Wed07232014

LAST_UPDATEWed, 23 Jul 2014 5pm

Visa Raises Outlook As Card Spending Accelerates

VISA Inc's quarterly profit beat estimates as people spent more using its cards, and the largest credit and debit card network raised its full-year outlook for revenue and earnings.

Visa also authorized a $1.5 billion share buyback program, sending its shares up about 3 percent in after-hours trading.

The company raised its full-year forecast for percentage growth in adjusted earnings per share to the "low twenties" from around 20 percent. It said it also expected percentage earnings-per-share growth in 2014 in the mid-to-high teens.

Chief Executive Charlie Scharf played down the European Commission's plan to limit interbank fees on card payments, noting that the proposed regulation would only apply to transactions where the issuer and acquirer are both in the EU.

The new rules, which would clamp down on fees banks charge on card payments and scrap hefty surcharges on shoppers paying with plastic, would particularly affect Visa Europe, which is owned by about 3,000 European banks.

Visa is boosting its electronic payment operations and rolling out a digital wallet service, V.me.

The company has signed up about 90 financial institutions including Bank of America Corp and PNC Financial Services Group for its V.me service, Scharf said.

PAYMENT GROWTH DRIVES PROFIT

Visa reported strong growth in the U.S. market, from where it makes more than half of its revenue. Revenue in the United States has been boosted in the past few quarters as more affluent customers use credit cards on the Visa network.

Total volume of transactions on Visa's network in the United States rose 10.3 percent to $683 billion.

"I think the results are strong across the board, there's more places where growth is accelerating," Wedbush Securities Inc analyst Gill Luria told Reuters.

The company reported a net profit of $1.23 billion, or $1.88 per Class A share, for the third quarter, compared with a net loss of $1.84 billion, or $2.74 per share, a year earlier.

The year-earlier quarter included a $4.1 billion litigation provision to cover costs associated with a settlement with U.S. retailers over the fixing of card fees.

Operating revenue rose 17 percent to $3.00 billion, while payment volume increased 13 percent to $1.1 trillion.

Visa's payment volumes rose 13 percent to $1.1 trillion in the third quarter.

Analysts on average had expected Visa to earn $1.79 per share on revenue of $2.89 billion, according to Thomson Reuters I/B/E/S.

Visa and peer MasterCard Inc have been trying to capture new business in emerging markets as more customers turn to cards and digital payments instead of cash.

International transaction revenue rose 14 percent to $854 million.

Foster City, California-based Visa's shares have risen 14 percent in the past three months, outperforming the broader S&P 500 Index, which has gained 6 percent.

They closed at $186.75 on Wednesday on the New York Stock Exchange.

 

 

- Reuters