MasterCard beats expectations in 3Q as Americans grow more willing to break out the plastic

MasterCard's third-quarter net income rose thanks to continued volume growth as Americans grow more confident about the economy and appear less hesitant to use credit cards.

The performance beat Wall Street expectations and shares climbed more than 2 percent before the markets opened Thursday.

MasterCard is the world's second-largest processor of debit and credit card payments. Economists keep an eye on the health of credit card companies because they can provide hints about the mindset of consumers and how confident they are about their prospects. Mastercard's bigger rival, Visa Inc., also beat expectations when it reported earnings this week.

Americans have become increasingly willing to take on debt as the employment landscape improves and the Federal Reserve reported this month that overall borrowing rose $13.5 billion in August. And while the category that covers credit card debt declined by $208 million, it was the first drop in that area in six months.

For the three months ended Sept. 30, MasterCard earned $1.02 billion, or 87 cents per share. A year earlier it earned $879 million, or 73 cents per share.

Excluding certain items, earnings were 89 cents per share.

The average estimate of analysts surveyed by Zacks Investment Research was for earnings of 78 cents per share.

Revenue for the Purchase, New York, company climbed 13 percent to $2.5 billion from $2.22 billion. This topped the $2.44 billion that analysts polled by Zacks forecast.

Worldwide purchase volume increased 11 percent to $843 billion, on a local currency basis. Processed transactions rose 10 percent to 11 billion.

Shares of MasterCard Inc. climbed $1.91 to $77.90 in premarket trading.


Elements of this story were generated by Automated Insights using data from Zacks Investment Research. MA stock research report from Zacks.