Visa finds strength in holiday season as overseas spending slows

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A strong holiday shopping season was enough to save the day for Visa Inc.

Customers spent $2.2 trillion on Visa cards in the three months ended Dec. 31, a 7 percent increase compared from a year ago. That was just below the $2.27 trillion analysts at Sandler O’Neill & Partners were calling for, as strong spending during the holidays offset a drop in gas prices in the U.S. and a sharp slowdown in overseas spending growth.

“We delivered strong results in our fiscal first quarter,” Chief Executive Officer Al Kelly said in a statement announcing results, citing a “backdrop of an uncertain political environment.”

Visa spent $1.46 billion on client incentives paid to banks and retailers to encourage spending on its network. That was below the $1.52 billion average of analyst estimates compiled by Bloomberg. Visa still expects incentives to be about 22 percent to 23 percent of revenue this year, the firm said. Cross-border payments volume climbed 3 percent, the smallest increase in at least five quarters, San Francisco-based Visa said Wednesday.

A stronger U.S. dollar hinders the payment network’s profits abroad as it crimps cardholders’ overseas spending. The dollar strengthened for a third quarter, the longest such stretch since 2015, according to data compiled by Bloomberg. Visa said it still expects revenue to grow by a percentage in the “low double” digits, while expenses should drop by a percentage in the “mid-single” digits. Its board authorized a new $8.5 billion share buyback program.

Visa shares climbed 1.7 percent to $139.89 at 4:16 p.m. in late trading in New York. They had climbed 4.3 percent this year through the close of trading on Wednesday. Visa said profit for its fiscal first quarter rose 18 percent to $3 billion, or $1.30 a share, topping the $1.25 average of analyst estimates compiled by Bloomberg.

Bloomberg News
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