This file photo shows a MasterCard sign on a revolving door in New York.Mark Lennihan/The Associated Press
MasterCard Inc., the second-largest U.S. payments network, posted third-quarter profit that beat analysts' estimates as customer spending climbed. Shares rose in early trading.
Net income increased 16 per cent to $1.02-billion, or 87 cents a share, from $879-million, or 73 cents, a year earlier, the Purchase, New York-based company said today in a statement. The average estimate of 33 analysts surveyed by Bloomberg was 78 cents.
Chief Executive Officer Ajay Banga, 54, has signed new credit-card deals with retailers including Wal-Mart Stores Inc. MasterCard also has increased prices for some processing services and partnered with technology companies including Apple Inc.
"One of the things that has been helping MasterCard materially has been pricing," Jason Kupferberg, an analyst at Jefferies Group LLC, said before results were released. "They've done a couple of different price increases the past two years that continue to help the numbers."
MasterCard climbed 2.6 per cent to $77.95 at 8 a.m. in New York. The shares slid 9 per cent this year through yesterday, compared with the 12 per cent advance of the 66-company Standard & Poor's 500 Information Technology Index.
Geopolitical tensions have triggered a slowdown in travel outside the U.S. Earlier this year, the U.S. imposed sanctions after Russia invaded neighboring Ukraine, prompting lawmakers in Moscow to change the nation's payments system and making it potentially more costly for foreign firms to operate. MasterCard and Visa Inc., the largest payments network, said U.S. relations with Russia could crimp this year's earnings.
In September, Apple announced it was partnering with MasterCard, Visa and American Express Co. on a mobile-payment system called Apple Pay.
MasterCard is scheduled to increase its fees for some U.S. banks in January, which could generate another $100-million in annual revenue, according to Tien-tsin Huang, a JPMorgan analyst.
Visa yesterday posted adjusted net income of $2.18 a share, beating analysts' estimates, as consumer card spending abroad increased. American Express, the biggest U.S. credit-card issuer by purchases, said Oct. 15 that third-quarter profit rose 8.1 per cent as spending on its network climbed. Discover Financial Services, the fourth-largest U.S. payments network, reported Oct. 21 that profit climbed 8.6 per cent to $644-million.
To contact the reporter on this story: Elizabeth Dexheimer in New York at edexheimer@bloomberg.net To contact the editors responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net Steven Crabill 10-30-14 0809EDT