Western Union sees Russian profit slump with falling market share

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Published time: February 18, 2013 15:46
Edited time: February 18, 2013 19:46

Money transfer specialist Western Union has seen its fee and commission income drop by at quarter to 1.4 billion roubles ($46.5mn), while competitors have seen growth according to the Central Bank of Russia.

­The Zolotaya Korona credit transfer company saw its income reach 3.5 billion roubles ($116 million); an almost 60% rise on the year earlier.

The operator Russlavbank also grew 56% in comparison to 2011 with revenues of 2.3 billion roubles ($76 million), and this trend appears to be the same throughout Russia. 

According to Western Union it has seen a fall in net profit across the board of 12% in 2012, or about $1 billion, and it’s expecting a further reduction in profit in 2013. The company has had to lower its commission charges due to greater competition. 

The Bank for Corporate Finance’s Head of Research, Maxim Osadchy, links the growth of domestic money transfer systems with the stabilization of the economic situation in Russia and the influx of migrant workers who are the main users of such systems. 

The systems’ operators say their success is due to the positive dynamics in the sector and their active expansion and development of new sales channels. For example, the Blizko network of points of sale increased seven fold in 2012, said its head Andrey Laykov.