- Cross-border freight volumes are growing due to continued travel demand
- The strong results signal consumer resilience
- Visa’s Q4 adjusted EPS of $2.33 beats estimates of $2.24
Oct 24 (Reuters) – Card giant Visa (VN) beat estimates on Tuesday for fourth-quarter profit, while consumers reeling from the travel industry’s post-pandemic recovery shrugged off concerns about a looming economic slowdown and cost of living crisis.
Visa CFO Chris Suh said the recovery in inbound travel to the U.S. accelerated this quarter, while travel to Asia also continued to improve.
“At the macro level, we do not assume a recession,” Suh said on a call with analysts.
Although the economic outlook for the coming year is becoming increasingly bleak in an environment of higher and longer interest rates, consumer spending remains surprisingly stable, which is helping to maintain payment volumes.
Visa payments volume grew 9% in the quarter, while cross-border payment volume excluding transactions in Europe, a measure of travel demand, rose 18%.
“Consumer spending is expected to remain stable, particularly through the holiday season, as unemployment levels remain low and wages continue to rise,” said Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors.
Last week, American Express (AXP.N) also saw a quarterly profit that was better than expected. Rival Mastercard’s (MA.N) results, which will be released later this week, will close out the reporting season for the industry.
Meanwhile, the latest economic data shows that U.S. inflation has begun to moderate, a trend that tends to hurt card companies that charge a percentage of the dollar value of transactions.
“It (moderate inflation) has been a drag for much of this year, but given that inflation has come down significantly from its peak, it should be less of a problem for Visa next year,” Logan Purk, a technology analyst, told Reuters in Edward Jones.
Visa reported adjusted earnings of $2.33 per share for the three months ended Sept. 30, beating expectations of $2.24 per share, according to LSEG data.
It increased its quarterly dividend by 16% to $0.52 per share and approved a new, multi-year, $25 billion share repurchase program.
Shares of the world’s largest payments processor pared early gains and ultimately held steady in choppy aftermarket trading.
Manya Saini reports from Bengaluru; Edited by Pooja Desai
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