Mastercard beats profit estimates as customer spending improves

[BENGALURU] Mastercard beat Wall Street estimates for fourth-quarter profit on Thursday, as a recovery in customer spending partially offset the decline in cross-border volumes due to limited travel demand since the Covid-19 pandemic outbreak.

While travel has taken a massive hit due to the health crisis, contactless payments have surged and become mainstream, helping card companies such as Mastercard and Visa counter the impact of the pandemic on their bottom line.

Mastercard, in a recent presentation for investors, said transactions in the US were up 7 per cent, and down 2 per cent outside the United States in the third week of January.

Shares of the company jumped nearly 3 per cent in trading before the bell, as results showed that Mastercard managed to drive growth in overall volumes during the fourth quarter despite a resurgence in Covid-19 cases.

Earlier this week, credit card issuer American Express also beat profit estimates, despite a slump in demand for travel and entertainment.

Excluding items, Mastercard reported net income of US$1.6 billion for the quarter ended Dec 31, or US$1.64 per share, compared with US$2 billion a year earlier, or US$1.96 a share.

Analysts on average were expecting a profit of US$1.51 per share, according to the IBES estimate from Refinitiv.

Gross dollar volume - the dollar value of transactions processed - rose 1 per cent from a year earlier to US$1.7 trillion.

Cross-border volume, a measure for spending outside the country where the card was issued, fell 29 per cent on a local currency basis.

Net income came in at US$1.8 billion, down about 14 per cent from a year earlier.

Net revenue fell 7 per cent to US$4.1 billion, but still came in slightly ahead of estimates of roughly US$4 billion.

REUTERS