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Discovery Bank made money for the first time, reporting a profit of 370 million rand against a loss of 68 million a year earlier.
The bank Adrian Gore's group launched in 2019 grew its client base 26% to 1.57 million and lifted revenue 31% to 3.1 billion rand in the year to June 30. Gore said about 1,000 people a day are joining.
Where they come from is the part that matters. Seventy percent of new business originated outside the wider Discovery group, meaning the bank is now winning customers who have no existing relationship with Discovery Health, Discovery Insure or any other part of the business. Running the other way, 75% of Discovery members do not bank with it.
Gore called the potential remarkable, and said the shared value model, the incentives and the structures had played out well.
The group as a whole reported normalised profit from operations up 17% to 17.75 billion rand for the year. Headline earnings rose 34% and normalised headline earnings 21%. Normalised return on equity improved to 16.5% from 15.4%, financial leverage fell to 15.4%, and cash conversion reached 85% of after-tax normalised operating profit. The final ordinary dividend was raised 36% to 273 cents a share.
What Discovery does with the bank next is a strategy it calls Super Bank. The plan is to put its health, insurance and investment products onto the banking platform, using customer data, artificial intelligence and personalised rewards to link them. Gore described it as bringing all the shared value and Vitality structures into a single set of value.
That model is what Discovery has been built on since Gore founded it in 1992 as a health insurer. Vitality rewards customers for behaviour that reduces the insurer's risk, such as exercising or eating well, and the company licenses the system internationally through partnerships in Britain, China, the United States and elsewhere. The international Vitality businesses contributed to this year's growth alongside the South African operations.
Gore remains chief executive and one of the group's substantial shareholders. He co-founded Discovery with Barry Swartzberg and Herschel Mayers inside Rand Merchant Bank, and it has grown into one of the largest financial services companies on the Johannesburg exchange.
Discovery Bank has taken seven years and considerable capital to reach this point, entering a market dominated by Standard Bank, FirstRand, Absa, Nedbank and, at the value end, Capitec. Its argument has always been that behavioural data from the rest of the group would let it price risk better than a conventional lender.
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