Visa Profit Beats Estimates as Credit-Card Spending Increases

Wednesday, 08 February 2012 04:36 PM

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 has exceeded estimates every quarter since its March 2008 initial public offering, data compiled by Bloomberg show.

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 aims to generate more than half from markets abroad by 2015.

“We continued to benefit from the secular shift to electronic payments,” Saunders said in the statement.

Visa advanced 1.3 percent to $108.35 at 4:01 p.m. in New York. The shares have 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 reached record highs today.

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.

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Wednesday, 08 February 2012 04:36 PM
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