MasterCard posted a third-quarter profit that beat analysts' estimates as U.S. consumer spending increased.
Net income climbed 7.7% to $772 million, or $6.17 a share, from $717 million, or $5.63, a year earlier, the Purchase, N.Y.-based company said Wednesday in a statement. The average estimate of 35 analysts surveyed by Bloomberg was $5.92.
Consumer spending in the U.S., where MasterCard gets about 40% of its revenue, rose more than forecast last month, a sign that the biggest part of the economy was strengthening as the quarter ended. MasterCard, led by CEO Ajay Banga, also has been gaining share of the U.S. debit-card market after new federal rules on transaction processing helped erode the dominance of larger rival Visa Inc.
Debit growth continued to pace MasterCard’s financial performance, with worldwide debit transactions growing 13% for the quarter and by 16% for the first three quarters of the year, compared to growth of credit transactions of 7% for the quarter and of 8% for the first nine months.
"MasterCard continues to drive solid financial performance and focus on executing key deals, investments and partnerships," Banga, 52, said in the statement. "Emerging geographies and governments continue to provide great opportunities for growth."
MasterCard advanced 22% this year through last week, when it closed at $452.98 a share, outpacing a 13% gain for the 70-company Standard & Poor's 500 Information Technology Index.
Banga is repurchasing stock as MasterCard and Visa move closer to resolving a seven-year legal battle with merchants over credit-card "swipe" fees.
The settlement of the proposed class-action lawsuit against banks, MasterCard and Visa probably is worthy of preliminary approval, U.S. District Judge John Gleeson in Brooklyn, New York, said last week. MasterCard has said the settlement could cost the company $790 million. Visa, based in Foster City, California, has said its share would be about $4.4 billion.
MasterCard, which has fallen behind Visa in the U.S. market, continues to fuel its growth through expansion in foreign markets. “We won significant business in Europe this quarter with Nordea, Credit Agricole and CSOB in the Czech Republic,” Banga said. “Additionally, emerging geographies and governments continue to provide great opportunities for growth.”
Visa, the world's biggest payments network, is scheduled to report fiscal fourth-quarter results after U.S. markets close Wednesday.
MasterCard, ranked No. 2 globally by processed transactions, still risks losing its standing as the second-biggest payments network in terms of total spending to Shanghai-based China UnionPay Data Co.
UnionPay's share of combined credit- and debit-card purchase volume for the first half of 2012 rose to 25% from 21% a year earlier, while MasterCard's climbed to 22% from 21%, according to the Nilson Report, a payments-industry newsletter. Visa's share declined to 46% from 49%, while fourth-ranked American Express Co.'s fell to 7.2% from 7.5%.
Visa, MasterCard and New York-based AmEx were among companies to win partial support this year from World Trade Organization judges in a U.S. claim that China unfairly discriminates against foreign suppliers of electronic-payment services by imposing requirements on them that aren't applied to domestic firms.
Ed Roberts contributed to this report.