By Robin Sidel and Josh Beckerman

Visa Inc.'s earnings for the fiscal fourth quarter rose 28%, driven by growth in payments volume and processed transactions and its recent acquisition of sister company Visa Europe.

The results come about a week after Chief Executive Charles Scharf said he would step down in December because he can no longer spend enough time in San Francisco "to do the job effectively." He will be succeeded by Alfred Kelly, a member of Visa's board and a former president at American Express Co.

Like rival MasterCard Inc., Visa is a payment network that processes credit-card and debit-card transactions, earning a slice from each. The company purchased its sister company in Europe in June, a deal initially valued at up to 21.2 billion euros ($23.4 billion) that is designed to bring its global operations under one roof.

Visa's earnings for the quarter ended Sept. 30 climbed to $1.93 billion, or 79 cents a Class A share, up from $1.51 billion, or 62 cents Class A share, a year earlier. Earnings excluding items were 78 cents a share.

Operating revenue rose to $4.26 billion from $3.57 billion.

Analysts polled by Thomson Reuters expected earnings of 73 cents a share on revenue of $4.23 billion.

Chief Financial Officer Vasant Prabhu said the better-than-expected results were tied to stronger revenue, lower expenses and a more beneficial tax rate.

Mr. Scharf said results also got a boost from Costco Wholesale Corp.'s decision to move its co-branded credit card from American Express to the Visa network, as well as USAA's switch of its credit-and-debit portfolio to Visa from MasterCard.

Payments volume for the quarter ended Sept. 30 increased 47% on a constant-dollar basis to $1.9 trillion, buoyed by the purchase of Visa Europe.

Total processed transactions rose 41% to 25.9 billion.

For the recently started business year, Visa said earnings, excluding one-time items, are expected to increase in the midteens on a percentage basis, with revenue rising 16% to 18%. Analysts were looking for a 19% increase in earnings to $3.32 a share and a 20% rise in revenue to $18 billion.

Economic weakness in Europe and uncertainty about Britain's exit from the European Union are expected to hurt domestic and cross-border payment volumes, said Mr. Prabhu.

Visa, which faces intense competition from new financial-technology companies, has been active with its own digital efforts. Last week it introduced a bitcoin-style network called Visa B2B Connect. In July it struck a partnership with PayPal Holdings Inc., and it is also an investor in mobile-payments startup Square Inc.

In after-hours trading, Visa shares slipped 32 cents, or 0.38%, to $82.85.

Write to Robin Sidel at robin.sidel@wsj.com and Josh Beckerman at josh.beckerman@wsj.com

(END) Dow Jones Newswires

October 25, 2016 02:47 ET (06:47 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
American Express (NYSE:AXP)
Historical Stock Chart
From Mar 2024 to Apr 2024 Click Here for more American Express Charts.
American Express (NYSE:AXP)
Historical Stock Chart
From Apr 2023 to Apr 2024 Click Here for more American Express Charts.