MasterCard posts 22 percent jump in 4th-qtr profit but results fall short of Wall Street view

MasterCard 4Q profit up 22 percent, shares tumble

PURCHASE, N.Y. — MasterCard said Thursday its fourth-quarter profit jumped 23 percent as the company raised its fees to offset fading credit card use in the U.S.

Yet MasterCard’s performance paled in comparison with its rival, Visa, which reported a huge profit late Wednesday.

Shares of MasterCard tumbled 7 percent.

Both companies rely on fees they get from banks when consumers use their cards.

The difference is that Visa has a much bigger market share of debit cards, which consumers continue to use daily to buy necessities like food and gasoline.

MasterCard relies more on fees from credit card spending in a time when people are fearful of job losses and keeping those cards tucked way. There was 1 percent decline in the number of cards bearing the MasterCard logo.

While MasterCard’s worldwide purchase volume rose 6 percent from the year-ago period, to $510 billion, it fell in the U.S.

Credit card use dropped nearly 8 percent in the U.S. while rising about 9 percent in the rest of the world.

Use of MasterCard’s debit cards spiked worldwide, with a 10 percent gain in the U.S. and nearly 16 percent jump worldwide.

For the final three months of 2009, MasterCard earned $294 million, or $2.24 per share, compared with $239.4 million, or $1.83 per share, in the prior-year period.

Adjusted for an after-tax severance charge, profit rose to $2.43 per share.

Revenue rose to $1.3 billion, from $1.22 billion a year ago.

Analysts polled by Thomson Reuters, on average, expected profit of $2.46 per share, on revenue of $1.3 billion. Analyst estimates typically do not include one-time gains or charges.

The big revenue gains reflect a 5 percent increase in its fees from MasterCard Inc.

Revenue also rose on a 7 percent jump in the number of transactions the company processed, which rose to 5.9 billion.

Still, that is a comparison to last year, when the economy was in free fall.

For all of 2009, MasterCard posted a profit of $1.46 billion, or $11.16 per share, versus a loss of $253.9 million, or $1.94 per share, for 2008.

Company shares fell $17.50 to $230.08.