MasterCard's Profit Tops Expectations--Update

By Robin Sidel And Chelsey Dulaney 

Payment-card network MasterCard Inc. on Thursday reported stronger-than-expected earnings for its third quarter, though an increase in rebates and other incentives to customers dented revenue growth.

The Purchase, N.Y.-based company's results recently have been pressured across the world from a strong U.S. dollar, particularly when compared with the euro and the Brazilian real.

In a conference call with analysts, Chief Executive Officer Ajay Banga said the company's results have been affected by slower global growth in smaller emerging markets and worsening economic conditions in Venezuela.

Mr. Banga cited Mexico as a bright spot for the company due to strong consumer spending.

For the period ended Sept. 30, the company posted earnings of $977 million, or 86 cents a share, compared with $1.02 billion, or 88 cents a share, a year earlier. The results included a $50 million after-tax charge related to the termination of a U.S. employee pension plan.

Excluding that charge, per-share earnings were 91 cents.

Revenue grew 1.6% to $2.53 billion, or 8% excluding currency impacts.

Analysts had projected 87 cents a share in profit and $2.54 billion in revenue, according to Thomson Reuters.

Like rival Visa Inc., MasterCard processes electronic payments on its network, but doesn't collect interest or set interest rates.

In the latest quarter, purchase volume grew 12%, on a constant-currency basis, to $852 billion. Processed transactions grew 12% to 12.3 billion, while cross-border volumes grew 16%.

Gross dollar volume grew 13%, in terms of local currency, to $1.2 trillion.

In the weeks since the quarter ended on Sept. 30, trends through Oct. 21 have been steady to slightly weaker, said Chief Financial Officer Martina Hund-Mejean.

The company suffered a blow earlier this week when large issuer USAA told customers it is switching its credit and debit portfolios from MasterCard to Visa. USAA had been a longtime MasterCard issuer and was one of its largest customers.

"The fact is that we tried our best to pursue that business, but at a point we lost out," Mr. Banga said in response to an analyst's question. The company previously said the loss wouldn't affect its outlook for revenue and profits.

JetBlue Airways Corp. said Tuesday that it signed a deal for a new co-brand card with issuer BarclayCard and MasterCard. The Wall Street Journal reported earlier this year that JetBlue wasn't renewing its co-brand arrangement with American Express Co.

Write to Robin Sidel at [e-mail] and Chelsey Dulaney at [e-mail]

(END) Dow Jones Newswires

October 29, 2015 11:45 ET (15:45 GMT)

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