updated 4/28/2008 5:09:08 PM ET 2008-04-28T21:09:08

Visa Inc., the world’s largest credit and debit card processor, said its profit rose 28 percent in the first three months of the year as customers charged more to their cards.

The company, whose shares started trading publicly in March, said Monday that fiscal second-quarter profit amounted to $314 million, or 39 cents a share, up from $246 million in the same period last year.

However, investors appeared a bit disappointed that Visa’s results were not even stronger. Shares fell more than 3 percent in after-hours trading, having risen 53 cents to close at $75.63. Investors have set the bar high for the San Francisco-based company — Visa shares have jumped more than 70 percent in value since debuting at $44 a share March 19.

Analysts surveyed by Thomson Financial predicted, on average, earnings of 46 cents per share. But analysts tend to exclude one-time gains and losses from their forecasts, and Visa’s earnings per share reflecting a normalized tax rate and excluding certain factors including litigation amounted to 52 cents a share.

Still, revenues did not impress. Net operating revenue for the quarter ended March 31 amounted to $1.45 billion — up from $1.19 billion a year ago, but in line with analysts’ estimates.

Visa’s initial public offering, which raised nearly $18 billion, was the largest U.S. IPO ever.

Visa designated nearly $12 billion of the proceeds to buy back shares from banks that essentially co-owned the company. JPMorgan Chase & Co. benefited the most, earning $1.5 billion from the IPO. Some other big gainers were Bank of America Corp., which pulled in $776 million from the IPO; National City Corp., which got $532 million; and Citigroup Inc., which raked in $349 million.

Those windfalls came at a serendipitous time for the financial services industry, which has been swallowing huge losses due to poor bets on the mortgage market and preparing for more borrowers to stop repaying their debt.

But unlike most of its peers, Visa’s biggest risk going forward is not connected to the deteriorating credit climate. Visa’s member banks are the ones lending money to cardholders, not Visa.

Instead, the card processor faces legal worries. Visa set aside $3 billion in IPO proceeds for potential liabilities in lawsuits alleging Visa conspired to stifle competition and fix prices. A case brought by Discover Financial Services LLC is scheduled to go to trial in September, after Visa resolved a similar suit with American Express Co. last year.

Most analysts, however, have been fairly optimistic about the company’s prospects. Before Visa reported earnings late Monday, several analysts issued positive ratings for the company, a brand that was launched in 1977 and now has operations in 170 countries.

“Despite a challenging economic environment, Visa recorded strong growth in payments volume and transactions globally and across our diverse suite of products — a trend which is continuing into the fiscal third quarter,” Visa Chairman and CEO Joseph Saunders said in a statement Monday.

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