MasterCard 2014 revenue to come in at low end of forecast

Fri Jan 31, 2014 11:49am EST
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By Tanya Agrawal

(Reuters) - MasterCard Inc (MA.N: Quote) posted a lower-than-expected quarterly profit and said its net revenue for the year would come in at the low end of its three-year forecast range as customers migrate to Visa Inc (V.N: Quote) as part of a previously announced deal.

In 2013, JPMorgan Chase & Co (JPM.N: Quote), which issues both MasterCard and Visa-branded cards, signed a 10-year agreement under which the bank will commit more credit and debit card transaction volumes to Visa.

"We don't have any specifics on how these cards will migrate, but we are now assuming an impact in 2014. Given the size of this portfolio we can offset some, but not all, of this attrition with our wins," MasterCard Chief Financial Officer Martina Hund-Mejean said on a post-earnings conference call.

MasterCard shares were down 5 percent at $75.98 in late-morning trading. They fell as much as 10 percent.

The company had forecast net revenue growth of between 11 and 14 percent for the period between 2013 and 2015.

MasterCard reported a 21.1 percent rise in operating expenses at $1.21 billion as the company set aside $95 million for litigation settlements.

The company also saw its rebates and incentives it offers to customers increase 23 percent to $925 million as it signed up more business.

In the fourth quarter, MasterCard signed an agreement with pan-African bank Ecobank Group and also extended its agreement with U.K.-based Tesco Bank. MasterCard also renewed its agreement with Bank of Montreal (BMO.TO: Quote).   Continued...

An employee stands behind a MasterCard logo during the launch of the international credit card issuer's first ATM transaction in Myanmar, in Yangon November 15, 2012.REUTERS/Soe Zeya Tun