MasterCard Profit Beats Estimates as Card Spending Increases

MasterCard Profit Beats Estimates as Customer Spending Increases
MasterCard has climbed 13 percent this year, outpacing the 5.1 percent gain for the 70-company Standard & Poor’s 500 Information Technology Index. Photographer: Nelson Ching/Bloomberg

May 1 (Bloomberg) -- MasterCard Inc., the second-biggest U.S. payments network, posted a first-quarter profit that beat analysts’ estimates as card spending climbed.

Net income increased 12 percent to $766 million, or $6.23 a share, from $682 million, or $5.36, a year earlier, the Purchase, New York-based company said today in a statement. The average estimate of 33 analysts surveyed by Bloomberg was for $6.17 a share.

MasterCard, led by Chief Executive Officer Ajay Banga, doubled its dividend and authorized a new share-repurchase program during the quarter as a global consumer shift from cash and checks to electronic payments continues unabated. Spending on the network grew faster last year than at larger competitor Visa Inc., which lost market share as news U.S. limits on debit-card transaction fees and processing took effect.

“We delivered solid performance that met our expectations despite the mixed global economic environment,” Banga, 53, said in the statement. “Since the start of the year, we have had steady momentum in new business, as well as product innovations.”

MasterCard dropped 1.7 percent to $543.70 at 8:29 a.m. in New York after closing yesterday at an all-time high of $552.93. The stock has climbed 13 percent this year, outpacing the 5.1 percent gain for the 70-company Standard & Poor’s 500 Information Technology Index.

Revenue Climbs

Revenue increased 8.4 percent to $1.91 billion from a year earlier, according to the statement. Moshe Orenbuch, an analyst in New York with Credit Suisse Group AG, had predicted $1.94 billion.

Worldwide spending on MasterCard- and Maestro-branded cards climbed 10 percent to $690 billion in the quarter, adjusted for currency fluctuations, the company said. Spending by consumers outside their home countries surged 16 percent. Processed transactions rose 12 percent to 8.7 billion.

MasterCard’s operating expenses increased 5.4 percent to $799 million, mainly because of higher personnel expenses, the firm said. Orenbuch, who has an outperform rating on the firm’s shares, had estimated $819 million.

Visa, whose shares have advanced 11 percent in 2013, is scheduled to report fiscal second-quarter results later today. The Foster City, California-based company may say net income fell 7 percent to $1.2 billion, according to the average estimate of 21 analysts in a Bloomberg survey.

American Express Co., the third-biggest U.S. network, and No. 4 Discover Financial Services, both said last month that first-quarter profits rose as customer card spending increased.

To contact the reporter on this story: Donal Griffin in New York at dgriffin10@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net