Visa beats estimates as global credit-card spending climbs

July 26 (Bloomberg) -- Visa Inc., the world’s biggest payments network, posted a fiscal third-quarter profit excluding legal costs that beat analysts’ estimates as card spending rose.

Adjusted net income for the three months ended June 30 climbed to $1.06 billion, or $1.56 a share, from $883 million, or $1.26, a year earlier, the San Francisco-based company said yesterday in a statement. The average estimate of 34 analysts surveyed by Bloomberg was $1.45 a share. The firm had a net loss of $1.84 billion when including a $4.1 billion provision tied to its settlement this month of a U.S. antitrust lawsuit.

Visa, led by Chief Executive Officer Joseph W. Saunders, 66, has benefited as consumers shift from cash to electronic payments, while parrying legal and regulatory threats to its business. Visa, MasterCard Inc. and some of the biggest U.S. banks agreed this month to settle the suit brought by merchants who accused financial firms of rigging credit-card fees.

“Visa once again reported solid global growth in payments volume, cross-border transactions and processed transactions outside the U.S.,” Saunders said in the statement. “We are pleased that we were able to come to a resolution in the merchant litigation.”

The accord includes $6.6 billion in payments to retailers and a temporary cut in fees that banks earn on each transaction. Visa’s $4.4 billion share of the settlement would be covered by an escrow account established in cooperation with U.S. banks that owned the company before its 2008 initial public offering. Purchase, New York-based MasterCard, which reports results next week, said the settlement would cost it $790 million.

Share Repurchases

Operating revenue rose 10 percent to $2.57 billion, beating the $2.52 billion estimate of 29 analysts.

The company authorized a new $1 billion stock repurchase program after spending $461 million in the quarter to buy back about 4 million shares at an average of $115.51 each.

Visa climbed 2.6 percent to $125.42 at 9:32 a.m. in New York. The shares advanced 37 percent in the past 12 months through yesterday, the third-best performance in the 71-company Standard & Poor’s 500 Information Technology Index.

Visa updated its profit outlook, saying annual earnings- per-share growth would be in the “low twenties,” up from a May forecast of “high teens to low twenties,” according to the statement.

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