By Utkarsh Shetti
April 30 (Reuters) – Mastercard beat Wall Street estimates for first-quarter profit on Thursday, as resilient consumer spending supported sustained transaction volumes on its network.
Spending has largely held up despite concerns of economic uncertainty fueled by the Iran war and U.S. tariffs, even though consumer confidence has waned in a sluggish labor market.
However, cross-border volume weakened as the Middle East turmoil forced airspace closures and disrupted key global flight corridors, triggering widespread rerouting and thousands of cancellations.
“Starting in March, we began to see some impact on cross-border travel from the conflict in the Middle East,” CFO Sachin Mehra said on a call with analysts.
The metric that tracks spending on cards outside the country they were issued in posted a softer growth of 13%, compared with a 15% rise a year ago.
Mastercard’s shares, which closed up nearly 3.5% on Wednesday after peer Visa’s upbeat results, fell about 3% in early trading.
SPENDING STILL RESILIENT
Mastercard’s gross dollar volume – the value of all transactions processed on its platform – jumped 7% jump to $2.7 trillion.
A bulk of consumer spending comes from wealthier households, who continue to make discretionary purchases, while lower-income families pare back on non-essentials.
Experts are increasingly highlighting the bifurcation as the so-called “K-shaped” economy continues to underpin consumer trends, cushioning industries such as travel and entertainment.
Wall Street executives and experts have said while trends have largely remained stable, higher gasoline prices spurred by the war could start pulling spending away from other categories.
Peer American Express, whose customer base is typically seen as more affluent, topped first-quarter profit expectations last week. Visa also beat quarterly estimates for profit.
Payment processors offer the earliest window into consumer spending health, given their big market share in facilitating transactions on their individual networks.
Earlier this month, most of the big U.S. lenders reported an uptick in consumer loan balances, signaling sustained borrowing despite macroeconomic pressures that typically prompt caution.
Mastercard’s adjusted profit per share came in at $4.6, above the analysts’ average estimate of $4.4, according to data compiled by LSEG.
(Reporting by Utkarsh Shetti in Bengaluru; Editing by Arun Koyyur)
