Profits Jump 63% for MasterCard

MasterCard Inc. (NYSE: MA) reported its third quarter net income rose nearly 63 percent to $314 million, on net revenues of $1.1 billion, up 20 percent from $901.9 million in the same period a year ago.

The surge in profits was driven by a rise in purchase volume worldwide of 14 percent to $430 billion as more MasterCard-branded cards were in more consumers’ wallets. There were 878 million MasterCard cards in circulation at quarter's end, a rise of more than 11 percent from the same time a year ago.

U.S. cardholders accounted for $205 billion, or nearly 49 percent of all purchase volume worldwide for all MasterCard credit, debit and charge cards. Europe was the next largest market with volume of $126 billion, or 31 percent of the total. The U.S. and Europe markets grew at a 9.4 percent rate and 16.8 percent rate respectively. The Asia Pacific region accounted for about 13 percent of volume but grew at a 22 percent rate.

Worldwide there were 6.04 billion transactions with a MasterCard, a rise of 9 percent. MasterCard derives much of its revenue on transaction fees.

The credit and charge card programs accounted for $340 billion of gross dollar volume, and grew nearly 14 percent. The debit card programs accounted for 21 percent of volume and grew nearly 15 percent.

Operating expenses rose 16 percent to $730 million, primarily due to a 26 percent rise in marketing and advertising spending of $264 million.

The company’s board on Oct. 29 approved a plan to spend $750 million on repurchasing MasterCard stock through June 30, 2008. MasterCard completed this quarter a $500 million stock repurchase plan, buying about 3.4 million shares of its shares in the open market.