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Visa third-quarter adjusted profit beats

Tags: Visa
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Visa Inc.'s (V-N) adjusted profit topped Wall Street estimates, and it raised its full-year earnings forecast for the second time this year, as more people move to card-based payments globally.

Visa, the world's largest credit- and debit-card network, said adjusted per-share earnings growth for fiscal 2012 should be in the low twenties. It had previously forecast earnings growth in the range of high teens to low twenties.

The San Francisco-based company posted an adjusted profit of $1.56 US per share for the third quarter.

Total operating revenue rose 11 percent to $2.57 billion.

Analysts on average expected the company to earn $1.45 per share, excluding items, according to Thomson Reuters I/B/E/S.

Payments volume growth, on a constant dollar basis, for the quarter rose just 6 percent, a sign of slowing consumer spending. Payment volumes have grown in the double-digit range for the last nine quarters.

Low payment volume growth may also mute service revenue growth in the fourth quarter. Service revenue is recognized based on payments volume in the prior quarter and accounts for almost half of total revenue.

Service revenue grew 15 percent to $1.2 billion in the third quarter.

NET LOSS ON LEGAL RESERVE

Despite the adjusted earnings beat, the company posted a net loss of $1.8 billion, or $2.74 per Class A share, as it set aside $4.1 billion to cover 'swipe-fee' litigation costs.

Visa, along with rival Mastercard Inc. (MA-N) and banks that issue their credit cards, agreed to a $7.25 billion settlement with U.S. retailers in a lawsuit over the fixing of debit and credit card fees.

Visa's share of the settlement is $4.4 billion. Last week, it added $150 million to its legal reserves.

"We are pleased that we were able to come to a resolution in the merchant litigation which was acceptable to most parties while ensuring the long-term health of the U.S. payments industry," CEO Joseph Saunders said in a statement.

The company also authorized a new $1 billion class A share repurchase program. The program is slated to run through July 2013.

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