MasterCard’s Q4 profit up 33% on increased cross-border transactions

Net profit surged to $2.4bn in the three months to December 31

MasterCard's revenue during the fourth quarter rose almost 27 per cent on an annual basis to nearly $5.2 billion. Reuters

Global payments company MasterCard reported an annual 33 per cent jump in fourth-quarter net profit, driven by a recovery in global spending and surge in cross-border transactions.

Net profit jumped to $2.4 billion in the three months to the end of December - about $600 million more than the same period in 2020 - and remained flat on a quarterly basis. The results beat the $2.1bn estimate of analysts.

Revenue during the period rose about 27 per cent on an annual basis to $5.2bn.

The company said the earnings growth was primarily driven by cross-border volume growth that increased 53 per cent in the October-December period.

“We had a strong fourth quarter as spending trends continued to improve … [with] cross-border spending now above pre-pandemic levels,” MasterCard’s chief executive Michael Miebach said.

“We are optimistic about the coming year as consumers, businesses and governments have become more adaptable to the changing environment.”

The New York-based financial technology company’s full 2021 financial year’s net profit surged about 35 per cent to $8.7bn, while sales increased almost 23 per cent to $18.9bn.

MasterCard said it is carrying out its “strategic priorities and making good progress in scaling new products, strengthening partner relationships and winning new deals”.

The company’s operating income in the fourth quarter rose 37 per cent on a yearly basis to $2.8bn, while operating expenses increased 16 per cent annually to $2.4bn.

During the fourth quarter of last year, MasterCard repurchased 3.7 million shares at a cost of $1.3bn and paid $434 million in dividends.

Since the start of this year (to January 24), the company has repurchased 1.4 million shares at a cost of $528m, which leaves $11.4bn under the approved share repurchase programmes, MasterCard said in a statement.

The company is also acquiring FinTech start-ups to strengthen its services.

“We are adding to our unique services capabilities with the planned acquisition of Dynamic Yield, which creates individually tailored experiences for consumers across digital channels,” said Mr Miebach.

Last month, the company announced an agreement to acquire McDonald’s personalisation platform and decision engine company Dynamic Yield.

Using artificial technology, Dynamic Yield delivers individualised product recommendations, offers and content based on a range of factors, including past purchases, page views, time of day, current store traffic and trending products.

Total purchase transactions through MasterCard in the fourth quarter stood at $38.9bn, up 25.6 per cent year-on-year.

Europe led the purchase transaction volume at $15.9bn in the three months to December 31. It was followed by the US ($9.4bn); Asia Pacific, Middle East and Africa ($8.5bn); Latin America ($4.2bn); and Canada ($858m).

The number of cards issued by MasterCard globally increased 11.4 per cent annually to more than 2.5 billion at the end of last year. Maximum cards were in circulation in Asia Pacific, Middle East and Africa region (902 million) followed by Europe (739 million), the US (573 million), Latin America (307 million) and Canada (67 million).