A day after its dominant rival posted higher-than-expected earnings, MasterCard came in below analysts’ estimates with a 23 percent profit increase for the fourth quarter.
The No. 2 card payments network saw single-digit growth in both dollar volume and processed transactions, compared to double-digit increases in transactions reported this week from rival Visa.
MasterCard raised its fees as credit card use has waned in recent months. Visa benefits from a larger share of debit cards, which are more commonly being used by consumers for everyday purchases.
MasterCard reported earnings of $294.4 million, or $2.24 per share, in the fourth quarter, up from $239.4 million, or $1.83 per share, a year earlier. But it took an after-tax severance charge of 19 cents per share.
Wall Street analysts expected earnings of $2.46 per share.
“In the fourth quarter, we saw encouraging signs with regard to key aspects of our business as cross-border volumes increased and processed transactions continued to grow,” said Robert W. Selander, MasterCard chief executive officer. “Overall, we are very pleased with our performance, and we look forward to building on that momentum as the global economic climate continues to improve.”
Visa yesterday reported a 33 percent jump in profits bolstered by its debit card programs.
MasterCard’s net revenue for the fourth quarter of 2009 was $1.3 billion, a 6 percent increase versus the fourth quarter in 2008. But currency fluctuations – “driven by the movement of the euro and the Brazilian real relative to the U.S. dollar” - was responsible for 3.8 percentage points of the quarterly revenue increase.
“The net revenue growth was somewhat tempered by an increase in rebates and incentives primarily due to new and renewed customer agreements,” MasterCard reported.
MasterCard cited the following as benefitting the higher net revenue in the fourth quarter:
- Pricing changes of about 5 percentage points;
- An increase in cross-border volumes of 3.9 percent;
- A 6.7 percent increase in the number of transactions processed, to 5.9 billion;
- Growth of 5.3 percent in MasterCard’s gross dollar volume, on a local currency basis, to $674 billion.
