UPDATE 3-MasterCard profit rises on renewed spending

* EPS $3.46 vs Street view of $3.14

* Shares up 0.2 percent

* Cites increased consumer spending, especially on travel

* CEO-to-be Banga plans investments in new technologies (Adds CEO, COO comments; analysts; cross-border volume results; background on Banga and MasterCard)

By Maria Aspan

NEW YORK, May 4 (Reuters) - MasterCard Inc (MA.N), the world's second-largest credit card network, said first-quarter profit increased 24 percent, beating analyst expectations and confirming consumers are regaining the confidence to spend money on luxuries.

An increase in travel-related spending gave an extra boost to MasterCard, which earns additional fees when consumers swipe their cards abroad.

"We remain very optimistic about future growth prospects," outgoing MasterCard Chief Executive Robert Selander told analysts and investors on Tuesday. "The payment trends are working in our favor."

Cross-border transaction volumes increased 10.9 percent in the first quarter from a year earlier, after shrinking for most of last year. The company said on Tuesday its cross-border volume growth rate was even higher in April.

The growth in such spending indicates more consumers are willing to spend money on discretionary items such as travel, instead of restricting themselves to basic necessities as they did during the worst of the recession.

"It's higher profitability for both MasterCard and Visa, but also a sign that the consumer is spending again and discretionary spending is on the rise," said Mayank Tandon, analyst at Signal Hill.

While the U.S. economy is on the mend, domestic growth opportunities are relatively limited for MasterCard and larger rival Visa Inc (V.N), as most Americans already use credit and debit cards.

BANGA LOOKS AHEAD

MasterCard is now turning its focus to emerging markets such as Asia and Latin America, in part by naming a new CEO with experience working in those markets. The company said last month that Chief Operating Officer Ajay Banga will replace Selander when he retires, on July 1. [ID:nN12177969]

Banga, who oversaw Citigroup Inc's (C.N) Asia Pacific businesses before joining MasterCard last year, said during the conference call he does not have any plans "to dramatically change things" at MasterCard.

But he plans further investments in new technologies, including prepaid debit, e-commerce and mobile payments.

"You'll see a guy who has a different hat from Bob running the company -- literally," joked Banga, a practicing Sikh.

Banga's performance on the earnings call earned praise from Andrew W. Jeffrey, an analyst with SunTrust Robinson Humphrey.

"MasterCard is still trying to find its voice in the public market, in terms of how it communicates with the Street. I think that's been one of the reasons the stock has traded at a discount to Visa," he said. "They still have some work to do, but I think Ajay can drive that process."

MasterCard trades at 19 times Jeffrey's 2010 estimated earnings, while Visa, which reported better than expected earnings last week, trades at 23 times 2010 earnings. [ID:nN28139884].

MasterCard and Visa do not lend at all and have not suffered from credit losses affecting banks in the past two years. But they process transactions made on credit and debit cards, so their revenue growth was affected by the cutback in consumer spending during the recession.

MasterCard earned $455 million, or $3.46 a share, in the first quarter, compared with $367 million, or $2.80 per share, a year earlier.

Those results beat market expectations by a wide margin. MasterCard shares edged up 0.2 percent, but outperformed the Dow Jones U.S. Financials index .DJUSFN, which was down 2.1 percent. Analysts on average had expected MasterCard to have net income of $3.14 a share, according to Thomson Reuters I/B/E/S.

The company posted net revenue of $1.3 billion, up from $1.2 billion a year earlier. Analysts on average had expected revenue of $1.27 billion. (Reporting by Maria Aspan; editing by John Wallace, Maureen Bavdek and Andre Grenon)