Feb. 2 (Bloomberg) -- MasterCard Inc., the world’s second- biggest
payments network, said fourth-quarter profit climbed 24 percent as
spending with credit and debit cards increased. The shares rose in early
trading
Net income rose to $514 million, or $4.03 a
share, from $415 million, or $3.17, a year earlier, the Purchase, New
York- based company said today in a statement. The average estimate of
32 analysts surveyed by Bloomberg was $3.91 a share. MasterCard took a
$495 million charge related to price-fixing litigation.
MasterCard advanced 2.6 percent to $367 at 8:51
a.m. in New York. The results cap a year in which MasterCard, led by
Chief Executive Officer Ajay Banga, surged 66 percent, the fourth-best
performance in the Standard & Poor’s 500 Index. The firm repurchased
stock as the global shift from cash and checks to electronic payments
continued. New U.S. regulations on swipe fees charged to merchants for
debit-card purchases also may help Banga wrest market share from larger
rival Visa Inc.
“We are seeing sustained momentum driven by new
deals and the ongoing shift away from paper-based payments,” Banga, 52,
said in the statement.
MasterCard’s charge represents the company’s
financial portion of a potential settlement of an antitrust suit by
merchants and banks over swipe fees, or interchange, according to the
statement.
‘The Perfect Stock’
“It was a combination of a lot of things that sort
of made them like the perfect stock,” Donald Fandetti, a Citigroup Inc.
analyst in New York, said before the results were announced. “You had a
company that was beating numbers, a very strong capital return story
with share purchases and you had a world where investors weren’t fully
comfortable with some of the alternatives.”
Fandetti, who has a “neutral” rating on the stock, predicted MasterCard would report earnings per share of $4.10.
Fourth-quarter spending on MasterCard debit cards
in the U.S. increased 18 percent to $139 billion from a year earlier,
and U.S. credit-card spending rose 6.6 percent to $143 billion,
according to the statement. Debit-card spending climbed 21 percent
worldwide, while global credit-card spending was up 14 percent.
Worldwide spending on MasterCard- and
Maestro-branded cards, adjusted for currency fluctuations, increased 16
percent to $863 billion, the company said. Spending by consumers outside
their home countries climbed 18 percent. Processed transactions gained
23 percent to 7.7 billion.
Profit Increases
MasterCard’s total profit for 2011, including the
after-tax charge, increased 3.3 percent to $1.91 billion, according to
the statement. Revenue climbed 21 percent to $6.71 billion. Net revenue
during the three months ended Dec. 31 increased 20 percent to $1.7
billion. Operating expenses climbed 12 percent to $968 million,
excluding the charge, MasterCard said.
“It was a combination of a lot of things that
sort of made them like the perfect stock” in 2011, Donald Fandetti, a
Citigroup Inc. analyst in New York, said before the results were
announced. “You had a company that was beating numbers, a very strong
capital return story with share purchases and you had a world where
investors weren’t fully comfortable with some of the alternatives.”
Fandetti, who has a “neutral” rating on the stock, predicted MasterCard would report earnings per share of $4.10.
Visa is scheduled to report fiscal first-quarter results on Feb. 8.
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