July 31 (Bloomberg) -- MasterCard Inc., the world's second- biggest credit-card company, suffered the worst decline in New York trading since it went public in 2006 as U.S. spending growth slowed and expenses exceeded analysts' estimates.

MasterCard fell $26.58, or 9.8 percent, to $244.15 in New York Stock Exchange composite trading at 4:15 p.m. after slumping 12 percent earlier. Excluding a previously announced $1 billion settlement charge, the company's second-quarter profit of $276 million, or $2.11 a share, beat analysts' estimates by nine cents.

The company is ``worried about a slowing U.S. economy,'' Chief Executive Officer Robert Selander said in an interview, adding that he didn't expect the economy to improve in the second half. ``Investors are saying: `Thanks for the good quarter, we're concerned about the future'.''

MasterCard, which has surged more than sixfold since its 2006 initial public offering at $39 a share, gets half its revenue from the U.S., where rising unemployment and food and fuel prices are squeezing the consumer. The network said U.S. cardholder transaction growth slowed to 6.2 percent in the quarter from 9.8 percent a year earlier.

Total operating expenses excluding special items increased 14.6 percent to $830 million, compared with a 3.2 percent rise a year earlier. General and administrative expenses climbed 15.7 percent on higher compensation for recruits and severance costs. Revenue grew 25 percent to $1.2 billion.

Debit Transactions

``Given Mastercard's premium share price, investors were looking for even better results than they delivered,'' said Andrew Miedler, an analyst at Edward Jones with a ``hold'' rating on the company. ``We all know the U.S. consumer is challenged, but it showed up in MasterCard's results a little more than we expected.''

Selander said that while U.S. credit-card purchases rose 2.8 percent in the quarter, debit spending grew ``over 18 percent.'' Bigger rival Visa Inc., which has three-quarters of the U.S. signature debit market, said yesterday that U.S. spending by debit and credit rose 12 percent to $388 billion.

MasterCard purchases worldwide rose 14 percent to $493 billion on a local currency basis as the number of cards issued rose 11 percent to 951 million. The transactions growth of 6.2 percent in the U.S. compared with 18 percent in Europe, 19 percent in Asia, 17 percent in Latin America and 32 percent in South Asia, the Middle East and Africa.

Settlement Causes Loss

The company posted a net loss of $746.7 million, or $5.74 a share, in the quarter on the settlement of an antitrust lawsuit with American Express Co. That compared with earnings of $252.3 million, or $1.85, a year earlier, Purchase, New York-based MasterCard said today in a statement.

MasterCard said June 25 it agreed to pay as much as $1.8 billion to settle a complaint that it blocked banks from issuing American Express cards. The network said then it would book an after-tax charge of about $1 billion in the second quarter.

American Express sued MasterCard and Visa in November 2004 after the U.S. Supreme Court ruled the companies violated antitrust laws by preventing banks from offering rivals' cards. Visa and its bank partners settled in November for $2.25 billion.

Like Visa, which reported a 41 percent rise in fiscal third-quarter profit to $422 million yesterday, MasterCard sidestepped the rising customer defaults of American Express and Capital One Financial Corp. because it collects fees to shuttle payments between financial institutions, letting banks take the risk of making loans to consumers.

Visa shares slipped $5.39, or 6.9 percent, to $73.06 after earlier rising as much as 19 percent.

To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net

Last Updated: July 31, 2008 16:27 EDT