Bloomberg News

Visa Profit Exceeds Estimates as Credit-Card Spending Rises

February 09, 2012

(Updates with share repurchase in the second paragraph, revenue in the sixth, earnings outlook in eighth.)

Feb. 8 (Bloomberg) -- Visa Inc., the world’s biggest payments network, said fiscal first-quarter profit climbed 16 percent as consumers increased use of credit and debit cards.

Net income for the three months ended Dec. 31 rose to $1.03 billion, or $1.49 a share, from $884 million, or $1.23, a year earlier, the San Francisco-based company said today in a statement. The average estimate of 26 analysts surveyed by Bloomberg was for earnings per share of $1.45. Visa authorized a new $500 million share repurchase program.

Chairman and Chief Executive Officer Joseph W. Saunders, 66, is positioning Visa for its next phase of growth after U.S. regulators capped so-called swipe fees the company charges merchants for debit-card purchases. Visa, which derived about 56 percent of revenue from the U.S. in fiscal 2011, has said it intends to generate more than half from markets abroad by 2015.

“We remain intensely focused on further growing our international business,” Saunders said in the statement. “At the same time, we are moving forward on our innovation strategy.”

Visa advanced 3.2 percent to $111.80 at 4:51 p.m. in extended trading in New York. The shares had gained 45 percent in the past year, the second-best performance in the 71-company Standard & Poor’s 500 Information Technology Index after Purchase, New York-based MasterCard Inc., the No. 2 network, which climbed 58 percent. Shares of both companies closed at all-time highs today.

Worldwide Spending

Operating revenue was $2.55 billion, beating the average estimate of $2.47 billion by analysts in the Bloomberg survey. Worldwide spending on Visa credit and debit cards, adjusted for currency fluctuations, climbed 11 percent to $994 billion in the first quarter from a year earlier, the company said.

Cross-border volume, a measure of spending by consumers outside their home countries, surged 13 percent. Processed transactions worldwide rose 8 percent to 13.6 billion as consumers continued to shift from cash and checks to electronic payments.

Visa updated its 2012 outlook, forecasting net revenue growth in the “low teens” and earnings-per-share growth in the “high teens.” The company previously expected “high single to low double-digit” revenue growth and EPS growth in the “mid to high teens,” according to its fourth-quarter statement.

Mobile Phones

In December, Visa announced a plan to help develop Rwanda’s payments system and connect the African nation’s 11 million citizens to the global economy. The company also has rolled out prepaid accounts linked to mobile phones across Africa and the Middle East.

MasterCard said Feb. 2 that fourth-quarter profit climbed 24 percent to $514 million. The company reported 2011 profit of $1.91 billion.

MasterCard took a $495 million charge representing its portion of a potential settlement to price-fixing litigation. Merchants sued Visa, MasterCard and banks including JPMorgan Chase & Co. in 2005, claiming that the companies stifled competition by banning merchants from steering customers to cheaper forms of payment.

An accord may cost $4 billion, and last February, the defendants agreed that Visa would be responsible for two-thirds of any settlement and MasterCard would pay about one-eighth. In December, Visa said it would deposit $1.57 billion into its litigation escrow account to prepare for any settlement.

--With assistance from Donal Griffin in New York. Editors: Peter Eichenbaum, Dan Kraut

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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