© 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 reported a better-than-expected second-quarter profit on Tuesday and bet on sustained growth at its payments business, as consumers brace for a milder recession than was once feared.
The San Francisco-based payments processor’s shares, up 11% so far this year, rose another 2.4% in after-hours trading.
Card companies escaped the economic downturn of last year unscathed on the back of a strong dollar and a rebound in travel, particularly in China, with executives having downplayed the turmoil in the economy for several quarters.
“Consumer payments remains a massive opportunity for Visa (NYSE:),” Chief Executive Officer Ryan McInerney said on a post-earnings call.
“There is a very long runway for growth in this business,” he added.
Payment volumes for the three months ended March rose 10%, while cross-border volume excluding Europe, a measure of Visa’s revenue from international transactions, increased 32%.
That is a decline from a 17% jump in payment volumes and 47% growth in cross-border volume, excluding Europe, from a year ago.
“While the current environment still feels uncertain, we have contingency plans ready and are prepared to take action as needed,” McInerney said.
Financial conditions have tightened in the wake of the banking crisis, with analysts worrying that households and small businesses could be impacted even though labor market and jobs remain tight.
Transactions processed rose 12% in the quarter, below 19% growth a year before. That prompted an 11% increase in net revenue, the slowest in eight quarters.
Visa’s results follow peer American Express (NYSE:) Inc, which stockpiled $1.1 billion to cover potential defaults and spent more on promotions, missing Wall Street estimates on Thursday.
On an adjusted basis, Visa earned $2.09 per share in the quarter ended March, exceeding analysts’ estimates of $1.99, according to data from Refinitiv IBES.