Fintech earnings round-up: 24 July 2017

It’s been a busy time for second- and fiscal third-quarter earnings reports. Features Bank of America, Amex, Blackhawk Network and Visa. Banking Technology’s sister publication Paybefore reports.

Bank of America (BofA) has beaten analyst expectations with earnings per share of 46 cents on revenue of $22.829 billion for the second quarter ended 30 June 2017.

Analysts polled by Thomson Reuters expected earnings per share of 43 cents on sales of $21.781 billion, according to a CNBC report. BofA net income increased 10% to $5.3 billion, the bank says.

American Express has reported earnings per share of $1.47, which beat analyst expectations of $1.43, according to Thomson Reuters. The company results remain affected by its loss of Costco as co-brand partner, but loan volume was up 11%.

Second-quarter consolidated total revenues net of interest expense were $8.3 billion, up 1% from $8.2 billion a year ago. Excluding business from the discontinued relationship and the impact of foreign exchange rates, adjusted revenues net of interest expense grew 8%, according to Amex. Increases primarily reflected higher net interest income and higher adjusted card member spending, the company says.

Blackhawk Network, which offers gift cards, digital payments and loyalty points, has also reported its Q2 results, which CEO and president Talbott Roche says “exceeded expectations”. Analysts agreed and the stock reached a one-year high of $46.10 at the end of closing on 20 July, according to Stock News Times.

GAAP operating revenues totaled $463.1 million, an increase of 18% from $391.2 million compared to the previous quarter. Non-GAAP adjusted net income totaled $6.7 million, a decrease of 7% from $7.2 million compared to the same period last year. The decrease was driven primarily by increased interest expense, partially offset by a lower effective tax rate, Blackhawk Network says.

“We were pleased with the strong performance in both the international and incentives segments,” Roche says. “Additionally, US retail, transaction dollar volume (TDV) from closed- and open-loop gift products met expectations. Our grocery distribution partner locations impacted by EMV continue to show productivity improvement in line with expectations. Finally, we completed our preparations to launch Target as a new distribution partner at the beginning of the third quarter.”

The EMV impact refers to measures taken by some US retail distribution partners that are not EMV-compliant to restrict or limit the purchase of prepaid cards by credit cards to reduce potential chargebacks from fraudulent card purchases.

Also of note, digital gift card sales continue to grow at “healthy double-digits” and represented 9% of US gift card TDV for the quarter, Roche said during a conference call with investors, according to a Seeking Alpha transcript.

In the beginning of the third quarter, Blackhawk Network says it will launch closed-loop gift, gaming and telecom products in 1,800 Target locations and on the retailer’s website.

Finally, Visa has announced fiscal third-quarter results, reporting GAAP net income of $2.1 billion or $0.86 per share. The San Francisco-based payments network also reported net operating revenue of $4.6 billion, an increase of 26%, “driven by inclusion of Europe and continued growth in payments volume, cross-border volume and processed transactions”.

Payments volume growth, on a constant dollar basis, was 38% over the prior year at $1.9 trillion. Total Visa processed transactions were 28.5 billion, a 44% increase over the prior year, or 13% growth inclusive of Europe in prior year results.