After reporting earnings after markets closed on Thursday, Visa Inc. (NYSE: V) held its conference call to add some color to its rather boring second-quarter results. The world’s largest credit and debit card issuer posted earnings per share (EPS) of $2.20 on revenues of $3.16 billion, versus estimates for EPS of $2.18 on revenues of $3.19 billion.

On the conference call following the earnings release, Visa’s CFO said:

We are caught between the politics of the United States and the politics of Russia. We’re clearly seeing a drop-off in cross-border volume and sanctions are expected to have some impact on volume. … We have 100 million cards [in Russia] and it is not in anyone’s best interest, inclusive of the Russians, to make those cards not available to their own citizens.

Revenue growth slowed from 11% to 7%, and Visa is blaming U.S. sanctions on transactions with two Russian banks? Bank Rossiya is the country’s 15th largest bank, with $12 billion in assets, and is described by U.S. officials as the personal bank for senior Russian Federation officials. SMP, with assets of around $5 billion, is among Russia’s 40 largest banks. For comparison, the country’s largest bank, Sberbank, listed assets of $469 billion at the end of 2012.

ALSO READ: Credit Card Giants Resume Russia Transaction Processing

Now, unless a host of Russia’s oligarchs bank at one or the other of these two banks and charges a lot every month and lets the balance run in order to pay the 15% interest charge, it is hard to see how two relatively small banks can cause Visa’s revenue growth to dive by 4%.

Now it is true that Russian President Vladimir Putin has said the country’s banks will develop their own credit card system, but that is merely a threat at this point and probably not a terribly serious one. A credit-card system backed by Russia’s banks could have tough time getting traction in the global financial markets.

The CEO also prepped us for the impact of a stronger dollar having “slightly more pronounced” effect in the current quarter, so we should expect revenue growth to slip further. But Visa did not alter its earnings forecast, though the company did say that the guidance included “several pennies of earnings per share impact” as a result of the Russian sanctions. So Russia is having an impact on earnings but Visa knew it all along and has already accounted for it? And as for revenues, well, they will just continue to slide because Visa can’t do business with two of the smaller banks in Russia.

Visa shares opened at $200.00 Friday and trading down 4.1% to $200.74 in the first few minutes, in a 52-week range of $163.60 to $235.50.

ALSO READ: S&P Downgrades Russia Currency Near Junk

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.