Profit at Visa Boosted by European Unit

Visa Inc. said on Thursday that its quarterly earnings were better than had been expected and said it was expecting profit for the full year to be at its high end of the forecast, thanks to benefitting from its acquisition of Visa Europe and a big portfolio of credit cards wins at home.

Stock at Visa, the largest payments network operator in the world, was up 2.5% in trading after the close. It also announced a share buyback of $5 billion.

The company announced that total payments volume soared by 37.2% to just over $1.73 trillion during the second quarter.

Visa, based in San Francisco, like MasterCard its biggest rival, generates its revenue through facilitating the transactions where debit and credit cards are used.

The expansion of payments volume was aided by the results from Visa Europe being added to its overall quarterly results. Visa Europe is a former Visa subsidiary that it acquired in June of 2016 for the price of $23 billion.

Close to 20% of the total volume of payments came from Visa Europe.

U.S. payments volume was up by 11.7% helped from by large contracts in its portfolio and due to a stronger overall economy.

Costco the discount warehouse retailer and USAA, one of the biggest issuers in the U.S. of debit and credit cards, switched card portfolios last year to Visa, in an environment that is highly competitive where payment networks seek out the large portfolios.

A heathier economy in the U.S, which has experienced strong growth in jobs and increasing incomes during the 2017 first quarter, bodes well for spending by consumers, an important economic indicator for Visa and other payments processors.

The trends, while increasing profit for the quarter, also were able to help Visa update its forecast for the full-year. The company is now expecting its adjusted profit to come in at its forecast’s high end for an increase in percentage in the mid-teens.

Visa said it also expects revenue for the full-year to be at the high end of the forecast for an increase of between 16% and 18%.

Net income was down ending the quarter at $430 million equal to 18 cents a share, compared to 71 cents a share for the same period one year ago. However, it reflected a one-off charge of $1.5 billion for Visa Europe.

Excluding its one-off items, Visa’s earnings per share were 86 cents, which beat estimates on Wall Street of 79 cents.

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