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This is crucial to the company meeting its targets for its new growth phase, which runs until 2029 and projects a near doubling in Discovery’s size.
The company aims to grow normalised profit between 15% and 20% from 2025 until 2029, with it reducing its expenditure on new businesses as they become profitable.
This should translate into an improved return on equity, increased cash flow, and potentially greater dividends for shareholders as the company’s debt burden declines.
A key part of this is Discovery Bank’s profitability, with this division by far the most resource-intensive new business the company has launched during its investment phase over the past decade.
Launched in 2018 with just a credit card offering, Discovery Bank has grown rapidly and hit its client and account targets two years ahead of schedule.
Now, crucially for investors, the bank is sustainably profitable. It generated a profit for the second half of Discovery’s 2025 financial year, helping it narrow its full-year loss by 85% to R68 million.
Discovery Bank improved its operating loss before new business acquisition costs by R420 million, and the overall loss was R386 million, smaller than the prior year.
The bank reached monthly break-even at the end of the first half of the year and generated its first profitable period during the second half of the financial year, ahead of plan.
It continues to grow strongly, with its total client base up 30% over the past year, and maintaining 1,400 daily sales in June.
Non-interest revenue for the bank increased by 32%, driven by the growth in clients, increased engagement levels and product take-up, boosting the resulting fee income per client for each cohort.
Deposits increased by 26% and advances by 39%, with net interest income 30% higher. The Revolving Credit Facility product has more than doubled since the prior year, and home loans grew significantly to R1.7 billion as of the end of June 2025.
Personal loans for existing clients went live on 30 June 2025, with Discovery expecting further strong pick up.
Discovery Bank’s strong financial performance can be seen in the graph below from the full-year analyst presentation.
How Discovery Bank is winning
In his presentation following the release of Discovery’s results, CEO Adrian Gore explained in more detail what drove the bank’s performance.
Gore also stressed its importance in Discovery’s next phase of growth, with its profitability and “super app” capability at the centre of the company’s South African operations.
He explained that the ultimate aim is for the banking app to become the single interface through which Discovery’s clients interact with its products.
This is down to the security offered by the banking app and its payment rails, on which Discovery Miles are earned and spent.
During this process, the bank has ambitious targets to reach two million clients and R3 billion in profits by the end of the 2029 financial year.
Gore explained that this growth will be driven largely by increased uptake of existing products and elevated client engagement with Discovery Bank’s services.
In particular, the bank’s home loan offering is poised for strong growth and will contribute a significant chunk of its advances.
Crucially, the growth in the home loans business and other lending products has not come at the expense of client quality.
Discovery Bank’s credit loss ratio on its credit card advances and home loans is far below that of the market average.
Apart from attracting and retaining high-quality clients, this is also driven by improved financial behaviour on the back of Discovery’s shared-value Vitality Money model.
However, what is perhaps most crucial for Discovery Bank’s growth and profitability is increased client engagement with its products, which generates revenue through fees and commissions.
This makes the bank less reliant on traditional lending for its income and ensures its earnings are of higher quality as they are more stable and predictable over time.
Gore explained that engagement grows sharply from the moment a client joins Discovery Bank, with non-interest revenue from clients more than doubling per capita per month within the first year of being a client.
This can be seen in the graphs below, which show the growth of the home loans product, Discovery Bank’s strong credit loss management, and the elevated engagement with its products, which generate fee and commission revenue.
