Visa enjoys upbeat quarter, MasterCard lags

Visa enjoys upbeat quarter, MasterCard lags

Visa Inc, the world's largest credit and debit card network reported strong quarterly results as its customers spent more on its cards, but smaller rival MasterCard Inc reported a tougher quarter and warned of a difficult outlook.

Visa reported rising growth in the key US market in contrast to MasterCard, which has suffered as some of its biggest issuers, including Citigroup Inc, struggle.

Visa stock rose 2.2 per cent in after-hours trading while shares in MasterCard, which reported earlier in the day, closed down 2.4 per cent on the New York Stock Exchange.

Both reported purchase volume increases of 9-10 per cent from a year earlier, after adjustment for currency fluctuations, but MasterCard said its growth was slowing in the United States, the biggest market.

Annual growth in MasterCard's US purchase volumes eased to 4.6 per cent from 7.1 per cent in the previous quarter. Visa's annual growth edged up to 4.1 per cent from 3.0 per cent.

As well, MasterCard was downbeat about coming months.

"In the US, the second quarter right now looks a little bit dodgy, but there could be some upside going into the second half of 2013 as far as US economic growth is concerned,"MasterCard Chief Executive Ajay Banga said on a post-earnings conference call.

Visa raised its fiscal 2013 earnings forecast to around 20 per cent in earnings per share from a previous outlook for gains in the high-teens.

Consumer sentiment across the globe has remained muted, given the uncertainty in Europe and China's slowing growth. US consumer spending has taken a hit from higher payroll taxes.

MasterCard said it signed a memorandum of understanding with China's Alibaba Group, Asia's largest e-commerce company, to offer epayment services to potentially 800 million Alibaba customers.

Both MasterCard and Visa are trying to capture new business as consumers turn increasingly to cards and digital payments instead of cash.

They are also experimenting with mobile payments as they fear losing business to upstart technology companies.

Digital wallets are electronic versions of real wallets that store card and bank information and can be used to buy things online quickly and anonymously. They are increasingly being used on smartphones to shop in retail stores, posing a threat to networks such as MasterCard, Visa and American Express.

Visa's net profit fell to US$1.27 billion (S$1.55 billion) from US$1.29 billion a year earlier. But, on a per-share basis, profit rose to US$1.92 per Class A share from US$1.91, after share buybacks.

Total operating revenue rose 15 per cent to US$2.96 billion.

Analysts on average had expected a profit of US$1.81 per share on revenue of Visa Inc, the world's largest credit
and debit card network reported strong quarterly results as its
customers spent more on its cards, but smaller rival MasterCard
Inc reported a tougher quarter and warned of a difficult
outlook.

US$2.85 billion, according to Thomson Reuters I/B/E/S.

MasterCard net income rose to US$766 million, or US$6.23 per share, in the first quarter, from US$682 million, or US$5.36 per share, a year earlier.

Analysts on average were expecting the company to earn US$6.18 per share, according to Thomson Reuters I/B/E/S.

Revenue rose 8.4 per cent to US$1.91 billion but fell short of the average analyst estimate of US$1.93 billion.

Visa shares were up 2.2 per cent at US$169.64 in after market trade on Wednesday.

MasterCard shares closed down 2.3 per cent at US$539.82 on Wednesday. They had previously risen about 6 per cent this year.

Purchase this article for republication.

BRANDED CONTENT

SPONSORED CONTENT

Your daily good stuff - AsiaOne stories delivered straight to your inbox
By signing up, you agree to our Privacy policy and Terms and Conditions.