Mastercard’s profit rises 6% on uptick in cross-border transactions

Company's net profit jumped to $2.5bn in the three months to the end of December

Mastercard's fourth-quarter revenue jumped about 12 per cent on an annual basis to $5.8 billion. Reuters

Global payments company Mastercard's fourth-quarter net profit rose by 6 per cent annually, driven by a boost in cross-border transactions and a recovery in global spending.

The New York-based company's net profit jumped to $2.5 billion in the three months to the end of December. However, it remained flat on a quarterly basis.

We are well prepared to adjust our investment profile quickly if needed

Michael Miebach,
chief executive of Mastercard

Revenue during the period rose about 12 per cent on an annual basis to $5.8 billion.

The company said the earnings growth was primarily driven by cross-border volume growth that increased 31 per cent in the October-December period.

Gross dollar volume (GDV), which is a key measure of Mastercard's business, surged 8 per cent in the last quarter. GDV represents the aggregated dollar amount of purchases made and cash disbursements obtained with Mastercard-branded cards.

Michael Miebach, chief executive of Mastercard. Bloomberg

Total purchase volume, representing the aggregate dollar amount of purchases made with Mastercard-branded cards, surged 11 per cent in the December quarter.

“We closed out the year with strong financial results and notable wins, which will help us capitalise on the tremendous secular shift to digital payments,” said Michael Miebach, chief executive of Mastercard.

“As we look at the broader economy, we see the continued recovery of cross-border travel, with volumes up 59 per cent versus a year ago and we are encouraged by Asia opening up further.”

The company’s diluted earnings per share rose 9 per cent to $2.62 in the fourth quarter, exceeding analysts' expectation of $2.58.

Mastercard stocks, which have jumped almost 11 per cent in the past year, rose 0.71 per cent to trade at $385.1 a share in premarket trading on Thursday.

The financial technology company expects first-quarter revenue to grow at the “high end of high-single digits range”, Mastercard said in a presentation posted on its website. Analysts were expecting a growth of 10.7 per cent, according to Refinitiv.

The company’s net income increased 14 per cent annually to $9.9 billion in the 2022 full financial year while total sales increased by 18 per cent to $22.2 billion.

“While macroeconomic and geopolitical uncertainty persists, consumer spending has been remarkably resilient. We are well prepared to adjust our investment profile quickly if needed,” Mr Miebach said.

The company’s operating income in the fourth quarter rose 13 per cent on a yearly basis to $3.2 billion, while operating expenses increased 10 per cent annually to $2.6 billion.

An outdoor patio at the Mastercard office in New York. Bloomberg

Mastercard repurchased 7.4 million shares at a cost of $2.4 billion and paid $473 million in dividends to its shareholders in the last quarter.

Since the start of this year (to January 23), the company has repurchased 1.6 million shares at a cost of $590 million, which leaves $11.6 billion under the approved share repurchase programmes, Mastercard said in a statement.

The company’s customers had issued 3.1 billion Mastercard and Maestro-branded cards as of December 31.