* Nedbank FY earnings up 19 pct, hikes dividend by 24 pct
* FirstRand sees H1 profit up 24-29 pct (Recasts with FirstRand, adds analyst comment)
JOHANNESBURG, Feb 25 (Reuters) - South African lender Nedbank Group lifted profit by double digits in 2012, benefiting from a growing focus on millions of low-income retail customers, and rival FirstRand said its results would show a similar pattern.
Nedbank, South Africa's fourth-largest lender, posted a 19 percent increase in full-year earnings on Monday, with its retail business showing the sturdiest growth.
Bigger rival FirstRand said it would show profit from first-half operations rose by as much as 29 percent when it reports results on March 6.
Banks in Africa's top economy are pushing into the "entry level" market, rolling out low-cost accounts to customers without bank accounts, after incurring losses during the recession when many borrowers were unable to service mortgage payments.
Nedbank's retail unit only returned to profitability in 2010. The bank, majority owned by insurer Old Mutual , previously targeted high-income earners but is now looking more to the mass market. It added 655,000 new customers in 2012, with more than half of those at the entry level.
"Nedbank has the retail story. It's been growing its profitability from the lowest base in the last four years. It's focused and has done very well," said Adrian Cloete, an analyst at Cadiz Asset Management.
FirstRand and Nedbank were the two best performing stocks among South Africa's so-called "big four" banks last year, reflecting investor enthusiasm over their retail strategies.
Shares of FirstRand rose 50 percent in 2012, while Nedbank added 30 percent. Shares in both banks closed up round 0.8 percent on Monday.
Nedbank said diluted headline earnings per share totalled 1,595 cents in the year to end-December, from 1,340 cents a year earlier. A Thomson Reuters SmartEstimate had forecast earnings rising to a stronger 1,619 cents.
Headline earnings, the main measure of profit in South Africa, exclude certain one-time items.
Net interest income, the measure of earnings from lending, rose 9.1 percent to 19.68 billion rand ($2.2 billion), while non-interest revenue gained 12.4 percent.
Impairment charges shrank 2.6 percent to 5.19 billion rand and the lender hiked its dividend payout by over 24 percent to 752 cents per share, higher than analysts had anticipated.
The $10.9 billion bank has focused on improving its retail business and boosting fees from transactions, to offset relatively muted demand for credit in Africa's biggest economy.
Market leader Standard Bank has also forecast its full-year earnings to be up by a maximum 12 percent.
But no. 3 lender Absa Group posted a 9 percent drop in annual profit for 2012 earlier this month, hurt by bad mortgage loans from the start of the financial downturn.
($1 = 8.8780 South African rand) (Editing by Sophie Walker)