The digital bank, owned by SA’s biggest health insurer, Discovery, today gave shareholders an insight into its performance, from the six months to December 2023.

Discovery Bank is set to launch a new home loan proposition to the market, featuring a shared-value, interest rate reduction mechanism.

The digital bank, owned by SA’s biggest health insurer, Discovery, today gave shareholders an insight into its performance, from the six months to December 2023.

As part of this financial communication with the market, it said: “A revolutionary new home loan proposition will imminently be launched to the market.”

It added that the home loan offering will include a ‘shared-value interest rate reduction mechanism’.

The bank also reasoned that the market opportunity for the product was sizeable. It said: “Discovery Bank clients have c. R280 billion in existing home loan balances, which Discovery Bank is well-positioned to cater for. The bank is well-funded and positioned to continue to prudently grow advances in these target segments.”

Discovery Bank was announced in November 2018 and launched publicly in 2020. It was one of a handful of new banks to launch around that time. 

Its competitor TymeBank launched in 2019 and now has over seven million customers. Bank Zero, which launched in 2021, is not yet disclosing the number of customers it has on-boarded to date.

In the current reporting period, Discovery Bank said: “Growth remains high with Discovery Bank exceeding 825,000 clients in December 2023 and the total client base growing by 42% compared with the prior year.”

“This momentum is indicative of Discovery Bank’s accelerated pace towards achieving its ambition of one million clients by 2026, which the bank is well ahead of target to achieve.”

In terms of how that reflects in financial performance, for the six months to end 2023, Discovery Bank’s operating loss, before new business acquisition costs, improved by 40%, and the overall loss was 15% better than the prior year.

Further, the bank said, in light of challenging macroeconomic conditions, it has remained focused on high-quality growth with the bank’s shared-value behavioural banking model proving its efficacy.

“Deposits grew by 31%, reflecting that clients are increasingly using Discovery Bank as their primary account. Advances have grown steadily by 19% since December 2022, with the bank maintaining materially lower credit loss ratios than the market, for equivalent products,” it said.

Also, it said, average interest-earning assets increased by 26% and the net interest margin increased by 7% over the period, while net income interest grew by 37%.

According to Discovery Bank, non-interest revenue continued to grow steadily, by 29% year-on-year, driven by the growth in interchange income and fee income per client.

It added: “In line with the bank’s growth trajectory, client engagement levels grew, with a 56% increase in payment volumes and a 37% increase in spend values in December 2023 compared to the prior year.