank, which received regulatory approval in April this year.
Dividend
The group as a whole reported normalised headline earnings, which Discovery considers a more accurate measure of its profit and which excludes exceptional items, rose to R7.3-billion in the year ended 30 June, up from R6.4-billion recorded a year earlier.
Discovery declared a final dividend of R1.52/share. — Sfundo Parakozov, (c) 2024 Reuters