MasterCard's Q2 profit soars

MasterCard's revenue grew 19% to $772 million and its net income grew 82% to $120 million or $1.20 per share on a basic and diluted basis from the same period in 2004.

For the six months ended June 30, 2005, revenue grew 15% to $1,430 million and net income grew 54% to $214 million or $2.14 on a basic and diluted basis, from the same period in 2004.

The impact of currency fluctuations contributed 1% to revenue growth in the three months and six months ended June 30, 2005.

Fueling the higher revenue in the second quarter was growth in MasterCard's gross dollar volume (GDV), which increased 12.3% to $408.4 billion, a 14.1% increase in the number of transactions processed, and certain pricing changes that went into effect during the quarter. Worldwide purchase volume rose 14.5% during the quarter to $290.1 billion driven by increased cardholder spending on a growing number of MasterCard cards. As of June 30, 2005 MasterCard's customer banks had issued 716.3 million MasterCard cards, an increase of 12.1% percent over June 30, 2004.

"Our robust financial performance demonstrates MasterCard International's true strength as a global payments company," said Robert W. Selander, president and chief executive officer. "Given the ongoing consolidation and globalization of the banking industry, we are achieving success by reinforcing our customer-focused strategy and delivering innovative products and unsurpassed processing, franchise and information services. We continue to deliver on our commitment to partner with our financial institution customers to help them build, manage and enhance the profitability of their payments businesses."

Commenting on the company's financial performance, Chris McWilton, MasterCard's chief financial officer noted that "the second quarter of 2005 represents the sixth consecutive quarter of double-digit revenue growth for MasterCard. This growth reflects the strength of our globally competitive business model."

Operating expenses as a percentage of total revenues declined to 75% from 85% in the three months ended June 30, 2005, and to 76% from 83% in the six months ended June 30, 2005, in each case from the comparable period in 2004. Overall operating expenses increased by a modest 6% in each of the three and six months ended June 30, 2005 versus the same period in 2004. Foreign currency fluctuation contributed 1% to this growth in both periods.

MasterCard's effective tax rate was 35.8%, up from 27.1%, and 35.6%, up from 31.7%, in the three and six months ending June 30, 2005, respectively, from the comparable periods in 2004. The rates in 2004 were lower than 2005 primarily due to the settlement and reassessment of various tax audit matters.