* 4th-qtr adjusted earnings $0.57/shr vs est $0.60/shr
* Net revenue $2.13 bln vs est $2.14 bln
* Shares fall as much as 10 pct
By Tanya Agrawal
Jan 31 MasterCard Inc posted a
lower-than-expected quarterly profit and said its net revenue
for the year would come in at the low end of its three-year
forecast range as customers migrate to Visa Inc as part of
a previously announced deal.
In 2013, JPMorgan Chase & Co, which issues both
MasterCard and Visa-branded cards, signed a 10-year agreement
under which the bank will commit more credit and debit card
transaction volumes to Visa.
"We don't have any specifics on how these cards will
migrate, but we are now assuming an impact in 2014. Given the
size of this portfolio we can offset some, but not all, of this
attrition with our wins," MasterCard Chief Financial Officer
Martina Hund-Mejean said on a post-earnings conference call.
MasterCard shares were down 5 percent at $75.98 in
late-morning trading. They fell as much as 10 percent.
The company had forecast net revenue growth of between 11
and 14 percent for the period between 2013 and 2015.
MasterCard reported a 21.1 percent rise in operating
expenses at $1.21 billion as the company set aside $95 million
for litigation settlements.
The company also saw its rebates and incentives it offers to
customers increase 23 percent to $925 million as it signed up
In the fourth quarter, MasterCard signed an agreement with
pan-African bank Ecobank Group and also extended its agreement
with U.K.-based Tesco Bank. MasterCard also renewed its
agreement with Bank of Montreal.
MasterCard joined its larger rival, Visa, in urging U.S.
merchants and banks to hasten the adoption of a more secure
technology for credit and debit cards after security breaches at
"What we would now like to see is that all players within
the payments ecosystem come together with a sense of urgency to
ensure that the highest payment security standards are put into
place," MasterCard Chief Executive Ajay Banga said.
PROFIT MISSES ESTIMATES
MasterCard's net income rose 3 percent to $623 million, or
52 cents per share, in the fourth quarter, from a year earlier.
Adjusted earnings were 57 cents per share, below the average
analyst estimate of 60 cents.
Net revenue rose 12 percent to $2.13 billion. Analysts on
average had expected $2.14 billion, according to Thomson Reuters
MasterCard's worldwide purchase volume increased 11 percent
to $805 billion from a year earlier, while annual growth in its
U.S. purchase volumes rose 7.4 percent to $275 billion.
The company announced a 10-for-1 stock split and raised its
quarterly dividend by 83 percent last month.
Shares of MasterCard have risen 66 percent in the 12 months
ended December, outperforming the broader S&P 500 Index
which rose 30 percent in the year.
Visa reported a better-than-expected rise in quarterly
profit on Thursday as more people used cards instead of cash to
Visa shares were down 1.7 percent at $217.15.