VitalityLife mars Discovery’s results


VitalityLife mars Discovery’s results

Published Date: 2020-02-21 | Source: Stephen Gunnion | Author: Stephen Gunnion

VitalityLife mars Discovery’s results

The financial services group says its performance was affected after it mitigated its exposure to low interest rates in the UK.

Discovery has reported what it calls a robust first-half performance, marred by its VitalityLife business in the UK. Continued investments in new initiatives also reduced interim earnings.

The financial services group said while all its other established and emerging businesses did well, VitalityLife was largely impacted by an interest-rate hedge structure it introduced to mitigate its exposure to further interest rate declines in the highly volatile, low interest rate environment in the UK.

In line with its capital plan for the period, it increased investment into new strategic initiatives including Discovery Bank, VitalityInvest and global technology platform Vitality1, which all showed encouraging traction. However, as a result, profit for the period was 11% down at R2.08 billion and normalised profit from operations decreased by 7% to R3.55 billion. Headline earnings per share fell 10% to 311.7c. It maintained its interim dividend at 101c per share.

New business annualised premium income (API) increased by 17% to R11.1 billion. Excluding Vitality Group and the take-on of new closed medical schemes in Discovery Health, it was 5% higher at R9.52 billion.

Discovery Bank, which launched about a year ago, now has about 78,000 clients with 180,000 accounts and deposits of R1.2 billion. It said the growth potential was strong with over 200,000 accounts that still needed to be migrated from its FNB Discovery Card joint venture.

Its Ping An Health business in China grew normalised profit by 467% and its Discovery businesses in SA reported growth of between 7% and 25%.

The group said its key priorities were to return its VitalityLife business to profit in its next financial year and to achieve significant traction in its new initiatives, most notably Discovery Bank.

Its shares fell 0.9% to R105.60 yesterday.

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