February 1, 2018 / 1:22 PM / a year ago

Holiday cheer lifts Mastercard's profit above Street

(Reuters) - Mastercard Inc’s (MA.N) quarterly profit topped estimates on Thursday, boosted by a busy holiday shopping period that saw more people swiping credit and debit cards for larger sums.

Mastercard Inc. credit cards are displayed in this picture illustration taken December 8, 2017. REUTERS/Benoit Tessier/Illustration

The company’s shares rose 4.4 percent to an all-time of $176.52.

Growth in the U.S. economy over the last quarter also helped the world’s No. 2 payments network, which, like bigger rival Visa Inc (V.N) largely banks on the health of the economy and customers’ willingness to loosen purse strings in order to generate revenue from credit- and debit-card transactions.

U.S. consumer spending, which accounts for more than two-thirds of the country’s economic activity, accelerated at a 3.8 percent annualized rate in the fourth quarter, the fastest in three years, as household incomes continued inching up.

Outside the United States too, Mastercard has a strong presence. Cross-border volumes - the value of transactions made by overseas cardholders - rose 22.4 percent on a U.S. dollar-converted basis in the fourth quarter.

Europe, and the Asia Pacific, Middle East and Africa (APMEA) region accounted for majority of the cross-border volumes, Chief Financial Officer Martina Hund-Mejean said.

Around 1 percent point growth in overseas volumes came from “cardholders funding accounts and cryptocurrency exchanges, which was then used to purchase digital currencies”, Hund-Mejean said on a post-earnings call with analysts.

Gross dollar volume - the value of transactions processed - was the highest in the Asia Pacific, Middle East and Africa region, and superseded that in the United States.

In APMEA, the value of transactions processed came in at $435 billion, versus $423 billion in the United States alone.

“Payment volumes (for Mastercard) will stay healthy, we think, and a more sustained global economic recovery could eventually lead to an acceleration of spending and further revenue growth,” CFRA analyst Scott Kessler wrote in a note.

Net income fell 76 percent to $227 million, or 21 cents per share, in the quarter ended Dec. 31, as the company booked $981 million in charges, primarily due to the U.S. tax reform. (mstr.cd/2nwXaUZ)

Excluding items, Mastercard earned $1.14 per share, beating the average analyst estimate of $1.12, according to Thomson Reuters I/B/E/S.

The company’s net revenue jumped 20.2 percent to $3.31 billion.

Reporting By Aparajita Saxena in Bengaluru; Editing by Martina D'Couto and Maju Samuel

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