Rival payment processors MasterCard and Visa both posted higher earnings than Wall Street expected as US customers increased card spending at the end of 2015, a period including the lucrative holiday shopping season.
MasterCard reported profit of 79 cents a share on Friday, topping the 70-cent average of analysts’
projections, while Visa’s earnings of 69 cents a share, excluding some items, compared with estimates of 68 cents. Both companies benefited from double-digit gains in purchase volume, which totalled more than $1 trillion for each and was led by the US, their biggest market.
“We continue to see challenges in many parts of the world,” MasterCard CEO Ajay Banga said on a conference call with analysts last Friday. “The US economy seems the most resilient, with good growth in consumer spending and jobs,” while emerging markets such as Brazil and China are grappling with weak or slowing expansion, he said.
Net income for the Purchase, N.Y.-based company climbed 11% to $890 million in the fourth quarter, the company said. Revenue increased 4.4% to $2.5 billion as the number of transactions at businesses from restaurants to department stores rose 12% to 12.97 billion.
At Visa, which now expects to complete the repurchase of its Visa Europe business by the end of June, net income climbed 24% to $1.94 billion on sales of $3.57 billion, the San Francisco-based company said in a statement on Thursday afternoon. That included a one-time gain of $255 million from revaluation of an option linked to the deal. Without that, income was up just 7.5%.
Like MasterCard, Visa reported solid business in the US with weaker results in most emerging markets, including China and Brazil. “Even though there’s been much talk over the past few weeks of slowdown in the U.S., our business volumes in January have been strong,” CEO Charles Scharf said on an earnings call last Thursday.
While Visa’s total payment volume of $1.3 trillion was in line with an estimate from investment bank Goldman Sachs, analyst James Schneider said that US card spending was tempered by lower gas prices as crude oil plummeted.
Total transactions on Visa debit and credit cards in the US rose 8.9% to $841 billion, compared with declines in all of its other regional markets except Asia Pacific, executives reported.
“We view Visa’s results as better than feared,” Schneider wrote. “US volumes remain solid, and ticked up slightly in January, which suggests that US consumer spending has not worsened thus far,” despite challenges in the broader global economy, he wrote.