MoneyGram Spreads in Ukraine

Yesterday, MoneyGram International Inc. (MGI - Analyst Report) announced its expansion in Ukraine, where the company already functions in over 2,150 locations with the leading Oschadbank. This marks a 20% increase in the company’s agent locations in Ukraine, thereby escalating it to 13,200 locations.

Previously, MoneyGram also allied with other major banks and UkrPost in Ukraine in oreder to expand its money transfer services in the region. The addition of Oschadbank further enhances the company’s position in Ukraine as the leading bank is widely spread in large cities as well as intense rural towns.

Moreover, given the raw growth opportunities, MoneyGram has been boosting its position in Ukraine and the adjoining Commonwealth Independent States (CIS) with money transfer network growth, economical fees and new convenient services.

The company’s money transfer network in CIS has grown by about 22% to 32,400 locations in 2011. So far, MoneyGram also enjoys a global network of more than 256,000 agent locations in 192 countries.

In addition, MoneyGram has also allied with VTB to allow convenient transfers, which help consumers receive money into an individual’s VTB bank account by calling the bank’s call center. The expansion is also an attempt to tap the rapidly developing $400 billion global money transfer industry, which grew by 6% year over year in 2010.

Money transfer business remains the driving force for MoneyGram. The company has been spreading its money transfer business across the globe through various recognized financial institutions. MoneyGram is also enhancing its brand awareness by developing user-friendly payment solutions that suit the new market trends.

With regard to this growth strategy, the company also plans to expand its cash-to-account service to additional banks as well as add new online services.

Earlier this month, MoneyGram also launched cash-to-account service with leading Industrial and Commercial Bank of China to more than 269 million of its personal banking customers.

Furthermore, the company continues to explore new growth avenues in untested locations by incorporating latest and flexible technology that facilitates transfers through mobile phones, prepaid cards or ATMs, in order to speed up its money transfer services and enhance the remittance volumes. These efforts also help to retain the company’s competitive vigour, particularly against the steady global growth of its arch-rival Western Union Co. (WU - Analyst Report).

Currently, MoneyGram carries a Zacks #2Rank #2, which translates into a short-term Buy rating. However, based on its strong potential for fundamental growth, we are maintaining our long-term Outperform recommendation on the shares.

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Read the full analyst report on WU