Discovery boosts dividend by 38% as profits surge

Despite banking losses.

JSE-listed Discovery recorded a 17% jump in its normalised operating profit for the year ended June 2024, which saw the group increase its dividend to shareholders by 38%.

The group released its annual results on Thursday, declaring a final ordinary dividend of 152 cents per share, up from 110 cents per share in the corresponding period in 2023.

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Basic headline earnings per share (Heps) are 7% higher at 1 089 cents, while the net asset value increased by 16%.

Discovery has businesses in wellness, healthcare, life assurance, short-term insurance, banking, and savings in South Africa and operates through its Vitality model in more than 40 markets worldwide.

Total income from the non-insurance business was 16% higher, while its core new business annualised premium income increased by 18%.

“The full-year reporting period continued to be characterised by complexities in the macro-economic environment, including heightened consumer pressure due to cumulative interest rate increases, constrained economic growth, and political uncertainties on many fronts. Within this context, Discovery remained focused on delivering strong growth in earnings, value, cash generation and capital resilience,” Adrian Gore, group CEO, said in a statement.

Discovery Bank

Normalised profit from operations from the group’s banking business was 41% lower than in 2023.

The group says Discovery Bank (DB) improved its operating loss before new business acquisition costs by 89%, and the overall loss was 41% better than the prior year.

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“The bank’s total client base grew 36% to June 2024, and it achieved its ambition of one million clients post the year-end, well ahead of its ‘by 2026’ target,” it notes.

Discovery Bank expanded its lending suite by launching a revolving credit facility in December 2023 and home loans in May 2024.

Both products have seen “pleasing initial take-up”, according to the group.

Other segments

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Discovery Health increased its operating profit by 7%. Non-medical scheme products now represent 15% of total revenue.

Discovery Life grew profits by 9% with a “better-than-expected overall claims experience and favourable trends in lapses and premium income”.

Discovery Invest increased operating profit by 20%, with assets under management expanding by 11%.

“A higher growth in margins offshore and structured products drove higher fee income,” it says.

Discovery Insure posted strong profit growth, rebounding sharply in the second half after severe weather hit performance earlier in the year.

Gore says the group is entering a new phase in its lifecycle.

“Over the past eight years, we have been through a cycle of significant investment, with a focus on globalising the group’s capabilities, footprint, and scale, as well as building new ventures such as Discovery Bank.

“This investment cycle was aimed at creating new avenues for long-term growth and we are confident that the business is positioned well to capitalise on this investment,” he adds.

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