Discovery increased normalised profit from operations by 17% in the year to June 30, following a strong performance from Discovery Bank and solid growth in South Africa and its international Vitality businesses.
The JSE-listed medical schemes and financial services group said normalised profit from operations rose to R17.75 billion. It declared a final ordinary dividend of 273 cents per share, up a robust 36% on the previous period.
“The results reflect the strength and maturity of Discovery in South Africa and Vitality internationally, and the value created through investment in our shared-value model and platforms,” chief executive Adrian Gore said in a statement.
The review period was marked by geopolitical uncertainty, policy shifts and volatility in global financial markets.
Headline earnings increased by 34%, while normalised headline earnings rose by 21%. Normalised return on equity improved to 16.5%, from 15.4%. Embedded value increased to R143bn, delivering a 14.1% return on embedded value.
Discovery Bank delivered a profit of R370 million, compared with a loss of R68m in the previous period, as it continued to grow its client base, increase engagement and deploy AI-driven capabilities.
Client numbers increased by 26% to 1.57 million, revenue grew by 31% to R3.1bn and 70% of new business originated outside the Discovery group. Deposits rose by 40% to R12.9bn.
Gore said Discovery, now in the second year of its five-year strategy, was entering a new phase in South Africa as Discovery Bank evolves into an integrated platform connecting customers’ banking, health, insurance and investment needs.
He said this evolution underpinned the group’s “super bank” strategy, aimed at creating a more connected customer experience across its ecosystem.
The group is also accelerating its Vitality shared-value model globally.
The model combines behavioural science, data, advanced analytics and AI-driven personalisation to improve health and financial outcomes while creating long-term value for customers, shareholders and society.
“At the centre of the model is a simple idea: when people are encouraged and rewarded for making better health, driving and financial decisions, everyone benefits,” Gore said.
VitalityLife’s operating profit increased by 27% to £34.5m, or by 23% to R782m, after benefiting from favourable claims experience and lower cash-flow variances.
Discovery Bank’s revenue increased by 31% to R3.1bn. Operating expenses benefited from economies of scale as the bank grew, driving an improvement in profitability and returns while maintaining disciplined risk outcomes.
Discovery South Africa
Discovery South Africa increased normalised operating profit by 16% to R13.87bn, while new-business volumes rose by 8% to R19.53bn.
Discovery Health increased normalised operating profit by 9%, with new-business annual premium income up 10% and continued membership growth across the Discovery Health Medical Scheme.
Discovery Life increased operating profit by 6% to R5.87bn and maintained its leading position in the affluent retail-protection market, with a 27% market share.
Discovery Invest increased operating profit by 9% to R2.16bn, supported by strong asset growth and positive net inflows.
Discovery Insure delivered 29% growth in normalised profit from operations before associates, while its operating margin improved from 11.9% to 14.8%.
Vitality international
Vitality completed its transition to a regionalised operating model, with the UK as its centre and costs apportioned across the composite to support the deployment and scaling of capabilities across markets.
The business increased normalised operating profit by 21% to R3.88bn, following strong performances from Vitality UK and Ping An Health Insurance.
VitalityHealth UK increased operating profit by 65% to £83.6m. Vitality UK increased operating profit by 27% to £34.5m, while new business rose by 25%.
Vitality Global Markets’ contribution to normalised operating profit fell by 29%, although the business continued to make progress despite adverse currency movements and macroeconomic conditions.
After the year-end, VitalityHealth USA completed its acquisition of Icario, which covers 11 million lives. Discovery said the acquisition would accelerate and complement its capabilities in the large government-sponsored market.
Ping An Health Insurance increased Discovery’s share of after-tax operating profit by 9% to R1.32bn, while insured lives increased by 10% to 35.4 million.
edward.west@nationalmg.co.za
THE NATIONAL