Discovery, South African-based health, life and short-term insurance provider, announced on Tuesday that its Discovery Card division had an excellent performance in the year to end-June 2018.
The South African-based Discovery, which is planning to open an innovative digital bank, is valued at more than R113 billion ($7.5 billion).
The company disclosed that profits for the Discovery Card joint venure with First National Bank (FNB) rose by 17% to R414 million and revenue was up by 6% to R1 billion.
“In addition, Discovery’s credit card base is less sensitive to negative market conditions due to a substantially better risk profile,” the company informed investors on the JSE on Tuesday.
“Both its percentage of non-performing loans and cost to income ratio were significantly below the average of other South African banks.”
Discovery said the Discovery Card joint venture profits and additional 54.99% profit share (received by way of after tax dividends) have been reallocated to Discovery Bank and disclosed in “All other segments” and comparatives were restated where appropriate.
Last October, the South African Registrar of Banks gave the go-ahead for Discovery to operate a retail bank.
The new bank will compete in a highly competitive market with the “big five” banks – Standard Bank, Capitec, Absa, First National Bank and Nedbank.
It will also compete with TymeDigital, an online lender in which mining businessman Patrice Motsepe owns a stake, which was recently awarded a banking licence.
In August, Motsepe’s investment firm African Rainbow Capital (ARC) acquired 10% stake in TymeDigital through the Commonwealth Bank of Australia.
The aim is to establish a black-owned, black-controlled bank in the country.
TymeDigital has a 10-year partnership with retailer Pick n Pay to develop points of presence at its stores to expand the bank’s reach.