(Reuters) - Visa Inc (V.N), the world’s largest credit and debit card company, said U.S. sanctions on Russia were hurting its card transaction volumes and that revenue growth would slow further this quarter, sending its shares down 5 percent after the bell.
Visa’s quarterly revenue growth slid to a single digit in percentage terms for the first time in more than four years, due to a strong U.S. dollar.
The company and rival MasterCard Inc (MA.N) stopped providing services to two Russian banks after U.S. President Barack Obama imposed sanctions on Russia in March after a standoff over Ukraine.
“We are caught between the politics of the United States and the politics of Russia,” Chief Financial Officer Byron Pollitt said on a post-earnings conference call on Thursday.
“We’re clearly seeing a drop-off in cross-border volume and sanctions are expected to have some impact on volume.”
Uncertainty over the companies’ operations in Russia lingers as Russian President Vladimir Putin has said the country would develop its own credit card system to reduce dependence on western companies.
Visa said it would assess the situation in Russia and was hopeful it would still have a “meaningful opportunity” to continue to do business there.
“We have 100 million cards there (in Russia) and it is not in anyone’s best interest, inclusive of the Russians, to make those cards not available to their own citizens,” Pollitt said.
Visa said strength in the U.S. dollar was likely to slow its revenue growth further this quarter to “mid-single digits” in percentage terms.
The company’s revenue growth slowed to 7 percent in the second quarter ended March 31 from 11 percent in the first quarter.
Chief Executive Charlie Scharf said the impact of the strong dollar would be “slightly more pronounced” this quarter before rebounding in the following three months.
Net income attributable to Visa rose 26 percent from a year earlier to $1.60 billion, or $2.52 per Class A share, in the second quarter.
Visa earned $2.20 per share, excluding a tax benefit of $218 million in the quarter.
Total operating revenue increased to $3.16 billion from $2.96 billion.
Analysts on average had expected a profit of $2.18 per share on revenue of $3.19 billion, according to Thomson Reuters I/B/E/S.
Visa said it expected full-year revenue to grow 10-11 percent. The company had earlier said its revenue was expected to grow in low double digits in percentage terms.
The Foster City, California-based company maintained its earnings forecast, but said the guidance assumed “several pennies of earnings per share impact” from the situation in Russia.
In March, Visa and MasterCard launched a cross-industry group to push for improved security in card transactions and press U.S. retailers and banks to meet a 2015 deadline to adopt the safer EMV technology.
EMV cards, already used in Europe and Asia, store information on computer chips rather than on traditional magnetic strips, making them harder to counterfeit.
Shares of Visa, which has a market value of about $133 billion, closed at $209.40 on the New York Stock Exchange on Thursday.
The stock has risen 13 percent since it was included in the Dow Jones Industrial Average .DJI in September.
Editing by Savio D'Souza and Kirti Pandey