Discovery to spend further R270m on new bank

Discovery. Picture supplied.

Discovery. Picture supplied.

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

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 December 31 would decline by 21% 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 [building] until the rollout out and a further R180 million on [testing and running]. 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 8% of group earnings for the six months.

It said normalised profit from operations was expected to decrease by approximately 4% 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% 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%.

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

– African News Agency

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