NEW YORK (Reuters) - Visa Inc posted a stronger-than-expected profit on Wednesday, helped by rising debit card processing volume.
The company’s shares rose 2.6 percent in after-hours trading to $85.75, a stark contrast to a year ago, when it traded at $47.54.
Weakness in the economy has spurred more U.S. consumers to pay using their debit cards instead of their credit cards, Visa executives said. New U.S. regulations have also weighed on credit card spending volume, Visa Chief Executive Joseph Saunders said on a conference call.
“(Credit card spending) is not growing at anything close to the rates that it historically has, and obviously a lot of that has to do with the economy, and a lot of it has to do with the rules and regulations,” Saunders said.
Visa, operator of the world’s largest credit and debit payment network, receives fees whenever consumers use one of its credit or debit cards. As consumers worldwide increasingly pay using plastic, the company’s revenue rises.
The company said quarterly profit was $763 million, or $1.02 a share, in its fiscal first quarter ended December 31, compared with profit of $574 million, or 74 cents per class A share, in the same quarter a year earlier.
That beat analysts’ average forecast for earnings of 91 cents a share, according to Thomson Reuters I/B/E/S.
Revenue was $1.96 billion, compared with $1.74 billion in the same quarter a year earlier.
Revenue rose in large part because payment volume on Visa debit cards for the quarter ended in September rose 8 percent to $268 billion. That translates to revenue in the quarter ended in December. Credit card payment volume was flat over the same period.
Transaction volume in the quarter ended in December rose 14 percent, Visa said, which should translate to higher revenue next quarter.
Visa said it expected annual net revenue growth of between 11 percent and 15 percent. In October, the company said it expected revenue in the lower end of that range.
Visa, which does not lend at all, pulled off a record U.S. IPO almost two years ago as investors seized on its growth potential and lack of direct exposure to the global credit crisis.
Reporting by Dan Wilchins; Editing by Phil Berlowitz