Visa's Profit Rises 24% on Higher Payments Volume

Visa Inc.'s earnings for its latest quarter rose 24% as the company posted increases in payments volume and processed transactions.

But Chief Executive Charlie Scharf said the uneven global economy and the effects of the stronger U.S. dollar have weighed on Visa's cross-border volume and revenue growth. He noted those factors don't appear to be abating in the short term.

The company didn't change its financial outlook for the year but said those issues could ultimately affect its results.

Visa's cross-border volumes grew 4% on a constant-dollar basis in the quarter ended Dec. 31. Payments volume increased to $1.31 trillion, while the number of total processed transactions grew 8% to 19 billion.

Visa's shares rose 2.4% after hours and are off 11% so far this year.

In all, the company reported a profit of $1.94 billion, or 80 cents a Class A share, for its fiscal first quarter, up from $1.57 billion, or 63 cents a Class A share, a year earlier. Excluding $255 million in income tied to a Visa Europe put option, earnings improved to 69 cents a Class A share.

Revenue rose 5.4% to $3.57 billion, up 8% on a constant-dollar basis. The increase was driven by higher services, data processing and international transaction revenue.

Analysts polled by Thomson Reuters projected earnings of 68 cents a share on revenue of $3.62 billion.

Operating expenses grew 2.2% to $1.17 billion.

Spending on credit and debit cards has been strong as consumers migrate from cash and checks to electronic payments. Visa and competitor MasterCard Inc. don't issue cards or set interest rates, but they charge fees to financial institutions for transactions that travel over their networks.

Visa's digital efforts have included the launch of Visa Digital Solutions, an initiative geared toward secure payments using mobile devices. Visa and others have supported Apple Inc.'s Apple Pay service.

In November, Visa said it would buy its European counterpart Visa Europe for as much as 21.2 billion euros ($23.2 billion) in cash and stock, a long-awaited deal that would bring the payment network's global operations under one roof.

The acquisition will create a windfall for the 3,000 banks, other financial firms and payment networks that own the privately held European cooperative.

Visa's results follow Wednesday's report from Discover Financial Services Inc., which posted a weaker-than-expected quarterly profit as slower retail sales and low gas prices restrained growth in credit-card loans. Meanwhile, American Express Co. last week said its earnings were hurt by a strengthening U.S. dollar, pressure on merchant fees and competition. The company also issued a bleak outlook for 2017.

MasterCard is slated to report results Friday.

Write to Josh Beckerman at [e-mail]

(END) Dow Jones Newswires

January 28, 2016 18:25 ET (23:25 GMT)

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