Looking at Discovery’s unaudited interim results for the six months to the end of December 2025, it is hard to say what is more impressive: that Discovery Health could write off a R125-million administrative error and still show 5% growth, or the remarkable turnaround and scaling momentum at Discovery Bank.
At group level, Discovery delivered a strong performance in the first half of its 2026 financial year. Normalised operating profit rose 24% to R8.9 billion, headline earnings increased 29% to R5.69bn, and normalised headline earnings climbed 27% to R5.75bn, lifting the return on equity to 17.4%.
Group chief executive Adrian Gore described the first half as “an excellent, strong, and robust period for our group”, saying the results reflect disciplined execution across the business.
New business annual premium income increased 12% to R14bn and embedded value rose to R135.8bn.
Gore said the performance continued to reflect the strength of Discovery’s Vitality shared-value model, which uses behavioural incentives, data analytics, and personalised engagement to improve customer outcomes while enhancing profitability.
Zooming in on South Africa, Discovery’s local composite delivered normalised operating profit of R6.78bn, up 19%, while new business volumes grew 10% to R9.94bn. The group’s South African client base increased 7% to 6.5 million.
Discovery’s international Vitality is examined in a separate article.
Discovery Bank reaches profitability inflection point
Discovery Bank is rapidly emerging as one of the most significant growth engines in the group’s South African operations – and the interim results suggest the digital lender has finally crossed the long-anticipated threshold from investment phase to profitability.
Within Discovery’s South African composite – which delivered normalised operating profit of R6.78bn, up 19%, and new business volumes of R9.94bn – the bank stands out as the fastest-scaling platform.
Gore said the bank was built around three sequential pillars: a shared-value banking model, a full-service banking offering, and a sophisticated digital infrastructure capable of supporting deep client engagement.
“That first phase of creating a bank of scale… has been fundamental,” Gore said, noting the bank is now profitable and expected to grow earnings strongly as it continues to scale.
The numbers support that view. Normalised profit from operations improved to R75 million, compared with a loss of R145m in the prior period, while operating profit before new business acquisition costs rose to R319m from R69m – an improvement of roughly R220m year-on-year.
Operational momentum remains strong. Clients increased 28% to 1.4 million and accounts rose 29% to 3.37 million. Retail deposits grew 21%, advances increased 42%, and non-interest revenue climbed 39%. The bank is adding about 1 500 new customers per day.
One notable trend is that close to 70% of these new clients are not existing Discovery members. Gore said this shows the bank is attracting a broader market beyond the group’s traditional customer base while creating opportunities to deepen engagement across Discovery’s ecosystem.
He added that as customers use more services over time, revenue per client rises, while the digital platform’s operating leverage pushes costs per client down. The result is steadily improving profitability as scale increases.
The bank’s next phase will see it evolve into what Discovery describes as a “super bank” – a platform that integrates the group’s health, insurance, and investment products into a single interface. By placing these services on the bank’s digital rails, Discovery aims to create stronger client engagement, new distribution opportunities, and tighter security, while reinforcing the economics of the shared-value model.
Discovery Health absorbs costly system error
Discovery Health’s results must be viewed in the context of a pharmacy claims-processing error in 2025 that affected more than 16 000 Discovery Health Medical Scheme (DHMS) members.
In January this year, the administrator initially attempted to recover overpaid Above Threshold Benefit (ATB) claims but reversed the decision after public pressure and regulatory scrutiny. Discovery ultimately chose to absorb the cost itself.
Read: MediCheck claims win as Discovery Health writes off up to R170m in ATB recoveries
Gore said the decision was taken quickly in response to members’ concerns. The R125m write-off, he explained, reduced profit growth from roughly 11% to the reported 5%.
Despite this setback, Discovery Health increased operating profit to R2.13bn, while new business annual premium income grew 16% to R5.45bn. Lives under administration increased to 3.86 million.
Gore said the business remains focused on maintaining a balanced risk pool and encouraging healthier member behaviour. One example is the Active Smart Plan, which has attracted younger and healthier members, helping to stabilise the scheme’s risk profile.
At the same time, Discovery is expanding the use of data-driven health engagement tools. Gore highlighted the rollout of Personalised Health Pathways, which already involve more than 575 000 activated members completing health screenings and preventative actions.
Discovery Life delivers strong returns
Discovery Life also delivered a strong performance, with operating profit increasing 15% to R3.09bn.
Gore attributed much of the improvement to favourable mortality experience and stronger actuarial outcomes linked to the Vitality shared-value model. Engagement levels among healthier members continue to rise, which improves the claims experience and long-term profitability.
One metric likely to attract analyst attention is Discovery Life’s return on embedded value, which reached 31%. Even excluding the impact of lower long-term interest rates, the business delivered returns of about 14%.
Gore said Discovery’s focus in the life business is to maintain strong mortality performance while reducing the negative effects of policy alterations and lapses. The company has implemented several initiatives aimed at improving retention and strengthening the profitability of its in-force book.
Discovery Invest and Insure show solid momentum
Discovery Invest also delivered a robust operational performance, although headline earnings growth appeared muted. Operating profit rose just 1% to R984m.
Gore explained that the figure was affected by an asset-liability matching loss of R87m caused by interest-rate movements. Excluding this effect, underlying earnings growth would have been closer to 21%.
Assets under administration increased 20% to R200bn and assets under management rose 24% to R142bn, supported by strong market performance and continued client inflows.
Discovery Insure also recorded a strong period, with operating profit increasing 34% to R546m and operating margins improving to 15.2%.
Gore said disciplined pricing and behavioural improvements linked to the Vitality Drive programme helped to reduce accident frequency and improve the overall quality of the insurance book.
Shared-value model and AI drive the next growth phase
Across Discovery’s businesses, Gore emphasised that the group’s strategy continues to revolve around scaling the Vitality shared-value model – the framework that underpins its health, insurance, banking, and investment platforms.
The model works by aligning incentives between the company and its clients. By using behavioural incentives, personalised engagement, and data analytics to encourage healthier lifestyles and better financial behaviour, Discovery aims to improve risk outcomes while strengthening profitability. Gore said the approach fundamentally changes the economics of financial services by creating additional value in the system – something he described as “alpha”.
In practical terms, that alpha emerges from several mechanisms. Dynamic pricing allows Discovery to match premiums more precisely to risk, behavioural incentives improve health outcomes and reduce claims, and higher engagement increases customer retention. Together, these effects generate improved margins or returns on capital while simultaneously delivering better outcomes for clients.
The impact is already visible across the group’s businesses. Gore said Discovery’s internal analysis shows measurable improvements in mortality, morbidity, driving behaviour, and credit outcomes across the group’s platforms. In the case of the DHMS, for example, the shared-value model is reflected in members paying about 17.7% less per unit of healthcare benefit compared with comparable systems, according to Gore.
Discovery believes artificial intelligence will significantly accelerate this model. During the period, the group launched Vitality AI, a platform developed in partnership with Google that integrates AI capabilities across its businesses. Gore said the technology allows Discovery to move into a new phase of hyper-personalised engagement, enabling the company to interact with clients in far more precise and targeted ways.
Early applications are already being rolled out. Personal Health Pathways – an AI-driven engagement tool used in Discovery Health – has activated hundreds of thousands of members, encouraging preventative health actions and screenings. Similar data-driven engagement tools are being deployed across insurance, banking, and wellness programmes.
Gore said the combination of behavioural economics, large data sets, and AI-driven insights positions Discovery well for the next stage of growth.
“Discovery has delivered a strong performance during this period,” he said, adding the group continues to move ahead of its five-year growth targets while evolving the shared-value model into a more technologically advanced platform.
He said the company remains confident that the model – supported by AI and strong operational platforms in both South Africa and its global Vitality operations – will continue to drive sustainable earnings growth over the coming years.
