Visa tumbles as Russia sanctions threaten to crimp profit

Visa Inc. fell the most since July after the world’s biggest bank-card network said economic sanctions against Russia could crimp profit this year.

The shares declined 4.9 percent to $199.20 at 10:44am in New York, on Friday, the worst performance in the Dow Jones Industrial Average. Visa is the biggest component of the 30-company index, which slid 0.8 percent.

The sanctions may trim “several pennies” per share from Visa’s fiscal 2014 earnings, chief financial officer Byron Pollitt said after the Foster City, California-based company reported quarterly results.

The US imposed sanctions on more than two dozen individuals and St. Petersburg-based OAO Bank Rossiya, prompting Visa and MasterCard Inc. to stop processing payments for some banks.

Russian President Vladimir Putin responded to the sanctions by recommending that his country create its own payments system and change its laws. He said the two companies will lose market share.

“The geopolitical situation will create additional risk for Visa and MasterCard in coming months,” Christopher Donat, an analyst at Sandler O’Neill & Partners LP, said in a note to clients. “Pending Russian law could be negative for earnings.”

MasterCard, the second-biggest U.S. network, dropped 3.8 percent. The Purchase, New York-based company is scheduled to report quarterly results May 1.

Visa CEO Charlie Scharf, is among US executives scheduled to attend an economic forum Putin is hosting next month.

Citigroup Inc., which has more than 50 branches in Russia, said yesterday that CEO Michael Corbat, is withdrawing from the St. Petersburg International Economic Forum. ConocoPhillips CEO Ryan Lance also bowed out of the forum, the Houston-based energy producer said.

Paul Cohen, a Visa spokesman, said the company doesn’t comment on the travel or schedules of its executives.

“We’re caught between the politics of the United States and the politics of Russia,” Scharf said Friday during a conference call. “We have 100 million cards there and it’s not in anyone’s best interest, inclusive of the Russians, to make those cards not available to their own citizens.”

Visa said net income for the fiscal second quarter ended March 31 climbed 26 percent to $1.6 billion as consumer card spending increased amid a long-term global shift from cash and checks to electronic payments.

Adjusted earnings per share were $2.20, two cents more than the average estimate of analysts surveyed by Bloomberg.

Revenue increased 6.9 percent to $3.16 billion, missing the $3.19 billion average estimate of analysts. Visa said it expects fiscal 2014 revenue to climb 10 percent to 11 percent, compared with a previous forecast of “low double-digits.”