Visa Profit Beats Estimates as Card Spending Rises

(Corrects worldwide spending total in eighth paragraph.)

Visa Inc. (V), the world’s biggest payments network, posted a fiscal second-quarter profit that beat analysts’ estimates as consumer spending on credit and debit cards climbed.

Net income for the three months ended March 31 fell 1.7 percent to $1.27 billion, or $1.92 a share, from $1.29 billion, or $1.91, a year earlier, when there were more shares outstanding, the Foster City, California-based company said today in a statement. That beat the $1.81 average estimate of 32 analysts surveyed by Bloomberg. Net income a year earlier was helped by a one-time tax-related gain of $208 million.

Visa, led by Chief Executive Officer Charlie Scharf, increased dividends and stepped up share repurchases as the firm gained financial flexibility after joining rival MasterCard Inc. (MA) in agreeing to a multibillion settlement with merchants over card swipe fees. Visa also struck a deal in February with JPMorgan Chase & Co., the biggest U.S. card lender, to let the bank tailor payment solutions for merchants.

“To drive future transaction growth, we continue to invest in new technologies, channels and capabilities to make Visa transactions more valuable, accessible and secure,” Scharf, 48, said in the statement.

The payment processor raised its forecast for adjusted annual earnings per share growth to about 20 percent, from the “high teens” projected in February.

Shares Advance

Visa climbed 2.1 percent to $169.50 at 4:42 p.m. in extended trading in New York. The shares climbed 9.5 percent this year through the close of regular trading, outpacing the 4.2 percent advance for the 70-company Standard & Poor’s 500 Information Technology Index.

MasterCard, the world’s second-largest payments network by processed transactions, said earlier today that first-quarter profit increased 12 percent to $766 million. Revenue at the Purchase, New York-based firm climbed 8.4 percent to $1.91 billion, short of the $1.93 billion estimate of analysts in a Bloomberg survey. The shares, which touched an all-time high yesterday, fell 2.5 percent to $539.18, the most since July.

Visa’s total operating revenue climbed 15 percent to $2.96 billion, beating the $2.85 billion estimate of analysts surveyed by Bloomberg. Worldwide spending on Visa payment cards climbed 8.8 percent to $1.03 trillion, adjusted for currency fluctuations, according to the statement. Processed transactions rose 6.2 percent to 13.9 billion. Cross-border volume, a measure of spending by cardholders outside their home countries, advanced 10 percent.

Spending on Visa debit cards in the U.S. rose 0.3 percent to $285 billion, the first increase in a year, according to the statement. U.S. credit-card purchases climbed 9.1 percent to $244 billion.

U.S. consumer spending, which accounts for about 70 percent of the nation’s economy, cooled in March after higher payroll taxes took effect in January. Scharf seeks to bolster Visa’s growth outside the U.S. as the company has said it hopes to get more than half of its revenue abroad by 2015.

To contact the reporter on this story: Dakin Campbell in San Francisco at dcampbell27@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net

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