Adrian Gore. Picture: FREDDY MAVUNDA

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They rather coyly call it the Purple Division, and it barely featured in Discovery’s annual results for the year to June. But the proposed Discovery banking business is likely to be the next serious contender in SA’s banking sector.

The group is already recruiting some heavyweights, as the bank will be led by technology. It will be headed by Barry Hore, who led the technology-dominated changes at Nedbank under Richard Laubscher. The chief risk officer is August van Heerden, the former CFO of Absa Retail & Business Banking.

Discovery CEO Adrian Gore says licensing and regulatory processes to set up a bank have begun, though they are far from over. And key engagements are under way with the Reserve Bank and other regulators.

Discovery has subscribed for R1.4bn of FirstRand redeemable preference shares to increase its share of the profits from the Discovery credit card from 20% to 74.99%.

Initially, the credit card will form the core of the bank, and will be the first place in which it will look for clients of complementary banking products.

Gore says the proposed bank is just one of four new initiatives on the boil. The group spent R823m on these initiatives last year, a 73% increase on 2015.

The others include short-term insurer Discovery Insure, which is expected to squeak into the black next year. With gross written premium of R1.6bn, it is approaching the size of Santam’s MiWay unit.

Gore says Ping An Health, in which Discovery has a 25% stake, is rapidly reaching scale. Its new business premium increased by 75% to R1.73bn.

Discovery has also increased the scope of its Vitality network, launching in markets as diverse as Hong Kong, Germany, the Philippines and Thailand.

Discovery’s normalised operating profit increased by 11%, but with the impact of debt funding and capital raising through the rights issue, there was a modest 1% increase in headline earnings per share.