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MasterCard first-quarter profit hits record on growing int'l business, currency exchange

MasterCard first-quarter profit hits record on growing int'l business, currency exchange

MasterCard Inc., the world's second-biggest credit card franchise, on Wednesday reported favorable currency exchanges and stronger use of its brand overseas led to a record first-quarter profit.
The Purchase, New York-based company said profit for the first three months of the year rose to $214.9 million (euro158.15 million), or $1.57 (euro1.16) per share, from $126.7 million (euro93.24 million), or 94 cents per share, in the year-ago period. Revenue climbed 24 percent to $915.1 million (euro673.46 million) from $738.5 million (euro543.49 million).
The No. 2 card network behind Visa easily topped Wall Street projections for earnings of $1.15 (euro.85) per share on revenue of $840 million (euro618.19 million), according to analysts polled by Thomson Financial.
"We are very pleased with our first-quarter financial results, which reflect the highest quarterly net income in MasterCard's history," said President and Chief Executive Robert W. Selander in a statement.
MasterCard shares have almost tripled since it raised $2.39 billion (euro1.76 billion) in an initial public offering on May 24 and converted to a public company from a private, members-only association for financial institutions. The stock surged $13.38 (euro9.85), nearly 12 percent, to $128.23 (euro94.37) in midday trading Wednesday on the New York Stock Exchange, exceeding a previous 52-week high of $118.07 (euro86.89).
During the first quarter, MasterCard said 2.5 percent of the increase in revenue was driven by the movement of the euro relative to the dollar. The U.S. currency recently plunged to an all-time low against the euro.
The amount of money cardholders charged increased 16.4 percent during the quarter to $509 billion (euro374.6 billion). There was also a 19.4 percent increase in the number of transactions processed to 4.2 billion.
Worldwide purchase volume rose 18 percent during the quarter to $375 billion (euro275.98 billion), driven by increased cardholder spending.
MasterCard early last year initiated a charge to its bank customers for all overseas purchases using U.S.-issued cards. This restructuring of its cross-border transaction fees contributed to 5 percent of MasterCard's total revenue growth.
Total operating expenses increased 8.2 percent to $601 million (euro442.3 million) during the quarter due to an increase in personnel costs.
MasterCard said it made $22 million (euro16.19 million) from short-term investments, up from $10 million (euro7.36 million) a year earlier.
Chris McWilton, MasterCard's chief financial officer, did not provide earnings guidance for the second quarter. However, McWilton said he expects additional profit growth as the company increasingly looks overseas for expansion.
"There's a great natural momentum in the payments industry right now, with the conversion of cash to electronic forms of commerce," he told The Associated Press in an interview. "There is a U.S. perception that everyone has credit cards, but that's not true in international markets like Singapore, Asia Pacific, Latin America and the Middle East."
He said those regions prefer "cash to plastic," and that it represents an opportunity to expand MasterCard's business. The company plans to expand overseas organically, but may look at acquisitions abroad to accelerate growth, McWilton said.
Visa is preparing for an initial public offering later this year, while Morgan Stanley plans to spin off its Discover Financial Services credit-card division.
"Somebody taking their eye off the ball a little bit could create opportunity," he said. "We can go out with a customer, launch new products, and work with merchants to expand acceptance of our cards."


Updated : 2021-04-18 19:17 GMT+08:00