* Cuts carrying value of Ecobank t0 4 bln rand from 7.8 bln
* Says Ecobank still vital to African growth strategy
* Reports slowest profit growth since 2009
(Adds CEO comment, 2017 outlook)
By Tiisetso Motsoeneng
JOHANNESBURG, Feb 28 South Africa's Nedbank
booked a $293 million writedown on the value of its
stake in sub-Saharan lender Ecobank on Tuesday and
reported its slowest growth in annual profit since 2009.
Ecobank Transnational Inc's operations in central and west
Africa are exposed to some economies that have been pressured by
the commodity price slide and unfavourable currency swings since
Nedbank bought a 20 percent stake for $500 million in 2014.
The writedown reduces Ecobank's value on Nedbank's books to
4 billion rand ($308 million) from 7.8 billion rand, the South
African lender said in a statement.
Nedbank said, however, that Ecobank remained vital to its
expansion elsewhere on the African continent, where Ecobank has
operations in nearly 40 countries outside its home market.
"It's obvious that we would be disappointed with the
performance of our Ecobank investment to date," Nedbank Chief
Executive Mike Brown told reporters.
"But we still, however, remain optimistic on the long-term
growth prospects in the rest of Africa."
Brown forecast another tough year for Ecobank, which makes
the bulk of its earnings in Nigeria, before improving in 2018
and beyond. Nigeria, Africa's biggest economy, has been hit by a
currency crisis and its first recession in 25 years following
the slide in oil prices since the middle of 2014.
Shares in Nedbank were little changed at 244 rand at 1300
GMT, more than 40 percent below where they should trade based on
the most likely earnings trajectory, according to Thomson
Reuters StarMine intrinsic valuation model.
Nedbank, a subsidiary of Anglo-South African conglomerate
Old Mutual, said its diluted headline earnings per share
(EPS) rose 4.8 percent to 2,350 cents in 2016, the slowest pace
of growth since 2009 when its EPS fell by nearly a third.
Headline EPS is the main measure of profit in South Africa
as it strips out certain one-off items.
Nedbank also said its results were affected by slack demand
for loans as slowing economic growth and higher interest rates
hit consumption and investment spending across Africa.
Brown forecast at least 7 percent growth in 2017 annual
headline EPS, saying a peak in interest rate cycle in South
Africa would lift demand or loans.
Old Mutual is in the middle of an overhaul in which it will
carve itself into four parts and cut its 54 percent stake in
Nedbank to a minority holding to simplify its structure.
Nedbank competes with Standard Bank, FirstRand
, Barclays Africa and Capitec.
($1 = 12.9811 rand)
(Editing by Susan Fenton and David Clarke)