Discovery has flagged an increase in annual profit despite feeling the effects of higher interest rates, particularly in SA.
SA’s largest private health insurer, valued at about R101.2bn on the JSE, said in a voluntary trading statement that it would report normalised profit growth of 22%-27% and normalised headline earnings per share (HEPS), a common profit measure in SA that excludes certain items, growth of 30%-35% to 1,151.2c-1,195.4c.
“The reporting year coincided with considerable macro-economic volatility, with significant movements of interest rates within the markets in which Discovery operates,” said the company, whose biggest markets include in SA and the UK.
“The headline earnings impact of higher rates in the UK was more muted over the reporting year, as the hedging strategy proved effective despite significant market volatility,” Discovery added.
The normalised numbers remove the impact of interest rate movements, but when they are included HEPS will only grow 3%-8% to 816.2c-855.8c.
The Reserve Bank lowered interest rates during Covid-19 when the Bank tried to get people spending when consumer confidence was slow, but has since raised interest rates as it tried to tame high inflation triggered in part by supply-chain issues and the war in Ukraine.
Apart from health insurance, Discovery’s diversified business now also includes life and other insurance, banking and investing.
Commenting on SA, the group said that local growth was helped by Discovery Bank growing its number of customers over the past year.
In the UK, overall profit grew despite a slowdown from VitalityLife after strong results in 2022.
The group expects to publish its annual results on September 21.
Correction: September 12 2023
A previous version of this article referred to Discovery’s interim results, instead of annual results, in the headline.
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