Visa profit climbs 28% as consumer card spending increases

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Visa Inc., the world’s largest payments network, posted fiscal-fourth quarter profit that beat analysts’ estimates as card spending by consumers increased.

Net income for the period ended Sept. 30 climbed 28 percent to $1.93 billion, or 79 cents a share, from $1.51 billion, or 62 cents, a year earlier, the San Francisco-based company said Monday in a statement. Adjusted profit, which excludes one-time items such as severance costs and a tax expense related to its purchase of Visa Europe, was 78 cents a share, exceeding the 73-cent average estimate of 31 analysts surveyed by Bloomberg.

“We have begun to see the benefits from our acquisition of Visa Europe and strong cost discipline helped our results,” outgoing Chief Executive Officer Charlie Scharf said in the statement. Alfred F. Kelly will replace Scharf in December.

Visa shares gained 7.3 percent this year as the company benefited from a global shift away from cash and checks to electronic payments. Scharf, who announced last week that he will step down from his post in December, has said he’s committed to investing in digital-payment technologies and establishing more relationships with major retailers as consumers demand better rewards.

Visa shares dropped 1.1 percent to $82.24 at 4:31 p.m. in extended trading in New York.

The payments network expects annual net revenue growth to be 16 percent to 18 percent for fiscal 2017, including an $80 million cost for integrating Visa Europe, according to the statement. The firm didn’t provide a forecast for free cash flow next year, as it did in its fiscal third-quarter report.

Revenue rose 19 percent to $4.26 billion from a year earlier, in line with analysts’ estimates, while operating expenses climbed 27 percent to $1.64 billion, the company said. For the fiscal year, revenue increased 8.7 percent to $15.1 billion, according to the statement. Visa took a $110 million pretax charge in the quarter for severance costs for personnel reductions, including planned job cuts in Europe.

Global credit- and debit-card spending, including Visa Europe and adjusted for currency fluctuations, rose 47 percent from a year earlier to $1.86 trillion, the company said. Cross-border volume, a measure of customer spending abroad, gained 149 percent from a year earlier.

In June, Visa completed its roughly $20 billion purchase of Visa Europe, bringing the two firms together after eight years as separate companies. The lack of meaningful contributions to earnings from Europe had long been seen as a weakness for Visa and an advantage for its smaller competitor Mastercard, which owns its European business.

American Express Co., the biggest U.S. credit-card issuer by purchases, said Oct. 19 that third-quarter profit dropped 9.8 percent to $1.14 billion as the company increased spending on marketing and other incentives. Mastercard Inc., the world’s second-largest payments network, is scheduled to report results Friday.

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