Visa profit falls as U.S. consumer spending weakens

Reuters

* Fourth-quarter profit of $1.85/shr vs est $1.85

* Total revenue of $2.97 bln vs est $3.03 bln

* Says 2014 expectations slightly lower than they were inJuly

* Shares down 3.1 pct in post-market trading

By Tanya Agrawal

Oct 30 (Reuters) - Visa Inc, the world's largestcredit and debit card company, reported a 28 percent fall inquarterly profit due to a higher income tax provision and wasslightly pessimistic about its outlook in the face of soft U.S.consumer spending.

Visa shares fell 3.1 percent to $197.50 in after-hours tradewhile those of rival MasterCard Inc fell 1 percent, aheadof its results on Thursday.

Visa said it expects constant dollar revenue growth of lowdouble digits and a foreign exchange headwind of 2 percentagepoints over the next year. It said its expectations are slightlylower than they were in June.

It maintained its forecast for percentage growth per sharein 2014 in the mid-to-high teens despite the continued slow paceof global economic recovery, and the growing impact of a strongU.S. dollar.

Visa also authorized a new $5 billion share buyback programand said it believed the Federal Reserve had a strong case inits appeal against a court ruling limiting the fees banks chargeretailers for debit card use.

A successful appeal against the court ruling in July wouldprotect an important revenue stream for card companies.

SLOWING U.S. GROWTH

Both Visa and MasterCard face slowing growth in the UnitedStates, their largest market.

U.S. consumer sentiment slid in September to its lowest infive months as consumer lending rates rose and shoppers eyedsluggish economic growth ahead, a survey showed.

Visa said its U.S. domestic payment volume dropped to 8percent of global volumes in September from 11 percent inAugust.

Visa and MasterCard have been trying to capture new businessin emerging markets where more customers are signing up forcards and digital payments instead of cash.

Net income attributable to Visa fell to $1.19 billion, or$1.85 per Class A share, from $1.66 billion, or $2.47, a yearearlier.

Analysts on average, had expected the company to earn $1.85per share, according to Thomson Reuters I/B/E/S.

Total operating revenue rose 9 percent to $2.97 billion butcame in short of analysts' expectation of $3.02 billion due to astrong U.S. dollar.

Visa's results were hit by a $574 million income taxprovision, compared with a benefit of $74 million a yearearlier. The company gave no reason for the bigger tax bill.

Visa's payment volumes rose 13 percent to $1.1 trillion inthe quarter.

Foster City, California-based Visa's shares have risen 35percent since the beginning of the year, outperforming thebroader S&P 500 Index, which has gained around 24percent. They closed at $203.82 on the New York Stock Exchange.

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