MasterCard Posts $605 Million Quarterly Profit

MasterCard, the second-biggest U.S. payments network, posted a fourth-quarter profit last week that beat analysts’ estimates as customers made more purchases.

Net income excluding litigation charges increased 18 percent to $605 million, or $4.86 a share, from $514 million, or $4.03, a year earlier, the Purchase, N.Y.-based company said. The average estimate of 33 analysts surveyed by Bloomberg was $4.80 a share.

Chief Executive Officer Ajay Banga is fending off competitors Visa and Shanghai-based China UnionPay as he seeks a larger share of the electronic payments processing market. Banga is targeting developing countries such as Myanmar, Ghana, Nigeria and Angola for growth amid a global consumer shift from cash to plastic.

Profit comparisons were skewed by a $770 million expense tied to settling litigation with merchants taken in the fourth quarter of 2011. Including that cost, earnings a year earlier were $19 million or 15 cents a share.

Consumer spending in the U.S., which accounts for about 70 percent of the economy, expanded at a 2.2 percent annual rate in the final three months of 2012.

The pace followed a 1.6 percent advance in the third quarter and was the fastest since January through March, according to Commerce Department figures released yesterday.

Total revenue increased 9.7 percent to $1.9 billion, just beating the Bloomberg forecast of $1.89 billion. Profit comparisons were skewed by a $770 million expense for litigation recorded in the fourth quarter of 2011.

Worldwide spending on MasterCard- and Maestro-branded cards climbed 13 percent to $727 billion.

— Bloomberg News