MasterCard's Profit Beats Forecasts on Strength Abroad

Tuesday, 02 Nov 2010 09:23 AM

 

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MasterCard Inc.'s third-quarter profit rose 15 percent, far exceeding expectations, as consumers abroad ramped up their spending.

The company's shares rose 4.6 percent in premarket trading.

"The numbers were well ahead of expectations" and illustrated "a fundamental turn in their business," said Jim Tierney, chief investment officer of W.P. Stewart, which owns MasterCard shares.

The company, which processes credit card transactions but does not lend directly to consumers, makes money every time someone buys something with a credit or debit card.

Chief Executive Ajay Banga, who took charge in July, attributed the good results to an increase in cross-border spending and strong spending growth outside the United States.

MasterCard has relatively few opportunities for growth in the United States, where rival Visa Inc dominates the debit processing market and most consumers already use credit and debit cards.

Banga, who ran Citigroup Inc's Asia-Pacific businesses before joining MasterCard in 2009, is betting the company can grow more robustly in emerging markets like Brazil and India, where consumers still use cash more than plastic.

MasterCard, the world's second-largest credit and debit processing network, earned $518 million, or $3.94 per share, in the third quarter, compared with $452 million, or $3.45 per share, a year earlier.

Analysts on average had expected $3.54 per share, according to Thomson Reuters I/B/E/S.

MasterCard shares rose $11.07 to $250.06 in premarket trading.

© 2014 Thomson/Reuters. All rights reserved.

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