Visa Profit Matches Estimates as $5 Billion Buyback Plan Is Set

Visa Inc., the world’s biggest bank-card network, posted a fiscal fourth-quarter profit that matched analysts’ estimates and said it may repurchase as much as $5 billion of shares.

Net income for the three months ended Sept. 30 fell 28 percent to $1.19 billion, or $1.85 a share, from $1.66 billion, or $2.47, a year earlier, the Foster City, California-based company said yesterday in a statement. That equaled the average estimate of 31 analysts surveyed by Bloomberg. On an adjusted basis, profit climbed 15 percent from the fourth quarter of 2012, when results were helped by a $627 million tax adjustment.

Chief Executive Officer Charlie Scharf, 48, is boosting payouts and repurchasing shares as Visa seeks to bolster its business outside the U.S., where it gets more than half its revenue. The firm raised the quarterly dividend 21 percent to 40 cents a share last week and has returned almost $17 billion to investors since 2008. Visa repurchased 7 million shares in the quarter and said its new buyback plan is its biggest ever.

“Visa delivered strong financial performance during the fourth quarter and full year across our global businesses, a reflection of solid revenue and transaction growth,” Scharf said in the statement. “We also have been consistent and decisive in returning excess cash to shareholders and maintain this commitment.”

Shares Decline

Visa fell 3 percent to $197.75 in extended trading in New York yesterday, after results were announced. The shares had gained 34 percent this year through the close of regular trading, outpacing the 19 percent advance for the 30-company Dow Jones Industrial Average.

“There’s still a lot more to do considering how much excess cash this company has on its balance sheet,” Jason Kupferberg, an analyst at Jefferies Group LLC, said in an interview before results were announced.

Visa had $6.9 billion in cash and available-for-sale investment securities as of Sept. 30, according to the statement.

Net operating revenue rose 8.9 percent to $2.97 billion, missing the $3.02 billion average estimate of analysts in the Bloomberg survey. It was the second time Visa has missed revenue estimates since its March 2008 initial public offering.

“We do have this tepid recovery,” Scharf said in a conference call with analysts. Consumer spending could improve further if “the U.S. government can get its act together on the debt limit and on the budget,” he said.

Processed Transactions

Worldwide spending on Visa credit and debit cards climbed 13 percent, adjusted for currency fluctuations, to $1.1 trillion, according to the statement. Credit and debit purchases in the U.S. rose 11 percent and 9.6 percent, respectively, the company said.

Cross-border volume, a measure of spending by consumers traveling abroad, advanced 11 percent. Processed transactions on Visa’s networks climbed 14 percent to 15.5 billion.

American Express Co., the biggest credit-card issuer by purchases and operator of the third-largest U.S. payments network, said Oct. 16 that quarterly profit rose 9.3 percent to $1.37 billion on higher spending worldwide. Discover Financial Services, the No. 4 network, said last week that net income declined 6.9 percent as the company increased the amount of money set aside to cover future loan losses.

MasterCard Inc., the second-biggest payments network by processed transactions, is scheduled to announce results before U.S. markets open today. The Purchase, New York-based company may report that third-quarter net income rose 9 percent to $841.4 million from a year earlier, according to the average estimate of 21 analysts in a Bloomberg survey.

Visa, MasterCard and the biggest U.S. banks are awaiting approval of a multibillion-dollar settlement over fees charged to merchants when consumers pay with credit cards. The decision by U.S. District Judge John Gleeson in Brooklyn, New York, could end an eight-year legal battle pitting the financial firms against retailers including Wal-Mart Stores Inc.

Before it's here, it's on the Bloomberg Terminal.