Visa’s (V) second quarter results topped analyst estimates. Adjusted earnings jumped 30% to $1.11 per share, while operating revenues came in at $5.1 billion, up 13% year-over-year.

Thanks to increased consumer spending and rising oil prices, the company recorded double-digit growth in cross-border volumes and payments volumes. Tax reforms also helped Visa save $1.6 billion in the quarter with an effective tax rate of 19%. Operating margins improved 3 percentage points to 66%.

Payment volumes on a constant currency basis grew 11% touching the $2 trillion mark. Debit card spending saw 16.3% growth, while spending on credit cards rose 13.7% as consumers loosened their purse strings. Cross-border volumes saw 11% growth in the quarter, while transactions processed by the firm rose 12% to 29.3 billion. Visa paid $1.3 billion as incentives to financial institutions, which is 20.3% of total revenues. Incentive payments for the year are expected to be between 21.5% and 22.0% of total revenues.

Visa Q2 2018 Earnings

 

Based on the strong first half results, the payments company has raised its 2018 guidance. Operating margins are expected to be in the high-60s while net revenues are expected in the low-double digit range. Due to the income tax reforms, tax rate is projected to be in the range of 21% to 22% range, down 6 percentage points.

Glenn Greene, an analyst with Oppenheimer, in his research note stated that Visa is presently trading at a 9% discount to Mastercard (MA) based on analyst earnings consensus for the next 12 months, which is the widest since early 2014. In 2018, shares are up 6% for Visa, while Mastercard’s shares climbed 14%. Mastercard is scheduled to report its first quarter results on May 2 before the bell.