Discovery Bank to Grow South Africa Loans in Bid to Boost Profit

(Bloomberg) -- One of South Africa’s newest banks is planning to almost double the number of customers and boost its lending book as it seeks to lift profit to 3 billion rand ($173 million) by 2029. 

Six-year-old Discovery Bank, a unit of insurer Discovery Ltd., broke even in the second half of its fiscal year that ended June 30, a year earlier than expected. For the full year, the lender shrank its loss to 68 million rand and plans to leverage its existing 1.2 million clients and the 1,000 new customers it nets daily to power earnings over the next four years. 

“It’s the fastest-growing bank in South Africa today,” Discovery Bank Chief Executive Officer Hylton Kallner said in an interview, adding that the company is working toward having 2 million clients by 2029. 

The lender unveiled a raft of new products this year including revolving credit facilities and grew its personal and home-loan businesses, which boosted loans by 39% in the year to June. Kallner is targeting a further increase in lending and plans to raise the ratio of loans to deposits to as much as 70% by 2029 from about 39%. 

“Our advances are less than half of our deposits, which gives us a lot of runway to grow the advances book within our current funding plan,” he said. “We do expect to see advances continuing to outpace deposits in the short to medium term.”

The lender plans to roll out a new artificial-intelligence tool that will boost its private-banking capability and incorporate the ability to access services through channels like Meta Platforms Inc.’s messaging tool WhatsApp.

“The market is competitive and to continue at this pace, we are going to have to continue innovating,” Kallner said. “That’s the only way that we can see growth continuing on that trajectory.”

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