Health and life insurance group Discovery expected its bank offering to start operating before the end of next year, it said yesterday as it released its results for the year to the end of June.
Discovery received authorisation from the Registrar of Banks to establish a banking presence in South Africa last October.
“Significant progress has been made in developing the system infrastructure, operating processes, regulatory engagement and the customer value proposition, with a number of key milestones having already been reached. Discovery anticipates launching its proposed banking offering during 2018,” the group said.
Discovery has a number of businesses that management believes are poised for growth, despite encountering challenges such as Brexit in VitalityLife and low economic growth in South Africa.
Discovery said a sophisticated capital management structure supported the organic growth methodology to ensure Discovery’s financial strength, sufficient financial flexibility through cash generation and production of above target returns.
In its results, the group reported a 10% increase in normalised profit from operations to R7.05 billion. Core new business annualised premium income increased 16% to R16.99bn. In constant currency terms, core new business annualised premium income grew 22% to R17.87bn and normalised profit from operations grew 12% to R7.19bn. Gross inflows under management were up 10% to R115.06bn.
Discovery now operates in 16 countries, serving close to 10million clients.
In South Africa, the group said both Discovery Health and Discovery Health Medical Scheme (DHMS) delivered excellent results.
Discovery Health’s normalised operating profit increased 11% to R2.51bn, while new business annualised premium income increased 18% to R6.11bn (excluding take-on of new closed schemes) and lives under management reached 3.39 million.
DHMS announced a highly competitive contribution increase of 7.9% and ended the 2016 calendar year with a total surplus in excess of R1.3bn.
New business in Discovery Life saw its annualised premium income increasing 17% to R2.18bn and earnings increased 10% to R3.59bn, despite the impact of higher than expected claims.
Discovery Invest reported a 12% increase in operating profit to R744 million and assets under administration grew 14% to R69.5bn with 76% of linked funds in Discovery Funds.
The group said Discovery Insure’s performance exceeded its expectation. The business achieved a cumulative profit in the second half of the financial year and reduced its combined ratio by 8.4%.
The board declared a final gross cash dividend of 520.68c a share, up from 416.55c as compared to last year.
Discovery shares rose 2.82% on the JSE yesterday to close at R146.