* Nedbank earnings up 14 pct
* Growth led by businesses outside of South Africa
* Bank expects “slow improvement” in domestic economy in 2019 (Updates CEO quotes, adds details, shares)
By Emma Rumney
JOHANNESBURG, March 5 (Reuters) - Nedbank grew earnings by 14.5 percent in 2018, driven by its business outside of South Africa as operations elsewhere, especially at its West African lender Ecobank, paid off amid a sluggish domestic economy.
The bank, one of South Africa’s top lenders, is focused on increasing market share at home, but like its peers has found better growth potential outside of the continent’s most developed economy.
In South Africa, low growth and low levels of business and consumer confidence have hit big banks’ retail operations, which have struggled with weak credit growth.
Nedbank CEO Mike Brown told Reuters in a phone interview that the bank would look to grow in south eastern and eastern Africa, especially digitally, and do as much business with Ecobank as possible.
“We would envisage that rest of Africa will continue to grow faster off a low base than our South African operations,” he said.
Togo-based Ecobank, in which Nedbank has a 21 percent share, is central to Nedbank’s expansion in Africa, and after years of hefty losses and governance issues delivered 608 million rand in associate income in 2018.
However, Ecobank and Nedbank’s subsidiaries across the continent contribute just 5 percent of overall earnings, with Nedbank’s corporate and investment bank and South African retail operation accounting for 90 percent.
Its retail operation is also in focus, as Nedbank prepares to counter rising competition from both established and new rivals, with numerous digital banks launching in South Africa this year.
Despite some success, such as increasing its retail market share from 12.7 percent to 13.1 percent against a target of over 15 percent, the unit grew earnings by just 1.5 percent over 2018, compared with over 98 percent growth elsewhere in Africa and over 100 percent growth at Ecobank.
Brown said Nedbank planned to launch a completely digital account opening process and a new loyalty and rewards programme this year to help it compete.
Earnings at Nedbank’s corporate and investment bank rose by 6.3 percent, resulting in an overall increase of 14.5 percent across the group.
Its headline earnings per share - the key profit gauge in South Africa - rose to 2,793 cents ($1.97), compared with 2,452 cents a year earlier.
In 2019, it said it expected a slow improvement in the economic environment in South Africa, but its net interest margin, which reflects banks’ profitability, to fall below 2018 levels, and its credit loss ratio to increase slightly.
The bank’s shares were up 0.96 percent at 0713 GMT. ($1 = 14.2065 rand) (Reporting by Emma Rumney; Editing by Subhranshu Sahu and Louise Heavens)