Visa profit beats as payment volumes surge on strong consumer spending
2022.10.25 18:36
© Reuters. FILE PHOTO: Visa credit and debit cards are seen in this picture illustration taken August 2, 2022. REUTERS/Benoit Tessier
By Mehnaz Yasmin
(Reuters) -Visa Inc beat estimates for fourth-quarter profit on Tuesday, helped by a jump in payment volumes as U.S. consumer spending showed no signs of cooling even against the backdrop of a slowing economy.
Payment networks such as Visa (NYSE:), Mastercard Inc (NYSE:) and American Express (NYSE:) are making the most out of a pent-up demand for travel, as a stronger dollar encourages more Americans to make trips abroad and splurge on shopping and entertainment.
American Express reported a stronger-than-expected profit last week, benefiting from a rise in travel and entertainment spending during the quarter. Mastercard is slated to report later this week, with its earnings report expected to mirror that of its rivals.
“Visa continues to benefit from the travel rebound and the ongoing shift away from cash,” said Ted Rossman, senior industry analyst at Bankrate.com.
Visa shares rose 3% to $197.28 in after-hours trading.
On a constant dollar basis, Visa’s payment volumes surged 10%, while cross-border volumes – a key measure that tracks spending on cards beyond the country of issue – jumped 36% for the three months ended Sept. 30.
Transactions processed also rose 12% on a constant dollar basis to 50.9 billion in the three months ended Sept 30.
“The substantial growth in processed transactions is a good indication that inflation isn’t the primary driver of increased spending,” Rossman said.
Visa’s net income was $3.9 billion, or $1.86 per share, for the three months ended Sept. 30, compared with $3.6 billion, or $1.65 a share, a year earlier.
Excluding items, the world’s largest payments processor reported a profit of $1.93 a share, beating estimates of $1.86, according to Refinitiv IBES data.
Net revenue rose 19% to $7.79 billion, while operating expenses jumped 20% to $2.7 billion.
American Express also reported a 19% rise in expenses in the quarter ended September on higher customer engagement and acquisition costs.
