Sluggish spending’s toll on MasterCard

MasterCard, the world’s second-largest payment network, reported a higher-than-expected rise in quarterly profit, but the company’s revenue missed analysts’ estimates as a sluggish global economy weighs on consumer spending.
By The Newsroom
Published 2nd May 2013, 09:57 BST

MasterCard shares were down 2.6 per cent at $538.54 yesterday. They had previously risen about 6 per cent this year.

“In the US, the second quarter right now looks a little bit dodgy, but there could be some upside going into the second half of 2013 as far as US economic growth is concerned,” chief executive Ajay Banga said.

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Consumer sentiment across the globe has remained muted, given the uncertainty in Europe and China’s slowing growth. Consumer spending has also taken a hit from higher payroll taxes and a delay in tax refunds.

MasterCard customers made $690bn of purchases worldwide on a local currency basis, up 10 per cent from a year earlier, but down 5 per cent from the fourth quarter of 2012.

“Looking ahead, recent positive news about the strengthening of the US housing market, could be a good signal that the economy is turning. But we are going to watch, and the second half of 2013 will be the test of that,” Banga said.

MasterCard maintained its forecast of 20 per cent compounded annual growth in earnings per share between 2013 and 2015.

Both MasterCard and its larger rival Visa are trying to capture new business as consumers turn increasingly to cards and digital payments instead of cash.

Related topics:MastercardChinaEurope