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29 June 2011

Visa and Master Card results show positive progress

Judging by the latest set of financial results from Visa and MasterCard, 2011 looks like being a very profitable year indeed, with revenues and card volumes having recovered strongly after two years of stagnation.

MasterCard's Q1 2011 results show that spending volume growth is in double-digit territory, with the network reporting net income of $562 million, a rise of 23.6% compared to the same period a year-ago, while net revenue for Q1 of 2011 was $1.5 billion, a 14.8% increase versus the same period in 2010.

The major highlights for MasterCard included a 12.8% increase in gross dollar volume (GDV) on a local currency basis to $728 billion, and an increase in cross-border volumes of 18.5%. However, the network noted that these factors were partially offset by an increase in rebates and incentives pri­marily due to new and renewed agreements and increased volumes.

MasterCard's worldwide purchase vol­ume during the quarter was up 12.9% on a local currency basis versus Q1 of 2010, to $545 billion. The number of processed transactions increased 11.1% compared to the same period in 2010, to 6 billion. As of 31 March, 2011, the company's customers had issued 1.7 billion MasterCard and Maestro-branded cards worldwide.

Meanwhile, Visa's fiscal Q2 results included net income on a GAAP (Generally Accepted Accounting Principals) basis rising to $881 million, while net operating revenue was $2.2 billion, an increase of 15% from the same period a year-ago, which the net­work attributed to strong growth in service revenues, data processing revenues and international transaction revenues.

Visa's payments volume growth on a constant dollar basis for the three months ended 31 December, 2010, on which fiscal Q2 service revenue is recognised, was a positive 15% over the prior year at $897 billion, while payments volume for the quarter ended 31 March, 2011 grew by 13% from the year-ago period to $861 bil­lion. Cross-border volume growth rose by 13%, while processed transac­tions amounted to 12 billion, a rise of 13% from the year-ago period. For the fiscal second quarter 2011, service revenues were $1.1 billion, an increase of 24%. Data processing rev­enues rose 13% to $823 million   while international transaction revenues, which are driven by cross-border payments volume, grew 14% to $624 million.

An indication of the networks' optimism in the continuing growth of its cards world­wide came with the announcement that Visa has authorised a new $1 billion class A share repurchase program. During the quar­ter, Visa also repurchased approximately 8.7 million class A shares on an as-converted basis, at an average price of $72.58 per share, for a total cost of $630 million. Of the $630 million, $400 million of class B shares were effectively repurchased through the March funding of the litigation escrow account previously established under the network's retrospective responsibility plan, representing 5.4 million class A shares on an as-converted basis at an average price of $73.81 per share.

Meanwhile, during the reported quarter, MasterCard repurchased about 2.6 million shares of class A common stock for $654 million under its $1 billion share repurchase program, which was sanctioned on 14 September, 2010.

On 12 April, 2011, MasterCard approved and authorised the extension of its stock repurchase program to $2 billion from $1 billion. Although the approval is effective immediately, the buyback of its class A shares will be held periodically through open market operations, depending on the

Q1 2011 Visa and Master Card financial statistics

                                          Visa                Master Card

Net revenue ($ billions)               2,2               1,5

Net income ($ millions)               881              562

Total assets ($ billions)              34,4              8,5

Total liabilities($ billions)            8,2               3,3

 

 Q1 2011 Visa and Master Card operational statistics  ($ millions)

 Visa                                    Total volume     Pmnts volume   Pmnts trns.  Cash trns.                                   

                                            ($ millions)        ($ millions)        (billions)       (billions)

Credit program                     572                     516                    6,08            0,174

Debit program                       806                     345                    8,73            3,01

 

Master Card                          GDV             Purchase volume  Pmnts trns.  Cash trns.                                    

                                       ($ millions)      ($ millions)             (billions)       (billions)

Credit/charge programmes         459             401                       4,65              0,222

Debit programmes                       270           143                       3,16              0,946

 Source: Payments cards and mobile, May-June,2011



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