Mastercard Profit Jumps 33% as U.S. and Global Volumes Grow

Mastercard Inc. posted a 33% increase in second-quarter profit as its worldwide purchase volumes rose nearly 16% and U.S. volume grew 10.5%.

New business wins, including cobranded cards, and more customers for existing products drove the higher numbers. “We continue to make excellent progress with cobrands,” Mastercard chief executive Ajay Banga said Thursday morning on a conference call with analysts.

Banga noted that the new debit card for PayPal Holdings Inc.’s Venmo peer-to-peer payment service bears the Mastercard brand, and that the company renewed its cobranding pact with Hawaiian Airlines and extended a commercial card agreement with JPMorgan Chase & Co. Most recently, the L.L.Bean cobranded card began converting from Visa to the Mastercard brand as a result of the sale earlier this month of the program’s outstandings from Barclays Bank’s U.S. subsidiary to Citigroup Inc. Banga also noted that some rewards cards from Capital One and Bank of America now have the Mastercard brand.

Chief financial officer Martina Hund-Mejean said the United States, Mastercard’s largest region, is “winning quite a few businesses, particularly in the cobrand space. We are starting slowly but surely to getting all these wins coming into the numbers.”

Second-quarter U.S. payment volume totaled $384 billion versus the prior-year quarter’s $348 billion. Debit and prepaid card purchase volume rose 13.2% to $182 billion versus last-year’s $161 billion. Credit card purchase volume increased 8.2% to $202 billion from $187 billion.

Worldwide purchase volume grew 15.5% on a currency-adjusted basis to $1.08 trillion versus $926 billion in 2017’s second quarter. Europe, Mastercard’s third-largest region, led the way with a 22.8% increase to $285 billion. The Asia-Pacific/Middle East/Africa region, No. 2 in the Mastercard realm, saw volume rise 15.4% to $309 billion. The worldwide switched transaction count rose 13.4% to 18.2 billion.

Net income came in at $1.57 billion, a 33.3% increase from $1.18 billion in the year-earlier quarter. Net revenues grew 18% on a currency-neutral basis to $3.67 billion from $3.05 billion. Despite the hefty profit increase, Mastercard’s stock was trading down about 3% Thursday morning from Wednesday’s close because the company forecast somewhat higher expenses, according to reports on the financial wires.