(Reuters) — Visa Inc <V.N>, the world's largest credit and debit
card company, said U.S. sanctions on Russia were hurting its card
transaction volumes and that revenue growth would slow further this
quarter, sending its shares down 5 percent after the bell.
Visa's quarterly revenue growth slid to a single digit in percentage
terms for the first time in more than four years, due to a strong
The company and rival MasterCard Inc <MA.N> stopped providing
services to two Russian banks after U.S. President Barack Obama
imposed sanctions on Russia in March after a standoff over Ukraine.
"We are caught between the politics of the United States and the
politics of Russia," Chief Financial Officer Byron Pollitt said on a
post-earnings conference call on Thursday.
"We're clearly seeing a drop-off in cross-border volume and
sanctions are expected to have some impact on volume."
Uncertainty over the companies' operations in Russia lingers as
Russian President Vladimir Putin has said the country would develop
its own credit card system to reduce dependence on western
Visa said it would assess the situation in Russia and was hopeful it
would still have a "meaningful opportunity" to continue to do
"We have 100 million cards there (in Russia) and it is not in
anyone's best interest, inclusive of the Russians, to make those
cards not available to their own citizens," Pollitt said.
SLOWING REVENUE GROWTH
Visa said strength in the U.S. dollar was likely to slow its revenue
growth further this quarter to "mid-single digits" in percentage
The company's revenue growth slowed to 7 percent in the second
quarter ended March 31 from 11 percent in the first quarter.
Chief Executive Charlie Scharf said the impact of the strong dollar
would be "slightly more pronounced" this quarter before rebounding
in the following three months.
Net income attributable to Visa rose 26 percent from a year earlier
to $1.60 billion, or $2.52 per Class A share, in the second quarter.
Visa earned $2.20 per share, excluding a tax benefit of $218 million
in the quarter.
Total operating revenue increased to $3.16 billion from $2.96
Analysts on average had expected a profit of $2.18 per share on
revenue of $3.19 billion, according to Thomson Reuters I/B/E/S.
Visa said it expected full-year revenue to grow 10-11 percent.
The company had earlier said its revenue was expected to grow in low
double digits in percentage terms.
The Foster City, California-based company maintained its earnings
forecast, but said the guidance assumed "several pennies of earnings
per share impact" from the situation in Russia.
In March, Visa and MasterCard launched a cross-industry group to
push for improved security in card transactions and press U.S.
retailers and banks to meet a 2015 deadline to adopt the safer EMV
EMV cards, already used in Europe and Asia, store information on
computer chips rather than on traditional magnetic strips, making
them harder to counterfeit.
Shares of Visa, which has a market value of about $133 billion,
closed at $209.40 on the New York Stock Exchange on Thursday.
The stock has risen 13 percent since it was included in the Dow
Jones Industrial Average <.DJI> in September.