Visa Q2 - Upbeat On Travel

Visa reported earnings last week that topped expectations and gave an upbeat outlook as spending volumes recovered. The payments giant had revenues of $7.3 billion for the quarter, up 19% year-on-year thanks to a massive 12% increase in payments volume and a 16% increase in processed transactions. Profits soared 32% to $3.2 billion.

The most profitable part of the business, cross-border payments, enjoyed a transaction volume climb of 40%, led by a big 48% increase in intra-Europe money swaps. Consumers are back on the road, visiting various corners of the world. Cross-border travel volumes surpassed 2019 levels for the first time since the pandemic began.

Management also mentioned that they're seeing a change in consumer behaviour as individuals switch from buying less discretionary items to buying more staples, meaning people are trading down from branded goods to house brands. However, this is not affecting Visa much since they take a slice of spend, regardless of what we buy as consumers.

The next big tailwind for Visa's cross-border travel recovery will come from Southeast Asia when China finally reopens post-Covid. This may take some time but it's something to look forward to. Visa has been one of our better performers this year, which is why I reiterate our strong conviction that Visa should be an anchor position in every offshore portfolio.