Visa adjusted profit beats as card payments grow

Wed Jul 25, 2012 7:37pm EDT

1 of 2. Visa credit cards are displayed in Washington in this October 27, 2009, file photo. Visa Inc's adjusted profit topped Wall Street estimates and the company raised its full-year earnings forecast for the second time this year.

Credit: Reuters/Jason Reed/Files

(Reuters) - Visa Inc's (V.N) adjusted profit topped Wall Street estimates, and it raised its full-year earnings forecast for the second time this year, as more people move to card-based payments globally.

Visa, the world's largest credit- and debit-card network, also indicated it was not seeing signs of a slowdown, even as global economic growth falters on fears of a worsening European debt crisis.

"Although there appear to be darkening economic clouds, our global revenue drivers remain healthy with no clear signals of a downturn at this point in time," Chief Financial Officer Byron Pollitt said on a post-earnings conference call.

Card rival American Express indicated slowing spending growth when it reported results last week.

Visa now expects adjusted per-share earnings growth for fiscal 2012 in the low twenties. It had previously forecast earnings growth in the range of high teens to low twenties.

Payment volumes grew 6 percent in the quarter.

The San Francisco-based company posted an adjusted profit of $1.56 per share for the third quarter.

Total operating revenue rose 11 percent to $2.57 billion.

Analysts on average expected the company to earn $1.45 per share, excluding items, according to Thomson Reuters I/B/E/S.

NET LOSS ON LEGAL RESERVE

Despite the adjusted earnings beat, the company posted a net loss of $1.8 billion, or $2.74 per Class A share, as it set aside $4.1 billion to cover 'swipe-fee' litigation costs.

Visa, along with rival Mastercard Inc (MA.N) and banks that issue their credit cards, agreed to a $7.25 billion settlement with U.S. retailers in a lawsuit over the fixing of debit and credit card fees.

Visa's share of the settlement is $4.4 billion. Last week, it added $150 million to its legal reserves.

"We are pleased that we were able to come to a resolution in the merchant litigation which was acceptable to most parties while ensuring the long-term health of the U.S. payments industry," CEO Joseph Saunders said in a statement.

The anti-trust settlement will also allow stores to start charging customers extra for using certain credit cards in an effort to steer them toward cheaper forms of payment.

Visa said it does not see surcharging as something that will significantly affect it.

The company also authorized a new $1 billion class A share repurchase program. The program is slated to run through July 2013.

Shares of the company were up 1 percent at $124.10 in trading after the bell. They closed at $122.20 on Wednesday on the New York Stock Exchange.

(Reporting by Jochelle Mendonca in Bangalore; Editing by Roshni Menon and Anil D'Silva)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (1)
usagadfly wrote:
States need to replace sales tax revenue with credit / debit card transaction “fees” on transactions with one end in that State. They should also tax loan originations and bond issuance. If broad enough, these taxes would be almost invisible and widely spread.

Jul 25, 2012 7:45pm EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.