In an effort to expand its remittance network payout locations in India, Wells Fargo & Company (WFC - Analyst Report) has entered into an agreement with HDFC Bank Limited (HDB - Analyst Report). The agreement adds over 2,500 branches and more than 8,900 ATMs of HDFC Bank to Wells Fargo’s network.
In fact, the addition of HDFC Bank’s branches and ATMs doubles Wells Fargo’s ExpressSend® remittance payout locations in India and its customers can now access a network of over 5,200 branches and more than 16,000 ATMs for remittances to the country.
With India reining a top spot in terms of remittance volumes in the world, the deal is a strategic fit for Wells Fargo to boost its fee-based income stream. ExpressSend customers of Wells Fargo will be able to remit up to $5,000 per day to their beneficiary’s HDFC Bank account using the service for a $5 fee. However, through August 31, the fee for account-based transfers to HDFC Bank will not be claimed.
Going forward, we believe that with a diverse geographic and business mix as well as opportunistic acquisitions, Wells Fargo is well poised to augment its top line.
The company has come out of the financial crisis and postednine consecutive quarters of growth in earnings per share.
Amid a protracted economic recovery in the U.S., regulatory issues as well as a low interest rate environment, strategic moves to boost its fee based revenue stream are impressive. Particularly, exploring those business initiatives which are comparatively less impacted by such overhangs is a judicious move.
Wells Fargo shares currently retain the Zacks #3 Rank, which translates to a short-term Hold rating. Considering the fundamentals, we also maintain a long-term Neutral recommendation on the stock.