Despite what president and CEO Ajay Banga called a “mixed global economy,” MasterCard Incorporated kicked off the year with a strong quarter.
The company reported net income of $870 million, up 14%, and earnings per diluted share of $0.73, up 18%, in each case versus the year-ago period.
Net revenue for the first quarter of 2014 was $2.2 billion, a 14% increase versus the same period in 2013. Net revenue growth was driven by the impact of a 14% increase in gross dollar volume, on a local currency basis, to $1 trillion; an increase in processed transactions of 14%, to 9.8 billion; and an increase in cross-border volumes of 17%.
These factors were partially offset by an increase in rebates and incentives, primarily due to new and renewed agreements and increased volumes.
Worldwide purchase volume during the quarter was up 13% on a local currency basis versus the first quarter of 2013, to $759 billion. As of March 31, 2014, the company’s customers had issued a little more than 2 billion MasterCard and Maestro-branded cards.
“We secured several new agreements, including three of the largest retailers,” said Banga. “Wal-Mart and Sam's Club will flip their co-brand portfolios to MasterCard. Target will also shift its co-brand to MasterCard and use our chip and PIN technology across all of its card products as part of a commitment to provide its customers with the most secure payment product. At the same time, we continue to invest in technology and acquisitions that will speed our development of mobile and online solutions.”
Total operating expenses increased 12% to $892 million during the quarter compared to the same period in 2013. The increase was primarily driven by higher investments, including acquisitions, to support strategic initiatives.