MasterCard quarterly earnings more than double

By Dan Wilchins

NEW YORK (Reuters) - MasterCard Inc (MA.N) said first-quarter earnings more than doubled, beating expectations, helped by the weak dollar and increased spending on its cards. Its shares rose more than 10 percent.

Investors are keenly awaiting information about how the economic slowdown will affect credit and debit card networks like MasterCard, but so far the companies are posting strong results.

MasterCard is seeing some evidence of U.S. consumers changing their spending habits: For example, more cardholders are using MasterCard for food and gas purchases, and fewer are buying luxury items, Chief Executive Bob Selander said on a conference call.

Spending growth was slower in the United States than other parts of the world, but volume growth was in the double-digits on a percentage basis globally.

MasterCard lifted the prices and fees it charges customers, including banks, during the quarter, which contributed to a 29.2 percent increase in revenue.

Both MasterCard on Tuesday and Visa on Monday said they have seen little evidence that any economic slowdown in the U.S. is affecting consumer spending.

About half of MasterCard's revenue is from outside the U.S., and cross-border transaction volume is still strong, said Martina Hund-Mejean, chief financial officer, in an interview with Reuters.

"Outside of the United States, we see very, very solid double-digit growth," Hund-Mejean said.

Often, consumers charge more to their credit cards during economic slowdowns, but that benefit can be offset by the fact that spending in general can slow as well, giving credit card companies a bigger piece of a shrinking pie.

Purchase, New York-based MasterCard said quarterly net income was $446.9 million, or $3.38 a share, compared with $214.9 million, or $1.57 a share, a year earlier.

Net income included $49 million, or 37 cents a share, from the termination of an agreement with a customer the company did not identify, and $56 million, or 42 cents a share, from the sale of a stake in credit-card processing company Redecard S.A. in Brazil.

Stripping out those two items, MasterCard earned $2.59 a share, compared with analysts' average expectations of $2.00, according to Reuters Estimates.

HIGHER REVENUE

Revenue rose $1.182 billion from $915.1 million in the first quarter of 2007, helped by currency fluctuations and a 15.7 percent increase in the number of transactions processed.

As of March 31, 935 million MasterCards had been issued globally, up from 834 million as of the end of the prior year's quarter.