Visa Net Climbs 33% As Spending Picks Up and mortgage loan

Visa Inc.'s fiscal second-quarter profit grew by a third, topping analysts' expectations, as consumers ratcheted up spending and the company processed more payments.
The results offer fresh evidence on the rising optimism of consumers as the economy stabilizes. Higher spending by borrowers also bolsters hopes of a turnaround in the broad credit-card industry and shifts the spotlight from consumer defaults and delinquencies.
"Our performance was fueled by higher-than-expected payments-volume growth," said Chairman and Chief Executive Joseph Saunders. He added Visa was "increasingly optimistic that economic growth will gradually improve."
For the quarter ended March 31, Visa reported a profit of $713 million, or 96 cents a class A common share, compared with a profit of $536 million, or 71 cents per class A common share, a year earlier. Revenue for the fiscal second-quarter jumped 19% to about $2 billion. Analysts polled by Thomson Reuters expected a profit of 91 cents on revenue of $1.93 billion.
For the second-quarter, payments volume, representing spending on Visa-branded cards, rose 13% from a year ago to $745 billion. The total number of transactions processed in the second-quarter rose 14% over a year ago to 10.6 billion.
For 2010, the San Francisco company expects net revenue growth to be at "the high end" of its earlier stated 11%-to-15% range. The company affirmed earnings-per-share growth at more than 20% through 2010 and its estimate for annual free cash flow in excess of $2 billion for this year. For 2011, the company reiterated earnings-per-share growth at more than 20% and annual free cash flow of more than $2 billion.
Unlike traditional credit card-issuers, Visa and smaller rival MasterCard Inc. are insulated from credit woes arising from increasing delinquencies because they don't lend to consumers. Visa and MasterCard make money from the fees they charge banks, including J.P. Morgan Chase & Co. and Citigroup Inc., to process card payments on the plastic these banks issue. These financial institutions are among the top issuers of Visa- and MasterCard-branded cards.
The more consumers charge on their Visa and MasterCard plastic, the more these two companies earn by way of fees. Visa also benefits from its larger market share in debit cards, which are used more frequently than credit cards for nondiscretionary expenses such as groceries or gasoline.
MasterCard reports fiscal first-quarter results Tuesday.
Earlier this month, Visa agreed to pay $2 billion for CyberSource Corp., a provider of electronic-payment security services to online merchants. The deal is expected to close during Visa's fiscal fourth-quarter, which ends in September.
American Express Co., which processes transactions in addition to issuing cards, last week reported higher quarterly earnings, beating analysts' expectations, boosted by an increase in consumer spending and improvements in the credit quality of its card loans.
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