Tags: Earns | MasterCard

MasterCard Profit Jumps 33% on Heavy Card Use

Wednesday, 03 August 2011 09:15 AM EDT

MasterCard Inc. said Wednesday that its second-quarter profit rose 33 percent, as cardholders used their plastic more during the spring months and the company added a few new banks to its list of issuers.

The results beat Wall Street expectations, and its shares rose $9.01, or 3 percent, to $307.50 in premarket trading.

The payment processing company said net income rose to $608 million, or $4.76 per share, for the three months ended June 30. That was up from 4458 million, or $3.49 per share, in the year-ago quarter.

The number of outstanding shares fell by more than 2 percent, which had the effect of increasing earnings per share.

Revenue rose 22 percent to $1.67 billion, from $1.37 billion a year ago.

Analysts, on average, were expecting profit of $4.22 per share, on revenue of $1.55 billion, according to data provided by FactSet.

MasterCard said the number of transactions it handled rose 17 percent during the quarter.

Both credit and debit card use rose around the world, with debit growth over 28 percent. In the U.S., credit card use rose 5.3 percent, while debit card use jumped 15 percent.

U.S. growth was helped by the additions of SunTrust Bank and Sovereign Bank as MasterCard issuers, which put more cards in the hands of consumers. That helped add 3 million new credit card account holders, bringing the total in the U.S. to 146 million, and 11 million new debit card customers, bringing the total to 115 million.

Worldwide, credit use rose 17 percent, while debit use surged 29 percent. International credit accounts rose by 14 million to 459 million, while worldwide debit accounts rose by 38 million to 181 million. More than half MasterCard's revenue comes from overseas, so international growth is key for the Purchase N.Y.-based company's results.

"It's a very, very strong performance," said Stifel Nicolaus analyst Chris Brendler. "International is clearly growing much faster than expected."

The international growth numbers did show a benefit from currency rates, he said, but even if that is taken out, growth overseas was very strong. "They absolutely crushed, the numbers look fantastic."

Operating expenses jumped 21 percent, mostly due to costs related to acquisitions. The company is also spending on new technologies like mobile payments, including contactless payments and the Google Wallet.

During the quarter, the company bought back 1.5 million shares at a cost of about $387 million, under a $2 billion repurchase authorization approved by its board in April.

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FinanceNews
MasterCard Inc. said Wednesday that its second-quarter profit rose 33 percent, as cardholders used their plastic more during the spring months and the company added a few new banks to its list of issuers.The results beat Wall Street expectations, and its shares rose $9.01,...
Earns,MasterCard
409
2011-15-03
Wednesday, 03 August 2011 09:15 AM
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