MasterCard Profit up 31 Percent Second Quarter 2010, Tops Street View
MasterCard reported today that its second quarter profit is up 31 percent due to strong international payment transaction growth, company cost cutting initiatives, and price increases.
The report topped what many on Wall Street were predicting. Despite the good news, MasterCard share fell during early morning trading. A closer look at the report by MasterCard revels it is clear that they depend on their international card network as global volume rose by 8% for purchases but the volume growth in the United States had a slight increase of less than 1%. Additionally, the domestic transaction volume was basically flat as well at 5.6 million while overseas transaction saw an increase of more than 15.2 percent. Recent data show during the month of June that there are currently more than 1.6 million Maestro and MasterCard debit and credit cards being utilized worldwide.
The Purchase, based in New York and payment processor for MasterCard reported that net income grew to more than $447 million, that is basically 3.49 per share compared to last year numbers which was $349 million net income ($2.67) per share in 2009.
MasterCard said the company’s revenue have risen 7 percent from 1.28 billion in 2009 to 1.37 billion so far in 2010 when comparing those two years.
MasterCard’s total operating expenses have also dropped by 10 percent to $648 million which was led by the company’s initiative to cut cost in salary and severance pay.
In the United States, credit card use has slow a bit for MasterCard, down 1.5% which is a two year decline for the company. U.S. debit card use is up slightly at 1%. The data reported shows that the U.S. economy is slow and consumer spending in the America is also slow. But compared to MasterCard’s global data, it show that the use of credit card overseas rose by 10% and debit card at 29%. The President and Chief Executive Officer of MasterCard, Ajay Banga, believe that the company has to innovate when it comes to payment processing and not just rely on credit and debit card transaction and this is the reason why MasterCard is investing heavily in Near Field Communication (NFC) contactless mobile payments in the U.S, creating new mobile payment platform in Latin America, and offer new money transfer services in China.
Source: AP
