MasterCard Q3 Profits Beat Estimates; Jumps 7.7% To $772 Million


New York-based Mastercard Inc (NYSE:MA) posted better than expected third quarter profits, as consumer spending in the United States continues to rise. Its net profits for the quarter jumped 7.7 percent to $772 million, or $6.17 per share, compared to $717 million profit a year earlier. Analysts were expecting an EPS of $5.92. Revenues climbed 6 percent to $1.92 billion, however, analysts were expecting $1.94 billion in revenues. Operating expenses increased 5 percent to $854 million.

MasterCard Q3 Profits Beat Estimates; Jumps 7.7% To $772 Million

Mastercard Inc (NYSE:MA) generates approximately 40 percent of its revenues from the United States. Last month, consumer spending in the country rose more than expected, showing the signs that the world’s largest economy is strengthening. The company’s chief executive, Ajay Banga, said that MasterCard is also gaining share in the U.S. debit card market, as the recent federal rules for transaction processing have eroded the dominance of Visa Inc (NYSE:V).

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Mr. Banga said that Mastercard Inc (NYSE:MA) continues to focus on executing investments, partnerships, and key deals. He said emerging economies and governments keep offering the company great opportunities for growth. MasterCard is close to resolving a 7-year long battle with merchants over credit card swipe fees. So, the company is aggressively buying back its shares. The company repurchased 500,000 shares during the third quarter for $216 million. This month, MasterCard has spent an additional $119 million tas of October 25 to buy back 255,000 shares.

Worldwide, people spent $676 billion through their Mastercard Inc (NYSE:MA) and Maestro-branded cards, up 12 percent from the last year. MasterCard is the world’s second biggest payment network, but it may soon lose its position to Shanghai-based, China UnionPay Data Co. For the first half of 2012, the market share of UnionPay in the combined credit and debit-card purchase volume grew from 21 percent to 25 percent. But, MasterCard rose to 22 percent from 21 percent, according to a Nielsen Report.

Mastercard Inc (NYSE:MA) shares jumped 1 percent to $454.10 in New York trading. The stocks have gained 22 percent this year so far, outpacing the 13 percent gains for Standard & Poor’s 70-company information technology index. MasterCard’s rival, Visa Inc (NYSE:V), will announce its fourth quarter results today after the market closes.