Card spending lifts Visa's 1Q above expectations

FOSTER CITY, Calif. (AP) -- Visa's fiscal first-quarter net income increased 9 percent, as higher card spending which boosted the number of payments it processed. Its performance beat analysts' expectations.

Foster City, Calif.-based Visa Inc. is the world's largest processor of debit and credit card payments. As such, it benefits from heightened consumer spending and its results are closely watched because they can be a window into the buying habits and financial health of consumers.The holiday shopping season ended on a lackluster note, with U.S. retail sales rising only 0.2 percent in December, according to the Commerce Department. Even so, Visa, along with card issuers American Express Co. and Discover Financial Services, reported stronger cardholder spending and borrowing during the holiday season.

All told, Visa processed 16 billion transactions during last three months of 2013, up 13 percent from a year earlier.

Shares rose $3.82, or nearly 2 percent, to $220.94 in morning trading, touching $226.00 shortly after the opening bell. The stock has risen 42 percent in the past 12 months and hit a 52-week high of $235.50 last week.

Referencing the latest hacks into systems at Target and Neiman Marcus, Visa said it continues to push toward adopting new chip technology to better safeguard card payments.

Visa earned $1.41 billion, or $2.20 per share, for the three months ended Dec. 31. That's up from $1.29 billion, or $1.93 per share, in the prior-year period, which included a tax gain of 11 cents per share.

Analysts surveyed by FactSet predicted earnings of $2.16 per share.

Operating revenue rose 11 percent to $3.16 billion from $2.85 billion, helped by higher revenue for service, data processing and international transactions. That topped the $3.13 billion expected by Wall Street. First-quarter payments volume climbed 11 percent to $1.2 trillion.

Visa Inc. reaffirmed its fiscal 2014 guidance for mid-to-high-teens growth in earnings per share and a low double-digit increase in revenue.

The company also declared a regular quarterly dividend of 40 cents per share, payable March 4 to shareholders of record on Feb. 14.