MasterCard Beats Estimates on Higher Consumer Card Spending

  • Revenue rose 4.4%, missing estimates, as expenses increased
  • Banga says card spending climbed despite `challenging economy'

MasterCard Inc., the second-largest U.S. payments network, reported fourth-quarter profit that beat analysts’ estimates as customer card spending increased.

Net income rose 11 percent to $890 million, or 79 cents a share, from $801 million, or 69 cents, a year earlier, the Purchase, New York-based company said Friday in a statement. The average estimate of 31 analysts surveyed by Bloomberg was for profit of 70 cents a share.

A stronger dollar has hurt revenue gains overseas and lower U.S. gas prices have crimped payments at the pump even as spending on MasterCard’s network climbed. Chief Executive Officer Ajay Banga has focused on working with governments abroad and expanding offerings outside the U.S., where MasterCard generates about 60 percent of its revenue.

“Despite a challenging economy, we were able to deliver solid results for the quarter and the full year in 2015,” Banga, 56, said in the statement. “Entering 2016, while uncertainty in the global economy persists, the fundamentals of our business and our approach remain unchanged.”

Revenue Misses

Revenue increased 4.4 percent to $2.52 billion, falling short of the $2.55 billion estimate of analysts in the Bloomberg survey, as expenses climbed 1.2 percent to $1.41 billion. Global debit and credit purchase volume rose 2.8 percent, led by growth in spending in the U.S. and Asia. Adjusting for currency fluctuations, worldwide spending advanced 12 percent.

MasterCard climbed 0.4 percent to $83.80 at 8:29 a.m. in early trading in New York. The shares declined 14 percent this year through the close of regular trading Thursday.

In September, MasterCard forecast slower growth in earnings per share from 2016 to 2018 compared with the previous three-year period. Revenue growth is expected to increase at a “low double-digits” pace, the company said, compared with 11 percent to 14 percent in the earlier period. MasterCard raised its quarterly dividend 19 percent to 19 cents a share in December and approved a plan to buy back as much as $4 billion of its shares.

United States Automobile Association, which serves members of the U.S. military and their families, said in October it was switching from MasterCard to rival Visa Inc. to process its debit and credit-card payments. A MasterCard spokesman said at the time the USAA loss had already been factored into the company’s three-year financial goals.

Visa Inc., the largest payments network, posted fiscal first-quarter profit Thursday that beat analysts’ estimates as consumer card spending increased. American Express Co., the biggest credit-card issuer by purchases, said last week that fourth-quarter profit fell 38 percent to $899 million as expenses rose and the company took a restructuring charge.

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