You are here

Mastercard shares fall as profit drops on virus-led travel slowdown

[BENGALURU] Mastercard's quarterly profit missed analyst estimates on Wednesday as the Covid-19 pandemic led to a slowdown in global travel and related spending, sending the payment processor's shares more than 4 per cent lower.

The pandemic has forced companies to lay off workers by the millions, hurting their spending power, and the hit to air travel has also taken a toll on cross-border card transaction volumes.

Mastercard reported a 36 per cent drop in cross-border volume on a local currency basis in the reported quarter. Gross dollar volume, the dollar value of transactions processed, rose 1 per cent to US$1.6 trillion.

Cross-border volumes have continued to fall since the quarter ended, with all first three weeks of October clocking declines of more than 30 per cent, according to an investor presentation.

"We are seeing encouraging progress in the trajectory of domestic spending, while travel spending remains a challenge,"chief executive officer Ajay Banga said in a statement.

Your feedback is important to us

Tell us what you think. Email us at btuserfeedback@sph.com.sg

American Express on Friday warned that business travel spending would not pick up before early 2022 after reporting underwhelming third-quarter profit due to weak spending on travel and entertainment by its card users.

Mastercard's total operating expenses fell 4 per cent to US$1.7 billion in the quarter.

Net income fell 28 per cent to US$1.5 billion, or US$1.51 per share, in the third quarter ended Sept 30. Excluding items, profit was US$1.60 per share, missing Street estimates of US$1.66, according to IBES data from Refinitiv.

REUTERS

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes