MasterCard profit beats estimates on higher consumer spending

By Sudarshan Varadhan

(Reuters) - MasterCard Inc <MA.N>, the world's second-biggest payments processor, reported a higher-than-expected quarterly profit as consumers shopped more using cards on its network.

Shares of MasterCard rose as much as 3 percent to a near five-month high of $96.50 on Thursday.

The company's results mirror those of rival Visa Inc <V.N>, which also reported a higher-than-expected quarterly profit as payments volume rose 10.2 percent.

MasterCard's worldwide purchase volume rose 9 percent to $897 billion (£682.2 million) on a local currency basis in the second quarter. U.S. volume rose 8.1 percent to $335 billion.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose for a second straight month in May on increased demand for automobiles and other goods. Data for June has not been released yet.

MasterCard's cross-border volumes - the value of transactions made by card holders outside the card-issuer's country - jumped 10 percent.

The company said it did not anticipate any significant impact this year from Britain's vote to leave the European Union. In fact, the company is seeing an increase in inbound cross-border spend in the United Kingdom.

Europe accounted for more than 26 percent of its total purchase volume during the second quarter.

"The increased activity in Europe has to do with better economic health, which is yet to be affected by Brexit," Wedbush Securities analyst Gil Luria told Reuters.

Cross-border spending activity fell "significantly" in Turkey, Chief Executive Ajay Banga said on a conference call.

MasterCard's net income rose 6.7 percent to $983 million, or 89 cents per share, in the quarter ended June 30, from a year earlier.

Excluding a charge, the company earned 96 cents per share, beating the average analyst estimate of 90 cents, according to Thomson Reuters I/B/E/S.

Revenue jumped 12.7 percent to $2.69 billion, above analysts' average estimate of $2.59 billion.

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Credit card earnings (http://tmsnrt.rs/1nncv98)

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(Reporting By Sudarshan Varadhan in Bengaluru; Editing by Maju Samuel)

Article Published: 28/07/2016