PURCHASE, N.Y. – MasterCard reported a 15% surge in second quarter earnings this morning, shaking off expenses related to the record antitrust settlement it and Visa entered into last month with merchants.
The cards giant reported a $700 million profit for the quarter, which includes $20 million ($13 million after-tax) set aside for the $790 million it agreed to pay under the antitrust deal. That’s because the company set aside $790 million for potential litigation costs in its fiscal fourth quarter for 2011.
MasterCard’s earnings came in contrast to those of Visa, which reported a $1.8 billion loss for its quarter last week for its share of the historic antitrust deal.
Under the deal, Visa, which controls about two thirds of the cards market, will pay $4.4 billion and MasterCard $790 million, while a handful of banks will add another $1 billion, making $7.25 billion to be paid to almost seven million merchants. Most of the Visa settlement is being funded by the conversion of credit union- and bank-owned Class B shares.
The prospects of the two companies are critical to credit unions, first because they pass on some $5 billion in processing fees a year to credit unions, and second because they are the only two stocks credit unions are permitted to own, providing millions of dollars in dividends each quarter.
For its fiscal second quarter MasterCard reported a 9% increase in revenues to $1.8 billion, as worldwide purchase increased on its card brand by 13% during the period.
For the first six months of the fiscal year MasterCard reported a 13% increase in revenues to $3.6 billion, and an 18% increase in net income to $1.4 billion.