Earnings Preview: Visa to report 3Q earnings

Visa expected to report higher net income in fiscal third quarter

Associated Press

LOS ANGELES (AP) -- Visa is expected to report healthier third-quarter net income and it may also provide some hints as to whether people are growing more comfortable about taking on debt, given the improving employment and housing picture. The payments processor releases quarterly results after the markets close Wednesday.

WHAT TO WATCH FOR: Visa is trying to grow its presence on smartphones and computer tablets, which its customers are using increasingly to pay bills and shop.

Investors also want to know what Visa has to say about recent reports that the European Union may again try to place caps on so-called "swipe," or "interchange," fees charged by payment processors. Those are big money generators and shares of Visa and other payment processors slid last week when it made headlines.

The European Commission is expected to release a draft proposal on the regulations later this week.

This year, the economy is showing more robust signs of growth, with employers having added an average 202,000 jobs the past six months, up from 180,000 in the previous six. The housing market is also gaining strength. And consumer confidence last month reached the highest level since January 2008, according to the Conference Board.

Those factors have helped boost confidence among consumers, making them more willing to spend. People have been slow, however, to return to spending with credit cards. There are signs, however, that that may be changing.

In the first three months of the year, Americans rang up $255 billion using Visa-branded credit cards, an increase of 9 percent from a year earlier. Debit card use was essentially flat.

Transactions processed over Visa's network grew 6 percent to $13.9 billion.

WHY IT MATTERS: Visa Inc., based in Foster City, Calif., is the world's largest processor of debit and credit-card payments. Its results can reflect the financial health and mindset of the consumer.

WHAT'S EXPECTED: Analysts, on average, expect adjusted net income of $1.80 per share on revenue of $2.9 billion during the April-June quarter, according to FactSet.

LAST YEAR'S QUARTER: Visa reported a loss of $1.8 billion, or $2.74 per share, due to a sharp increase in litigation costs. On an adjusted basis, Visa reported net income of $1.56 per share. Revenue was $2.6 billion.

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