Visa profit climbs 28% as consumer card spending rises

New York: Visa, the world’s largest payments network, posted fiscal-fourth quarter profit that beat analysts’ estimates as card spending by consumers increased.
Net income for the period ended September 30 climbed 28 per cent to $1.93 billion, or 79 cents a share, from $1.51 billion, or 62 cents, a year earlier, the San Francisco-based company said on Monday in a statement.
Adjusted profit, which excludes one-time items such as severance costs and a tax expense related to its purchase of Visa Europe, was 78 cents a share, exceeding the 73-cent average estimate of 31 analysts surveyed.
“We have begun to see the benefits from our acquisition of Visa Europe and strong cost discipline helped our results,” chief executive officer Charlie Scharf said in the statement.
Visa shares gained 7.3 per cent this year as the company benefited from a global shift away from cash and checks to electronic payments. Scharf, who announced last week that he will step down from his post in December, has said he’s committed to investing in digital-payment technologies and establishing more relationships with major retailers as consumers demand better rewards.
Visa shares dropped 1.1 perc ent to $82.24 at 4:31 p.m. in extended trading in New York.
Revenue forecast
The payments network expects annual net revenue growth to be 16 per cent to 18 per cent for fiscal 2017, including an $80 million cost for integrating Visa Europe, according to the statement. The firm didn’t provide a forecast for free cash flow next year, as it did in its fiscal third-quarter report.
Revenue rose 19 per cent to $4.26 billion from a year earlier, in line with analysts’ estimates, while operating expenses climbed 27 per cent to $1.64 billion, the company said. For the fiscal year, revenue increased 8.7 per cent to $15.1 billion, according to the statement.
Visa took a $110 million pretax charge in the quarter for severance costs for personnel reductions, including planned job cuts in Europe.
Global credit- and debit-card spending, including Visa Europe and adjusted for currency fluctuations, rose 47 per cent from a year earlier to $1.86 trillion, the company said. Cross-border volume, a measure of customer spending abroad, gained 149 percent from a year earlier.
In June, Visa completed its roughly $20 billion purchase of Visa Europe, bringing the two firms together after eight years as separate companies. The lack of meaningful contributions to earnings from Europe had long been seen as a weakness for Visa and an advantage for its smaller competitor Mastercard, which owns its European business.
American Express, the biggest United States credit-card issuer by purchases, said on October 19 that third-quarter profit dropped 9.8 per cent to $1.14 billion as the company increased spending on marketing and other incentives. Mastercard, the world’s second-largest payments network, is scheduled to report results on Friday. -