Slide 1: Discovery SA and Bank Update
Discovery SA and BANK UPDATE
Slide 2: Make people healthier and enhance and protect their lives
Make people SA COMPOSITE MODEL UK COMPOSITE MODEL PARTNER COMPOSITE MODEL healthier and enhance and Health Invest Life protect their lives markets Vitality lives new members each month
Slide 3: Exportable, localised and tailored to market needs
EXPORTABLE, LOCALISED AND TAILORED TO MARKET NEEDS Vitality spans multiple markets, regulators, languages, time zones, vendors, rewards partners, currencies and types of financial services AIA AIA AIA AIA AIA AIA AIA John Hancock Manulife Generali Singapore South Korea Hong Kong Philippines Indonesi
Slide 4: The Vitality shared-value model and global trends
THE VITALITY SHARED-VALUE MODEL IS CONSISTENT WITH GLOBAL TRENDS AND HAS THE POWER TO TRANSFORM INSURANCE MARKETS Institution Value Incentive ∆ Behaviour Bent (qx) Value = × × × Member Member Incentive ∆ Behaviour Bent (qx) Shared- Vitality Make people Programs Product Value chassis healthier
Slide 5: Interim financial performance, six months ending 31 December 2020
INTERIM FINANCIAL PERFORMANCE | SIX MONTH PERIOD ENDING 31ST DECEMBER 2020 SA COMPOSITE MODEL UK COMPOSITE MODEL PARTNER Continued resilient operating performance COMPOSITE MODEL New businesses continue to see good traction Health Invest Life Continued focus on capital strength and liquidity COVID-1
Slide 6: Operating profit R4.5bn
Operating profit R4.5bn Rm Continued operational excellence with significant support to members and 1 670 +6% society Excellent operating performance and positive variances delivering growth 1 922 +3% on an optimised capital base SA Composite High-quality earnings driven by positive flows and market
Slide 7: New businesses continue to see considerable traction
NEW BUSINESSES CONTINUE TO SEE CONSIDERABLE TRACTION % in New decreasing Bank VitalityInvest Umbrella Funds DBI Vitality1 26% 22% New business New business APE New business R6.1bn +95% +123% +247% +77% 15% 5% 7% ZAR Retail deposits to £151.2m to R592m to R124m New market launches over H1 H1 H1 H1 H1
Slide 8: Group is well capitalised and highly liquid
GROUP IS WELL CAPITALISED AND HIGHLY LIQUID 2 Strongly capitalised FLR is within target Highly liquid across the Group Liquid excess assets above regulatory capital requirements Dec 19 Dec 20 FLR Rm Cover Cover R millions 29% 28% 14,000 1.7x 1.8x 27% 12,000 25% 1.7x 1.8x 10,000 23% 1.4x 2.0x 8,000 2
Slide 9: Our strategic response to the pandemic
OUR STRATEGIC RESPONSE TO THE PANDEMIC GP initiated COVID-19 COVID-19 SA vaccine DISCOVERY Wellbeing Vitality Oximeter virtual information Business COVID Alert programme Connected talks at Home at Home benefit consults hub Support SA app support Care COVID-19 concessions till Dec 20 Keep every staff
Slide 10: SA's second wave was more severe but rapidly decreasing
SA’S SECOND WAVE WAS MORE SEVERE BUT RAPIDLY DECREASING SA’s second wave more serious than first, and started in holiday season Comparison between waves using Discovery data South Africa daily new infection trends Higher socio-economic classes hit harder 25,000 600 Deaths DL and DH 1.5x peak wave 1
Slide 11: The likelihood of a third wave
THE LIKELIHOOD OF A THIRD WAVE Projected deaths vs second wave deaths Total expected Incremental deaths under the medium scenario deaths Feb-Jun Jul-Dec Scenarios assume IFR = 0.39% and 1/3 reinfection 2,000 1,800 Second wave run-off 0.2x 0x 16.6k 1,600 1,400 1,200 Super spreader at 1,000 Easter, wi
Slide 12: COVID-19 provisions back to R3.4bn in December 2020
COVID-19 PROVISIONS BACK TO R3.4BN IN DECEMBER 2020 Life insurance Health insurance £69.8m R2 160m £64.9m R1 953m Invest Invest 1 023 lapses 956 claims 30-Jun-20 Claims and lapse Net new and new 31-Dec-20 30-Jun-20 Net movement New business Additional 31-Dec-20 unwind business COVID-19 in claims and
Slide 13: Discovery Life's COVID-19 claims experience peaked in January 2021
DISCOVERY LIFE’S COVID-19 CLAIMS EXPERIENCE PEAKED IN JANUARY 2021, AND HAS RUN DOWN MATERIALLY AS AT MID-FEBRUARY Significant provision utilisation Total provisions in excess R1bn remain Amplified relevance of shared-value during the January peak, has abated even after allowing for Jan and Feb clai
Slide 14: DHMS solvency build-up driven by decline in non-COVID-19 utilisation
DHMS SOLVENCY BUILD-UP DRIVEN BY THE DECLINE IN NON-COVID-19 HEALTHCARE UTILISATION Impact on utilisation Surplus build- Weekday hospital admissions index Private Psychiatric Day up emerging (rolling 3-day average) hospitals hospitals clinics due to 38.7% COVID-19 22.7% Claim cost change by service
Slide 15: Extensive preparations for vaccine roll-out
EXTENSIVE PREPARATIONS FOR VACCINE ROLL-OUT COVID-19 vaccine support model Discovery COVID-19 vaccine information hub Vaccine Myth Speak to Personal Benefits FAQs rollout busters experts vignettes tracker Health care workers (HCW) 26,948 Registration Booking portal portal Essential workers and congr
Slide 16: SA Composite
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Slide 17: Discovery Health operating profit and membership
Operating profit Membership New business* DHMS membership Rm Rm lives to R1 670m lives under administration to R3 167m Increased by Non-scheme products market share1 as at Sep 2020 Closed schemes DHMS 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 H1 H1 H1 H1 H1 2019 H1 H1 H1 H1 H1
Slide 18: Discovery Life operating profit and new business
New business Normalised Exceptionally strong operating profit operating variances to R1 162m to R1 922m Positive non-economic variances H1 2020 H1 2021 563 224 Policy alterations Total Lapses and surrenders Mortality and morbidity Other Premium and fee income Policy alterations Mortality and morbidi
Slide 19: Discovery Invest normalised operating profit and new business
Normalised operating profit New business Assets under administration Rm Rm Rbn to R471m to R1 316m to R107bn H1 2017 H1 2018 H1 2019 H1 2020 H1 2021 H1 2017 H1 2018 H1 2019 H1 2020 H1 2021 2016 20 201720 201820 2019 20 2020 20 16 17 18 19 20
Slide 20: Discovery Insure operating profit and new business
Normalised Gross written Market share in operating profit New business premium GWP Operating margin to R107m to R617m* to R2 121m* to 6%* (excl. Commercial) H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 2017 2018 2019 202
Slide 21: Discovery Bank clients, accounts, deposits and advances
Clients Accounts Retail deposits Advances Post-BIN Post-BIN Post-BIN Post-BIN migration migration migration migration 300k J A S O N D J F MAM J J A S O N D J F S ON D J FMAM J J A S ON D J F J A S OND J FMAM J J A S OND J F J A S OND J FMAM J J A S OND J F 2019 2020 2021 2019 2020 2021 2019 2020 20
Slide 22: Discovery Bank growth is best in class after 14 months
DISCOVERY BANK GROWTH IS BEST IN CLASS AFTER 14 MONTHS OF OPERATION Discovery Bank Tyme Bank Monzo Revolut Launch date 2019 2018 2015 2015 Primary market Retail Affluent Mass retail Mass retail Mass retail 48.6 Retail 28.7 The higher spend at Monzo is also driven deposits 5.03 1.5 partly by their bu
Slide 23: New clients and accounts continue to grow steadily
NEW CLIENTS AND ACCOUNTS CONTINUE TO GROW STEADILY WITH FOCUSED EFFORTS ON “NEW-TO-BANK” FOLLOWING THE MIGRATION New accounts Average daily new-to-Bank sales Post-BIN migration >556k Post-BIN migration >350 <70 S O N D J F M A M J J A S O N D J A M J J A S O N D J
Slide 24: Deposits have grown strongly to R6.1bn
DEPOSITS HAVE GROWN STRONGLY TO R6.1BN IN LINE WITH THE “RETAIL DEPOSITS LED” STRATEGY Strong growth in retail deposits Science of Dynamic Interest Rates Superior growth compared to market Deposits per month, indexed to 100 Clients on Diamond Vitality Money status can earn interest on their cheque a
Slide 25: Advances remained flat reflecting prudent lending approach
ADVANCES REMAINED FLAT REFLECTING THE DECREASE IN CONSUMER SPENDING AND THE PRUDENT LENDING APPROACH IN THE CURRENT ECONOMIC ENVIRONMENT Advances Credit loss ratio vs. the market Credit quality Competitors indexed to Discovery 800 Exceptionally Low Risk 700 600 Low Risk 500 Medium Risk 400 300 High
Slide 26: Key focus areas
KEY Differentiated, market-leading FOCUS AREAS product offerings Engagement and utilisation Service excellence and customer experience Marketing and Distribution
Slide 27: Key focus areas: differentiated product offerings
KEY Differentiated, market-leading FOCUS AREAS product offerings 2 Engagement and utilisation 3 Service excellence and customer experience 4 Marketing and Distribution
Slide 28: Continuous innovation
CONTINUOUS INNOVATION Banking licence Public launch issued 2019 2017 2019 2020 • Vitality Money • Vitality Money 2.0 • Dynamic Interest rates • Discovery Miles are worth more than cash • Rewards • Smart search • Single Credit Facility • Virtual Cards • Health Banking • Discovery Pay 2.0 • Discovery
Slide 29: Significant innovation in 2020
SIGNIFICANT INNOVATION IN 2020 Vitality Money 2.0 Miles Worth More Smart Search 5% 10% 15% 20% Vitality Easily search for Vitality Money Discovery Bank transactions across Vitality + Health + qualifying + Suite & Vitality Drive account Money activated your accounts Airti ElectrWate me icity r Enhanc
Slide 30: South Africa's first virtual credit card
SOUTH AFRICA’S FIRST VIRTUAL CREDIT CARD Free and unlimited to all Discovery Clients Instantly available Personalised limits Fitbit Pay, Garmin Pay and Samsung Pay Automatic renewal Safer and more secure shopping experience
Slide 31: Credit card utilisation and take-up of feature capabilities increasing
CREDIT CARD UTILISATION AND TAKE-UP OF “FEATURE” TRANSACTIONAL CAPABILITIES ARE INCREASING Credit utilisation distribution Value-added services and Discovery Pay: >2x increase since the launch Number of clients Value-added services: Value, R’m Discovery Pay: Value, R’m 0-10% 10-40% 40-70% 70-80% >80
Slide 32: Key focus areas: engagement and utilisation
KEY Differentiated, market-leading FOCUS AREAS product offerings Engagement and utilisation Service excellence and customer experience Marketing and Distribution
Slide 33: Shared-value in banking
SHARED-VALUE IN BANKING Clients Improved wealth, better value through improved price and benefits. Exceptional client experience Money Society Bank More disposable income mproved product usage More wealth Lower risk Less reliance on state and family 4 o MCreased depo Lower defau® Silver Total points
Slide 34: Vitality Money correlations aligned to the pricing basis
VITALITY MONEY CORRELATIONS ARE ALIGNED TO THE PRICING BASIS Blue Bronze Silver Gold Diamond Spend by Vitality Money status Three months average, indexed to Blue Vitality Money status 7 greater 3 Savings 2 2 31% 45% 16% 5% 4% spend 1 only Blue Bronze Silver Gold Diamond Gold 43% 33% 15% 5% 3% Deposi
Slide 35: Unbeatable rewards for clients who manage their money well
UNBEATABLE REWARDS FOR CLIENTS WHO MANAGE THEIR MONEY WELL Earned Spent Savings boost Interest rebate Interest saved
Slide 36: Mobile log-ins and Vitality Money engagement show considerable growth
MOBILE APPLICATION LOG-INS AND VITALITY MONEY ENGAGEMENT HAVE SHOWN CONSIDERABLE GROWTH Mobile Application Vitality Money Mobile application log-ins Status distribution Bank rewards for Bank clients Number of iPhones sold Indexed to January Indexed to July, Value of Rewards Indexed to July 171% 212%
Slide 37: Key focus areas: service excellence
KEY 1 Differentiated, market-leading FOCUS AREAS product offerings 2 Engagement and utilisation Service excellence and customer experience 4 Marketing and Distribution
Slide 38: A month in Discovery Bank
A MONTH IN DISCOVERY BANK Core operations Growth Shared-value rewards transactions in new deposits Discovery Miles earned and spent spend new accounts HealthyLiving, mobile app log-ins iPhone, Fuel and credit facilities other rewards granted calls cards delivered
Slide 39: Strong service levels
STRONG SERVICE LEVELS Full-suite service offering Service Operations ***ONLINE 24/7/365*** Mobile App Service levels Fraud resolution rate Tele-Banking Social media CBR score Complaints/1000 clients Zoom Bankers Onboarding journeys via Abandoned rate “straight-through- 99.9% processing” system avail
Slide 40: Continuous innovation across customer journeys and user experience
CONTINUOUS INNOVATION ACROSS CUSTOMER JOURNEYS AND USER EXPERIENCE Intuitive and simple onboarding
Slide 41: Open an account in less than 5 mins
OPEN AN ACCOUNT IN LESS THAN 5 MINS Number of clicks to join a bank 24 34 Know Your Client 38 45 Account is opened 69 74 81 Virtual Card live 84 85 91 92 99 120 Source: Builtformars.co.uk | Opening an account
Slide 42: Continuous innovation: Zoom co-browsing and credit card application
CONTINUOUS INNOVATION ACROSS CUSTOMER JOURNEYS AND USER EXPERIENCE Intuitive and simple onboarding Enhanced credit card application Zoom co-browsing journey
Slide 43: Zoom co-browsing video demo
ZOOM CO-BROWSING VIDEO DEMO
Slide 44: Key focus areas: marketing and distribution
KEY 1 Differentiated, market-leading FOCUS AREAS product offerings 2 Engagement and utilisation 3 Service excellence and customer experience Marketing and Distribution
Slide 45: Marketing
Marketing
Slide 46: Brand awareness to position Discovery Bank and shared-value banking
BRAND AWARENESS TO CLEARLY POSITION DISCOVERY BANK AND THE SHARED- VALUE BANKING MODEL
Slide 47: Brand video
BRAND VIDEO
Slide 48: Manifestation of shared value across suites and Vitality Money status
MANIFESTATION OF SHARED VALUE ACROSS SUITES AND VITALITY MONEY STATUS
Slide 49: Introducing the interactive shared-value rewards stack
INTRODUCING THE INTERACTIVE SHARED-VALUE REWARDS STACK Choose your card colour Real-time updating of rewards and account type and benefits Fully customisable Select a Vitality Money status Full shared-value stack Toggle your Vitality Health & Vitality Drive membership
Slide 50: Interest rates, dynamic spend discounts and Miles
Interest rates 17.50% Dynamic spend discounts Travel discounts Earn Miles for spending, exercising fama: and driving 20% cr Miles spend discount
Slide 51: Interest rates, dynamic spend discounts and Miles
Interest rates Dynamic spend discounts Travel discounts Earn Miles for spending, exercising and driving Miles spend discount eatenykood fornrate 21:20 ® 40% 40% ep Interest rates Dynamic spend discounts discounts Earn Miles for spending, exercising and driving Miles spend discount 17.50% eamrate 21:
Slide 52: Distribution
Distribution
Slide 53: New bancassurance model: opportunities for intermediaries
NEW BANCASSURANCE MODEL | SIGNIFICANT OPPORTUNITIES FOR INTERMEDIARIES Traditional banks Discovery Credit Forex Mortgage Life Short-term product insurance insurance • Low advice • Hybrid distribution models • Disintermediates distribution • Advice-led • Integrated products underpinned by the Shared-
Slide 54: Unlocking bancassurance opportunities
UNLOCKING BANCASSURANCE OPPORTUNITIES Advise clients on the full Integrate existing Grow your practice Bank advice spectrum of financial clients; Bank enhances with an additional Additional support services products rewards and benefits revenue stream Up to for sales Up to on deposits
Slide 55: Unlocking bancassurance opportunities
UNLOCKING BANCASSURANCE OPPORTUNITIES Advise clients on the full Integrate existing Grow your practice Bank advice spectrum of financial clients; Bank enhances with an additional Additional support services products rewards and benefits revenue stream Up to for sales Up to on deposits
Slide 56: Simple and intuitive new business tool
SIMPLE AND INTUITIVE NEW BUSINESS TOOL for advisers with security step-up procedure interface Full journey Finalise Ability to on behalf of clients
Slide 57: Unlocking bancassurance opportunities
UNLOCKING BANCASSURANCE OPPORTUNITIES Advise clients on the full Integrate existing Grow your practice Bank advice spectrum of financial clients; Bank enhances with an additional Additional support services products rewards and benefits revenue stream Up to for sales Up to on deposits
Slide 58: Bank gives brokers ability to advise on the full spectrum
BANK GIVES BROKERS ABILITY TO ADVISE ON THE FULL SPECTRUM Savings Retirement Savings Debt Insurance Retirement Property Insurance Property
Slide 59: Advise on the full spectrum of investments
ADVISE ON THE FULL SPECTRUM OF INVESTMENTS Investment horizon Short-term Medium-term Long-term 0 years >30 years Transactional Demand and Fixed deposits Flexible Pre-retirement Post-retirement accounts notice savings investments and savings savings endowments • Transaction account • Demand Savings •
Slide 60: Bancassurance in action
BANCASSURANCE IN ACTION Opportunities Client value proposition Discovery Bank Vitality Money Goals Wills ~ 300 000 clients Life integration ~ 375 000 clients Investments ~ 40 000 clients opens Fixed Deposits > R314 billion significant opportunity Retirement ~ 72 000 clients
Slide 61: Unlocking bancassurance opportunities
UNLOCKING BANCASSURANCE OPPORTUNITIES Advise clients on the full Integrate existing Grow your practice Bank advice spectrum of financial clients; Bank enhances with an additional Additional support services products rewards and benefits revenue stream Up to for sales Up to on deposits
Slide 62: Bank is a multiplier of shared-value rewards
Health BANK IS A MULTIPLIER OF SHARED-VALUE REWARDS Drive Money Up to 15% monthly Minimum 50,000 investment Up to 15% off premiums contribution boost Up to 46% cover Up to 5,000 points for wills Health Life Invest Insure Bank Up to 70% back on fuel Up to 75% back on HealthyLiving Save up to 40% on U
Slide 63: Unlocking bancassurance opportunities
UNLOCKING BANCASSURANCE OPPORTUNITIES Advise clients on the full Integrate existing Grow your practice Bank advice spectrum of financial clients; Bank enhances with an additional Additional support services products rewards and benefits revenue stream Up to for sales Up to on deposits
Slide 64: Earn up to R3 500 in commission for bank accounts
EARN UP TO R3 500 IN COMMISSION FOR BANK ACCOUNTS… Transaction Credit Card Suite R2 500 R750 R750 R2 000 R1 500 R2 500 R1 750 + R1 000 Vitality Money boost on credit R750 R1 000 R1 250 products only Up-front + 6 months 50% payment 50% payment + Vitality Money Boost Applies to new Bank clients and cl
Slide 65: And up to 0.6% commission on deposits
… AND UP TO 0.6% COMMISSION ON DEPOSITS Notice Fixed Deposit accounts accounts 32-days 3 months 24 & 60 months 0.02% 0.075% 0.6% commission commission commission (monthly) • Applicable to deposits over R500 000 • Notice commission is paid monthly in arrears • Fixed deposit commission is paid upfront
Slide 66: Get your commissions matched in Discovery Miles
GET YOUR COMMISSIONS MATCHED IN DISCOVERY MILES Discovery Bank will match your commission earned on Onboard 10 Suite accounts and your Discovery Miles Credit Card and Suite accounts with 1 per R1 earned earn rate for that month! Credit Card Suite Onboard 10 Suite 2x Purple 2 500 accounts and double
Slide 67: Illustration: monthly remuneration from bancassurance
ILLUSTRATION | MONTHLY REMUNERATION FROM BANCASSURANCE Assumptions Monthly remuneration, R 28,000 28,000 28,000 28,000 28,000 24,375 22,625 12,500 12,500 12,500 12,500 9,875 8,125 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 New accounts second payment N
Slide 68: Discovery Miles are worth more than cash: Miles match example
DISCOVERY MILES ARE WORTH MORE THAN CASH | MILES MATCH INITIATIVE EXAMPLE 0% 5% 10% 15% =20% 169 999 15 Black/Purple Suites + = 15 Black credit cards 135 992 Discovery Bank Suite Vitality Money Vitality Health Vitality Drive + Vitality Money R16 898 R16 999 114 490 10 Black Suites + = 10 Black credi
Slide 69: New commissions dashboard on FAZ
NEW COMMISSIONS DASHBOARD ON FAZ Sales overview Discovery Bank Broker commission statement Mr B Correia Johannesburg Statement as at 10 February 2021 Breakdown of products sold Statement period 1-28 January 2021 Total payment for January R35 500 Commissions cashflow Sales for the period 8 Suite Acco
Slide 70: Unlocking bancassurance opportunities
UNLOCKING BANCASSURANCE OPPORTUNITIES Advise clients on the full Integrate existing Grow your practice Bank advice spectrum of financial clients; Bank enhances with an additional Additional support services products rewards and benefits revenue stream Up to for sales Up to on deposits
Slide 71: Simple accreditation process
SIMPLE ACCREDITATION PROCESS Watch onboarding videos Complete NCA training Tied advisers: Sign supervision Go through training on agreement DIT and pass general accreditation IFAs: Sign Bank intermediary agreement and ensure licenced to sell under FAIS categories 1.17 & 1.18, or source 3rd party sup
Slide 72: New and improved FAZ
NEW AND IMPROVED FAZ Everything you need to get accredited Product guides, FAQs and sales support documents Compare > 70 bank accounts with Discovery Bank Trigger campaigns to your clients Interactive sales dashboard 72
Slide 73: New support teams
NEW SUPPORT TEAMS • Technical analysis • Sales initiatives for advisers Bank • Custom campaigns Level of support Specialist Support • Client opportunity analyses • First-line adviser support Relationship • Escalation of adviser or client cases Bankers • Commissions on deposits • Support for New Busi
Slide 74: Differentiated, market-leading product offerings
Differentiated, market-leading product offerings Engagement and utilisation ***ONLINE 24/7/365*** Service excellence and customer experience Marketing and Distribution
Slide 75: Innovation month calendar
INNOVATION MONTH CALENDAR Monday Tuesday Wednesday Thursday Friday 1 Mar 2 Mar 3 Mar 4 Mar 5 Mar Bank roadshow: topics covered Business update PD 8 Mar 9 Mar 10 Mar 11 Mar 12 Mar • Walkthrough of new business platform Business update 15 Mar 16 Mar 17 Mar 18 Mar 19 Mar • Remuneration structures for n