MasterCard beats Street with 33pc profit jump

City A.M. Reporter
MasterCard said second-quarter profit jumped 33 per cent, as US inflation lifted spending volume and more international consumers used debit and credit cards.

Its shares have risen as much as 10.9 per cent in trading.

The credit- and debit-card processor said signing up two big banks - SunTrust Banks and Santander US affiliate Sovereign Bank - to offer MasterCard debit cards helped boost revenue in the second quarter, and should help next quarter too. The two banks had previously offered Visa debit cards.

MasterCard executives told analysts on a conference call that the company benefited from overseas customers using debit and credit cards instead of cash to make payments, a long-term trend.

Spending over the MasterCard payments network also increased because of rising prices in the United States for gasoline and other goods, even though the broader economy has stayed sluggish.

US economic weakness is now translating to slowing inflation or even deflation, which could cut into the dollar size of transactions that MasterCard processes in the coming quarters.

But analysts said the company's expanding international business could offset any domestic slowdown.

"They're getting strength from other areas," said Shannon Stemm, a financial services analyst with Edward Jones.

MasterCard generated second-quarter net income of $608m (£373m) or $4.76 per share, up from $458m, or $3.49 per share, a year earlier.

Analysts had on average expected $4.23 per share.

Visa also beat analysts' expectations when it reported quarterly results last week.