Mastercard profits grow as travel and entertainment spending increases
Mastercard profits grow as travel and entertainment spending increases
Mastercard Reports Strong Second-quarter Earnings and Resumes Profit Growth
/cloudfront-us-east-2.images.arcpublishing.com/reuters/SD4J3WE3NFLOBOEPXMYHXAW6N4.jpg)
In a positive turn of events, Mastercard reported better-than-expected second-quarter earnings, marking a return to profit growth after a lukewarm start to the year. The payments processor witnessed strong spending from customers, who showed a renewed confidence in the economy despite fears of an impending recession. This surge in spending, particularly on travel and entertainment, helped boost the company’s earnings, even as the U.S. Federal Reserve continued to raise interest rates, potentially impacting economic growth.
Mastercard, based in New York, reported adjusted earnings of $2.7 billion in the three months ended June 30, representing a 10% increase compared to the same period last year. This recovery follows a slight dip in adjusted profit of nearly 1% during the first quarter. Moreover, the company exceeded expectations with earnings of $2.89 per share, surpassing the estimated $2.82 per share according to Refinitiv IBES data.
“We see results as constructive and see Mastercard as among the stocks that have the potential to compound well throughout 2023,” commented Wolfe Research analyst Darrin Peller, expressing confidence in the company’s performance.
Mastercard has outperformed its rivals, Visa and American Express, with its shares gaining almost 16% year-to-date. This impressive growth solidifies the company’s position in the industry, particularly during a tepid earnings season for card issuers. Despite being relatively stable compared to other industries, card issuers have faced pressure in recent times. Visa reported its smallest jump in quarterly profit in over two years, while American Express maintained its full-year profit forecast, although reporting record spending.
Mastercard’s gross dollar volumes, which reflect the total dollar value of all transactions processed, rose by 12% to $2.3 trillion on a local currency basis compared to the previous year. The company particularly saw a substantial increase in cross-border volume, a metric measuring travel demand, which grew by 24%. This surge in cross-border travel volume reached an impressive 154% of pre-pandemic levels, as stated by Mastercard CEO Michael Miebach.
- Somalia Russia grants $684 million relief on debt
- Germany attempts to prevent fights in public swimming pools.
- US regulators propose 16% increase in bank capital requirements.
The company’s net revenue also exhibited strong growth, increasing by 14% to reach $6.3 billion. Mastercard’s robust earnings report demonstrates its resilience and ability to adapt to changing market conditions. The company has successfully capitalized on the resurgence of consumer spending and international travel, positioning itself as a promising investment opportunity.
With an optimistic outlook, Mastercard has proven itself as a leader in the financial industry, with the potential for continued growth throughout 2023. As the company leverages its strong earnings and expands its market share, it remains a formidable competitor within the payments processing sector.
/cloudfront-us-east-2.images.arcpublishing.com/reuters/CR6ON5EKPVPSLPHMOKV2OCWUSQ.jpg)
/cloudfront-us-east-2.images.arcpublishing.com/reuters/N6HWFVNOXVPW7GK6DKW7UUBAZQ.jpg)
/cloudfront-us-east-2.images.arcpublishing.com/reuters/F3ANOS6INFKVZPCDPA33FCJHWM.jpg)
/cloudfront-us-east-2.images.arcpublishing.com/reuters/KTOBO2BNPFIS3IM4Y3TFMKDCWQ.jpg)
/cloudfront-us-east-2.images.arcpublishing.com/reuters/OHPJMVHOTRIOVGDPKA4JMSZLA4.jpg)
