Discovery to spend further R270 million on new bank


JOHANNESBURG, February 15 – Financial services group Discovery said on Friday it would invest a further R270 million on building its new bank to be rolled out to the public in March.

The company said its earnings for the six months ended 31 December would decline by 21 percent as it increased investment into five key new businesses, most notably Discovery Bank, which it launched in November for beta testing.

Discovery said the cost incurred in the build, test and run phases of the bank had largely been in line with expectations.

“Discovery estimates a further R90 million to be spent on build until the public roll out and a further R180 million on test and run. Other important new businesses include Vitality Invest, Vitality1, Umbrella Funds and Discovery for Business – all with pleasing early receptivity,” it said.

“The spend on new businesses is in line with budget and is fully provided for in the group’s capital plan.”

The group said operating performance from all of its businesses remained strong, except for Discovery Life which experienced a spike in large mortality claims amounting to approximately eight percent of group earnings for the six months.

It said normalised profit from operations was expected to decrease by approximately four percent to R3.7 billion compared with the previous year, due to an increase in borrowings.

Normalised headline earnings per share were also expected to drop 16 percent to 366.6 cents.

Discovery declared an interim gross cash dividend of 506 cents per B preference share for the six months.

It said its established businesses were well positioned for growth, with Discovery Life expected to revert to target growth levels, while profit growth was expected to return to its stated goal of consumer inflation plus 10 percent.

Discovery added that it was well capitalised for its five-year planning horizon. (ANA)