Visa earnings beat estimates on resilient consumer demand

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A credit card is seen in front of a Visa logo displayed in this illustration taken July 15, 2021. REUTERS/Dado Ruvic/Illustration GLOBAL BUSINESS WEEK AHEAD

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July 26 (Reuters) – Visa Inc (VN) beat quarterly profit estimates on Tuesday as resilient consumer spending so far and a summer travel boom across much of the United States translate into higher card spending.

After being cooped up at home, pandemic-weary Americans are splurging on travel and other leisure-related activities, helping the economy stay on track despite the onslaught of inflation.

Major U.S. banks including JPMorgan Chase & Co and Citigroup Inc have pointed to the resilience of consumer spending in the face of an uncertain economic outlook in recent weeks, a welcome sign for card companies.

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The world’s largest payments processor reported a surge in revenue, with payments volumes jumping 12% in the third quarter, helped by a 40% increase in cross-border volumes. Travel-related cross-border volumes were 16% higher than 2019.

“While a company like Walmart can be hurt if consumers shift their spending from higher-margin clothing to lower-margin groceries, Visa gets its share the same way,” said Scott Lieberman, founder of TouchdownMoney.com.

“Whether people are buying champagne in a bull market or beer in a recession, Visa has something to win,” added Lieberman, who has covered the credit card industry for nearly a decade.

Visa posted adjusted net income of $1.98 per share, easily beating the $1.75 per share analysts expected, according to Refinitiv data.

The payments processor’s results closely mirror American Express (AXP.N) which benefited hugely from record card spending and raised full-year revenue guidance on Friday. Read more

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Reporting by Mehnaz Yasmin in Bangalore; Editing by Krishna Chandra Eluri

Our standards: The Thomson Reuters Trust Principles.

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