(Updates with share price, currency impact, security breaches starting in fifth paragraph.)
Jan. 30 (Bloomberg) -- Visa Inc., the biggest bank-card network, posted fiscal first-quarter profit that beat analysts’ estimates as card spending climbed.
Net income for the three months ended Dec. 31 rose 8.8 percent to $1.41 billion, or $2.20 a share, from $1.29 billion, or $1.93, a year earlier, the Foster City, California-based firm said today in a statement. The average estimate of 30 analysts surveyed by Bloomberg was for adjusted profit of $2.16.
Chief Executive Officer Charlie Scharf, 48, is seeking ways to increase business outside the U.S., where Visa gets more than half its revenue, amid a global shift to electronic payments from cash. The firm has returned almost $17 billion to investors since its 2008 initial public offering and last year was the sixth-best performer in the Dow Jones Industrial Average, gaining 47 percent.
“We feel very good about the strong financial performance,” Scharf said on a conference call to discuss results. “Holiday spend in the U.S. was better than reported.”
Visa rose 1.6 percent to $220.57 at 9:56 a.m. in New York. The shares have declined 1.7 percent this year, compared with the 4.7 percent slide of the 30-company Dow. Smaller rival MasterCard Inc., which reports results before U.S. markets open tomorrow, climbed 1.6 percent to $78.97.
The strengthening of the U.S. dollar versus currencies for Japan, Brazil, Australia, Canada, Argentina and Venezuela will reduce net operating revenue by 2 percentage points this fiscal year, Chief Executive Officer Byron Pollitt said on the call.
Visa expects marketing expenses will increase in the second and third quarters as it spends more on promotions surrounding the Winter Olympics in Sochi, Russia, and World Cup soccer tournament in Brazil, Pollitt said.
Net operating revenue increased 11 percent to $3.2 billion from a year earlier, according to the statement. Card spending increased 11 percent to $1.16 trillion, adjusted for currency fluctuations, and cross-border volume, a measure of spending by consumers traveling abroad, also rose 11 percent, the firm said. Processed transactions on Visa’s networks climbed 13 percent to $16 billion.
Visa repurchased 5.5 million shares in the quarter at an average price of $199.56 and had $4.2 billion remaining for buybacks as of Dec. 31, according to the statement.
Target Corp., the second-largest U.S. discounter, said in December that data from 40 million accounts were compromised during the holiday shopping season. The Minneapolis-based company said this month that the breach affected more people and information than previously thought, including personal data for as many as 70 million people collected over several years. Neiman Marcus Group Ltd. said Jan. 23 that about 1.1 million credit cards may have been hacked during the holidays.
“These incidents remind us of the need for all of us to continue to work together to secure payments from criminals,” Scharf said in the statement. Visa “will continue to move the industry toward the adoption of new safeguards,” he said.
Visa and MasterCard last month won approval for a $5.7 billion settlement that ended years of litigation with merchants over allegations that credit-card swipe fees are improperly fixed. The National Retail Federation and dozens of merchants including Wal-Mart Stores Inc. and Target are appealing the settlement.
Discover Financial Services reported Jan. 23 that fourth- quarter profit advanced 12 percent to $602 million as credit- card spending and loan demand increased. American Express Co., the biggest credit-card issuer by purchases, said Jan. 17 fourth-quarter profit doubled on higher consumer spending.
--Editors: Steven Crabill, Peter Eichenbaum