MasterCard Inc., the second-largest U.S. payments network, posted fourth-quarter profit that beat analysts' estimates as customer spending climbed.
Net income rose 29% to $801 million, or 69 cents a share, from $623 million, or 52 cents, a year earlier, the Purchase, New York-based company said today in a statement. The average estimate of 34 analysts surveyed by Bloomberg was for profit of 67 cents a share, adjusted for one-time items.
Chief Executive Officer Ajay Banga, 55, is investing in new technologies and forging partnerships with companies including Apple Inc. as consumers increasingly use mobile phones and other digital devices to make payments. While a strengthening U.S. dollar and geopolitical tensions have curbed business abroad, MasterCard continues to benefit from a global shift from cash and checks to electronic payments.
"Despite a mixed global economy, we delivered solid results for the quarter and for the full year," Banga said in the statement. "This year is off to a good start with several new wins, as well as renewals of some important customer agreements, with more in the pipeline."
MasterCard rose 3.8% to $84.50 at 8:24 a.m. in early trading in New York. The shares climbed 3.1% last year, trailing the 11% advance of the Standard & Poor's 500 Index. The company raised its quarterly dividend to 16 cents a share last month and announced a new stock-repurchase program.
Revenue climbed 14% to $2.42 billion in the fourth quarter as the amount of purchases on MasterCard's network rose 12%, led by Latin America with a 22% increase and the Asia Pacific region with a 15% advance, according to the statement. Expenses increased 16% to $1.4 billion, driven by a $87 million charge for realigning some roles within the company, redeploying resources around the world and consolidating processing operations, according to the statement.
Acquisitions the company made had a dilutive effect of 3 cents per share in the quarter, MasterCard said. Cross-border purchases rose 19%.
"The company's long-term growth story remains intact," Darrin Peller, a Barclays Plc analyst, said before results were released. "The underlying drivers of MasterCard's growth and profitability suggests further outperformance."
MasterCard may raise some fees it charges banks in April, which could add as much as $200 million in revenue in 2015, according to estimates from Barclays. Larger competitor Visa Inc. has also said it plans to increase some fees this year.
American Express Co., the nation's biggest credit-card issuer by purchases, said Jan. 21 that fourth-quarter profit increased 11% to $1.45 billion as revenue rose 6.6 percent. Visa said Jan. 29 that net income for the period ended Dec. 31 climbed 12% to $1.57 billion as card spending increased.
