NationsBank Corp.'s retail brokerage is a small slice of the giant banking company's business, but it's growing rapidly enough to catch the eye of some bank analysts.

Investment product sales to retail customers pulled in nearly half of the banking company's $114 million in 1995 brokerage income, according to Henry C. Dickson, a Smith Barney Inc. bank analyst and author of a recent report on NationsBank.

And though retail brokerage profits were less than 1% of the Charlotte, N.C., banking company's entire revenue for 1995, the report said it grew twice as fast as overall profits and was among the fastest growing business lines for the company.

"The raw material is there, and so are the customer base and the desire from management to grow this business," Mr. Dickson said in a telephone interview.

To be sure, the company's brokerage business was able to rise rapidly because it came up from a smaller base. But Mr. Dickson and other analysts said they are impressed by the priority NationsBank has given investment sales.

"NationsBank has been aware of the asset shift away from deposits and toward investment products for a long time," said Sally Pope Davis, a bank analyst for Goldman Sachs & Co. "They've been doing this since the late '70s, long before most banks even thought about brokerage."

The banking company's brokerage now serves 100,000 households, and has more than 220,000 active full-service and discount brokerage accounts, according to the Smith Barney report.

Most banks do not break out the profitability of its brokerage or mutual funds. But Merrill H. Ross, a bank analyst for Wheat First Butcher Singer, said NationsBank's retail brokerage revenue is on par with its closest bank rival, First Union Corp.

"This year they will be neck and neck in the retail arena," Ms. Ross predicted. She added that NationsBank will likely see its retail brokerage revenue rise "50% or more this year, much faster than fee income in general."

Mr. Dickson was more reserved in his forecast, predicting the unit's retail revenue would rise 20% this year, and its investment sales force would expand from 375 brokers to more than 2,000 in the next five years.

NationsBank executives were not available for comment, a spokeswoman for the bank said.

But in the banking company's 1995 annual report, it attributes much of brokerage's revenue growth last year to the collapse, in November 1994, of NationsBank's joint-venture with Dean Witter & Discover Co. That arrangement originally had Dean Witter brokers selling investments in NationsBank branches, for a share of the profits.

"The difference is that now they have complete control over the brokerage, and it shows," Mr. Dickson said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.