PURCHASE, N.Y. -- MasterCard Inc.'s third-quarter net income rose on 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 it can provide hints about the mindsets 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.
Chief Executive Officer Ajay Banga has signed new credit card deals with retailers in the U.S., including Wal-Mart Stores Inc., and bought smaller firms abroad. MasterCard also has increased prices for some processing services and partnered with technology companies including Apple Inc. as more transactions are made online and by mobile phone.
"We are making it safer and simpler for people to pay and get paid," Banga said in a statement Thursday. "We delivered strong results for the quarter, reporting double-digit revenue and net income growth, despite a mixed economic environment."
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, N.Y., 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 $7.14, or 9.4 percent, to close at $83.13 Thursday.
MasterCard is scheduled to increase its fees for some U.S. banks in January, which could generate an additional $100 million in annual revenue, said Tien-tsin Huang, a JPMorgan Chase & Co. analyst.
The company opened a new technology hub in New York earlier this month. In September, Apple announced it was partnering with MasterCard, Visa and American Express on a mobile-payment system called Apple Pay.
Visa on Wednesday posted adjusted net income of $2.18 a share, beating analysts' estimates, as consumer card spending abroad increased.
And, American Express, the biggest U.S. credit card issuer by purchases, said Oct. 15 that third-quarter profit rose 8.1 percent as spending on its network climbed. Discover Financial Services, the fourth-largest U.S. payments network, reported Oct. 21 that profit climbed 8.6 percent to $644 million.
Information for this article was contributed by staff members of The Associated Press and Elizabeth Dexheimer of Bloomberg News.
Business on 10/31/2014