Visa profit rises 16 pct but shares fall

Visa Inc said on Wednesday quarterly profit rose 16% to USD 884 million, slightly beating expectations, as consumer spending ramped up and the company processed more transactions abroad.

But shares fell about 1.4% in after-hours trading, as the company failed to post the outsize profits investors have come to expect. Visa also has yet to address investor concerns about how it will cope with looming US regulation that may reduce its revenue.

"It was a good quarter, not a great quarter, in terms of beating expectation and clearly there are more issues at stake," said Signal Hill analyst Mayank Tandon. "The market will be looking for some clarity on how they plan to mitigate the impact" of regulation.

The US Dodd-Frank financial reform law will restrict the fees that merchants pay banks and networks for processing debit card transactions. Visa's shares fell more than 12% in December after the Federal Reserve proposed a 75% cut in debit card processing fees, and have not fully recovered since.

Visa, the world's largest credit and debit card processing network, reported a profit of USD 1.23 per share for its fiscal first quarter, ended December 31.

That compared with a year-ago profit of USD 763 million or USD 1.02 per share.

Analysts on average expected Visa to earn USD 1.21 per share, according to Thomson Reuters I/B/E/S.

Visa shares closed up 2% at USD 72.09 on Wednesday on the New York Stock Exchange.