Visa and MasterCard have found that cutting costs to the bone is
helping them to withstand the global economic slump. Visa Inc’s
results for its fiscal third quarter 2009 ending 30 June showed net
income on an adjusted basis of $744 million, a jump of 73 percent –
excluding the sale of its stake in VisaNet do Brasil, adjusted net
quarterly income was $507 million.
The world’s largest payment network continues to take a scythe to
operating costs and expenses, with total operating expenses coming
in at $804 million, a fall of 9 percent compared to the year-ago
period. Personnel expenses fell to $262 million compared to $310
million in the year-ago period, while advertising, marketing and
promotion expenses totalled $229 million compared to $271
Mixed results for credit and debit
Although payment volume declines appear to be stabilising in some
areas, Visa’s results were impacted by foreign currency
fluctuations relative to the US dollar. US credit continues to
slide, falling by 9.7 percent to $176 billion in payment volume,
and in the rest of the world credit fell by 11 percent on a nominal
dollar basis (which includes the impact of foreign currency
fluctuations) to $204 billion.
On the debit side, the US posted growth of 4.7 percent to reach
$202 billion, while worldwide debit payment volumes fell on a
nominal dollar basis by 2.5 percent to $34 billion. Visa Inc’s
outlook for the next year is that annual net revenue growth will be
in the high single digits for 2009 and at the lower end of the 11
percent to 15 percent range in 2010 – provided that the global
economy picks up.
For MasterCard, net income for the second quarter jumped by 26.4
percent to $349 million, while net revenue rose by 2.7 percent to
$1.3 billion, driven by pricing changes, a 7.9 percent increase in
the number of transactions processed to 5.6 billion, and a 5.8
percent decrease in rebates and incentives. The rise in earnings
for the quarter excludes a one-time $1.65 billion charge in the
second quarter last year stemming from a legal settlement.
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However, results were impacted by lower gross dollar volumes, which
fell 0.6 percent on a local currency basis to $595 billion.
Worldwide purchase volume during the quarter was down by 0.7
percent on a local currency basis versus the second quarter of 2008
to $450 billion. MasterCard’s gross dollar volume (GDV) on credit
and charge programmes in the US fell by 18.7 percent to $133
billion and $120 billion in payment volume, while in the rest of
the world, credit GDV fell by 12.3 percent to $266 billion, and
$218 billion in payment volume.
On the debit side, MasterCard’s debit programmes posted growth of
4.1 percent to reach $112 billion in GDV and $82 billion in payment
volume, while MasterCard debit in the rest of the world posted
growth of 3.3 percent to reach $84 billion, and $31 billion in
debit payment volume.
MasterCard indicated that in July, cross-border volumes continued
to stabilise across most global regions, with the rate of decline
slowing from the 2.1 percent seen in the second quarter. Processed
volumes in the US also saw a lower rate of decline in July,
signalling potential signs of stabilisation. According to
MasterCard CFO Martina Hund-Mejean, the decline in gas prices
accounted for a third of the fall in US credit payment
MasterCard also confirmed that its expected average revenue growth
in 2009 will fall short of its previously stated expectations of 12
percent to 15 percent until 2011, but the payment network declined
to give a revised revenue forecast, citing economic