Announced in Discovery Limited’s company results, Discovery Bank suffered a loss of R990 million for the year ending June 2022. The digital bank previously stated that it would reach breakeven if it attained between 500,000 and 600,000 customers, which it is close to already. As of 30 June 2022, the bank had 470,220 customers, an increase of 42 percent at the same point in 2021. The bank also reached 1,023,790 accounts compared to 649,000 in June 2021.
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The operating loss was just 10 percent lower than in the previous financial year, when the bank lost nearly R1.1 billion. Of course, this type of massive capital injection is needed to get such a large operation off the ground, but it does raise questions about the business model. Despite the results, the bank has said that they are still on target to reach their intended profit margins in the original timeline.
When results were last published in December 2021, CEO Adrian Gore said the bank was ahead of schedule in every respect, including the number of clients, deposits, and people using the bank. Discovery Bank was officially launched to all new customers back in June 2019, two years after attaining its banking licences.
While Discovery Bank is still in its infancy, the Discovery group as a whole is still seeing positive results. The group’s profits for the year ending June 2022 surged by 70 percent to R5.48 billion.
The bank has a medium-term target of 1,000 sales per day and 1,000 000 clients by 2026. Its retail deposits grew by 30 percent to R10.6 billion, advances grew 14 percent to R4.3 billion, and new business volumes continued to be strong, achieving more than 800 average daily new-to-bank sales versus 500 in June 2021.
“The bank has also continued to attract high-quality clients, resulting in high levels of average non-interest revenue (NIR) and a low credit loss ratio of 1.56 percent,” Discovery added.
