Discovery plans to launch a retail bank

JOHANNESBURG – Insurance group Discovery plans to launch a full-scale retail bank out of its credit card, CEO Adrian Gore said on Thursday.

Discovery plans to use around R1.3 billion of the R5 billion it raised in a recent rights offer to increase its stake in DiscoveryCard, a joint venture with the FirstRand Group, to 74.99%.

It will spend an additional R800 million to R1 billion on the development of the bank, Gore said.

He said that Discovery was still in the process of applying for a banking licence and is attracting a team to drive the project. Gore would not be drawn on a launch date but said the bank was a “multi-year project” and will not be launched for a number of years. He said its focus would be retail customers and small businesses.

“We’re obsessed with being the best globally,” Gore, speaking at the group’s results for the year to June, said.

For the year under review, Discovery grew normalised headline earnings 16% to R3.5 billion, with operating profit growing 17% to R5.8 billion, as its home market continued to grow revenue and market share, particularly in the health and life insurance sectors.

New business grew 15% on a normalised basis. When including the award of the Bankmed Medical Scheme, new business grew 51% to R17.5 billion.