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Mastercard reported a strong performance for the second quarter, surpassing profit expectations as consumers continued to spend heavily using their cards. The company’s shares surged nearly 3% in pre-market trading on Wednesday following the announcement.
For the quarter ending June 30, Mastercard reported a 17% increase in profit, reaching $3.3 billion, or $3.50 per share. This performance exceeded analysts’ predictions, with adjusted earnings of $3.59 per share surpassing the forecasted $3.51, based on data from LSEG. Further Revenue also rose by 13% on a currency-neutral basis, reaching $7 billion.
The company’s solid performance is attributed to strong consumer spending despite a tight labour market and persistent monetary policy from the U.S. Federal Reserve. Mastercard’s switched volume, which reflects the total value of transactions processed on its network, grew by 10% compared to the same period last year. Additionally, cross-border volume, a key indicator of international travel demand, saw a 17% increase.
While Mastercard’s results were robust, several of its competitors have reported slower growth, especially among low-income customers. Wage inflation moderation and high interest rates have begun to affect consumer sentiment, raising concerns about future spending trends.
Despite these challenges, Mastercard’s performance stands out in the payments sector. Its shares have risen nearly 5% year-to-date, outperforming its primary rival, Visa, which has gained just 1%. Other competitors like American Express, Capital One, and Discover Financial have also posted strong gains, with Capital One recently acquiring Discover in a $35.3 billion deal.
The market will closely monitor upcoming commentary from payments companies for indications of how ongoing Fed rate hikes are impacting consumer spending and financial performance.