Tags: Visa | MasterCard | Global | Growth | us | economy | credit

Visa, MasterCard Positioned for Global Growth

Tuesday, 26 Apr 2011 12:27 PM

Consumers might not be out there slapping their credit cards down like they were before the Great Recession and ensuing credit crunch.

Consumer borrowing on credit cards has fallen, to $794 billion in February from a peak of $973.6 billion in August 2008, according to Federal Reserve data.

If the economy continues to recover, however, one could expect the American consumer to fall back into the same comfortable habits.

For Visa Inc. (V), things already look better. Net operating revenue in the full-year was $8.1 billion, an increase of 17 percent over the prior year and was driven by strong contributions across all revenue categories.

And despite gloomy consumer-spending data from the Fed, Visa expects its annual net revenue to grow between 11 percent and 15 percent in 2011.

Business abroad is helping to boost both the top and bottom lines. "We are intensely focused on growing Visa's revenue globally, working alongside our financial institution, merchant, technology and government partners," says Joseph Saunders, Visa's chairman and chief executive officer, in statement.

People are traveling more, which is helping. Company data show that spending by international cardholders traveling to the United States increased by 18 percent to more than $34 billion in 2010 from $29 billion in 2009. The company reports that spending by U.S. Visa cardholders traveling internationally increased by 6 percent, to $31 billion in 2010 from $29 billion in 2009.

"Despite economic uncertainties, the United States continues to be a major contributor to the global tourism economy, both as a destination of choice and as a critical source of tourism revenue for many countries," said William M. Sheedy, group president for the Americas for Visa.

"Tracking this spend data and turning it into actionable information enables our tourism partners, both domestically and internationally, to prepare for visitor business and create targeted tourism marketing programs that help sustain long-term growth," he said.

Revenue and net profits are up at MasterCard Worldwide (MA) as well.

Net revenue for the full-year 2010 was $5.5 billion, an increase of 8.6 percent versus 2009. Net revenue for the fourth quarter of 2010 was $1.4 billion, a 10.7 percent increase versus the same period in 2009.

"2010 proved to be a good year for MasterCard. Our business momentum was fueled by products and solutions that create efficiencies for cardholders, businesses and governments while driving future growth," Ajay Banga, MasterCard president and chief executive officer, says in an earnings statement.

"We are pleased to have ended the year with a strong fourth quarter. Our net revenue was up almost 11 percent, with underlying growth showing quarter-over-quarter improvement in all regions, and our operating income grew nearly 22 percent."

William Blair & Co. analyst Chris Shutler initiated coverage on both Visa and MasterCard with an outperform rating.

Shutler pointed out that both firms are prepared to capture a growing slice of the electronic transactions market worldwide. More than 80 percent of those transactions still take place in the forms of cash or checks.

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Consumers might not be out there slapping their credit cards down like they were before the Great Recession and ensuing credit crunch. Consumer borrowing on credit cards has fallen, to $794 billion in February from a peak of $973.6 billion in August 2008, according to...
Visa,MasterCard,Global,Growth,us,economy,credit,cards
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2011-27-26
Tuesday, 26 Apr 2011 12:27 PM
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