Discovery Bank has gone from losing money to making it in a single year, and Moody's now expects the next step. In the year to June the bank made R370 million from its operations, against a loss of R68 million the year before. In its first published view of the bank, the rating agency says it expects a profit after all expenses in the year to June 2027.
The R370 million is what Discovery calls normalised profit from operations, a cleaned-up measure, which is why Moody's treats a full profit as the step still to come. Management says it remains on track for R3 billion of annual profit by June 2029.
Where the new clients come from
The bank opened in 2019 as a fully digital lender with no branches, and it pays for good behaviour: the interest a client earns on savings, or pays on borrowing, is linked to how well they manage their money. Moody's says that rewards system has been instrumental in pulling in savers.
It now has about 1.57 million clients, 26% more than a year earlier, and about 70% of its new business comes from outside the Discovery group. Business Day describes that as a huge cross-selling opportunity, which turns the obvious expectation around: the bank is finding new customers for Discovery, rather than living off the ones Discovery already had.
Home loans show where many of those clients come from. Business Day reports the book is now above R4 billion, up 129% in a year, and that 71% of it is switch business: established homeowners moving their bond across from another bank for a better deal. It is winning them in a market dominated by Standard Bank, which finances one in every three home loans.
What Moody's will be watching
Moody's expects the pace to hold. The bank's assets grew by an average of 21% a year over the past three years, and the agency projects similar growth for another two to three.
The concern is how that growth is funded. Retail deposits rose 17% to R27.2 billion, and Moody's says they will stay, to some extent, sensitive to confidence and interest rates for as long as savers keep their main banking relationship somewhere else. If they do move, the bank has other options: credit lines from the Discovery group, the wholesale market, and, as a commercial bank, the Reserve Bank's liquidity lines.
Moody's also lists the risks of being young: a small bank with a narrow range of products, fast balance-sheet growth, new offerings that have not been tested, and risk systems that will take time to prove themselves.
The bank's bigger rivals have noticed. Nedbank's 2025 annual report singled Discovery Bank out as one start-up making tangible inroads in customer deposits.
