Old Mutual will unveil South Africa’s newest bank in the first quarter of next year, intensifying competition in a country where 85% of residents have accounts with lenders.

The continent’s largest insurer by assets has developed the bank’s core functions within a previously allocated budget of R1.75-billion, and the board has approved an additional R800-million to carry the project through to its official launch.

Old Mutual announced its timeline in a statement on Thursday, where it said first-half profit rose 20% to R5.2-billion.

The bank, whose name Old Mutual has yet to disclose, will primarily target affluent customers. Competition is intensifying in the industry with the entry of digital lenders as well as the rapid growth of fintech units of telecommunications companies like MTN Group, which provide mobile banking services. Rival Discovery started its bank in 2019 and has yet to turn profitable.

Old Mutual has received approvals from the Prudential Authority, certifying that its systems are fully operational. The insurer has also appointed Clarence Nethengwe as the CEO-designate of the bank, effective 1 November.

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The value of new business declined 8.4%, while gross written premiums climbed by 9%. The insurer’s return on net asset value increased to 12.6% from 11.9% a year earlier.