MasterCard earnings jump on consumer spending
Shares of MasterCard leaped more than 6% in early morning trading on Thursday after the financial services giant posted a jump in third-quarter income as consumers return to plastic in an improving economy.
Shares were up $4.64 cents at $80.63 shortly after the market opened.
MasterCard's third-quarter net income rose thanks to continued volume growth as Americans feel more confident about the economy and appear less hesitant to pull out their credit cards.
For the three months ended Sept. 30, MasterCard earned $1.02 billion, or 87 cents a share. A year earlier it earned $879 million, or 73 cents a share. Excluding certain items, earnings were 89 cents a share.
"We delivered strong results for the quarter, reporting double-digit revenue and net income growth, despite a mixed economic environment," said Ajay Banga, president and CEO of MasterCard, in a statement.
The performance beat Wall Street expectations. The average estimate of analysts surveyed by Zacks Investment Research was for earnings of 78 cents a share.
The performance of credit card companies is widely regarded as a good barometer of the economy as a whole. When consumers use their credit cards, it's a signal that they are feeling better about the economy as well as their personal, economic well-being. When consumers keep the cards tucked away in their wallets — as they did during the economic downturn — it's a troublesome sign.
Within the past two months, MasterCard opened a new technology hub in New York City, delivered technology and security protocols as part of the launch of Apple Pay and partnered with the Transport for London to deliver contactless payments system-wide, Banga said, in his statement.
Earlier this week, Visa Inc., the largest credit card company, also beat expectations.
Revenue for company climbed 13% to $2.5 billion from $2.22 billion. This topped the $2.44 billion that analysts polled by Zacks forecast.
Worldwide purchase volume increased 11% to $843 billion, on a local currency basis. Processed transactions rose 10% to 11 billion.
Contributing: Associated Press