News Archive

MasterCard profit beats driven by international business

(Reuters) – MasterCard Inc (MA.N) reported a better-than-expected 15.5 percent jump in quarterly profit as efforts to expand its international business pay off, with more people willing to use cards instead of cash.

China’s decision to open up its $1 trillion a year domestic bank card market to foreign companies should further benefit the company and its larger rival Visa Inc (V.N).

“We are pleased with the announcement and see it as a good step in the right direction,” MasterCard Chief Executive Ajay Banga said on a post-earnings conference call.

MasterCard’s shares were up 7 percent at $81.25 in midday trading. Visa was up 8.7 percent, the biggest gainer on the Dow Jones Industrial Average .DJI on Thursday.

MasterCard has a bigger exposure to global markets than Visa, deriving nearly 60 percent of its revenue from its international business.

Wedbush Securities analyst Gil Luria said if the two companies were to grow at their current rate, they would need big new opportunities and China was one of them.

MasterCard’s worldwide purchase volume, excluding the United States, grew 12.8 percent to $554 billion on local currency basis in the third quarter.

The company’s cross-border volume fees rose 14 percent to $835 million.

The two companies also benefited from a rise in global consumer confidence. A Nielsen survey showed that concerns about the economy and job prospects had eased globally in the three months ended September from the second quarter.

U.S. consumer confidence rose in August to its highest level since October 2007.

Visa, which reported a better-than-expected adjusted quarterly profit on Wednesday, said cross-border transactions increased 10 percent.

MasterCard’s net income rose to $1.02 billion, or 87 cents per share, in the quarter ended Sept. 30 from $879 million, or 73 cents per share, a year earlier.

Net revenue rose 12.8 percent to $2.5 billion.

Analysts on average had expected earnings of 78 cents per share on revenue of $2.45 billion, according to Thomson Reuters I/B/E/S.

MasterCard and Visa are also turning their attention to mobile payments and have partnered with Apple Inc (AAPL.O) in the launch of Apple Pay, which allows iPhone users to pay using their phones.

Chief Executive Ajay Banga said the company planned to use mobile-based payments as a key tool of its cash displacement efforts.

(Editing by Sriraj Kalluvila)

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Thomson Reuters financial products sales improve

NEW YORK (Reuters) – Thomson Reuters Corp on Thursday said more clients of its Financial Risk business added new products than canceled, the first time since 2008 that net sales were positive in the Americas, Asia and Europe for the news and information company.

Net sales are an important metric for the division that serves the banking industry and one that Thomson Reuters has struggled to expand since Canada’s Thomson Corp acquired Reuters Group Plc in 2008.

Overall, the company said third-quarter revenue increased 1 percent before currency changes to $3.1 billion on the strength of its Legal and Tax Accounting businesses. Analysts on average were expecting $3.1 billion, according to Thomson Reuters I/B/E/S.

“It’s another solid quarter of performance, and we are quite encouraged by what we are seeing,” Chief Executive Officer Jim Smith said in an interview.

Smith also pointed to better trends at the Legal division, which includes products and services like WestlawNext and Practical Law. Revenue for that business increased 1 percent to $854 million, its first rise excluding acquisitions since the second quarter in 2013.

Tax Accounting revenue rose 13 percent to $301 million.

Revenue at the Financial Risk division fell 2 percent to $1.62 billion but should improve next year because it lags net sales by about three quarters.

Smith said the company expected a stronger revenue performance in 2015, but it was too early to say if net sales would be positive for the fourth quarter.

Piper Jaffray analyst Peter Appert said the turnaround was not complete. “The company is making progress, but there is still some heavy lifting to do,” he said.

Europe, whose economic instability has caused banks to pull back on spending and slash costs, has been a particular challenge for Thomson Reuters. Smith said the environment had improved there, although professionals markets were “far from robust.”

Thomson Reuters’ net income attributable to common stockholders fell to $231 million, or 28 cents a share, from $271 million, or 33 cents a share, a year earlier.

Excluding items like tax charges, earnings of 45 cents per share were in line with analysts’ estimates.

The company affirmed its outlook for the year and expects revenue to be unchanged from last year’s $12.5 billion.

Shares of Thomson Reuters were down 1.2 percent at C$41.31 in morning trading on the Toronto Stock Exchange and fell 1 percent to $36.99 on the New York Stock Exchange.

(Reporting by Jennifer Saba in New York; Editing by Lisa Von Ahn)

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Daimler, VW dampen speculation about imminent CEO succession

MUNICH (Reuters) – Succession is not an imminent topic at Daimler or Volkswagen, the chief executives of both carmakers said on Thursday, adding that any potential candidates would most likely come from within their respective companies.

Daimler chief Dieter Zetsche and Martin Winterkorn, who heads up Volkswagen, were both asked during a panel discussion in Munich whether succession was imminent and whether a suitable candidate had emerged.

Zetsche said it was generally unwise to speculate in public about who would become the next chief executive, because premature exposure may prove disruptive to a smooth succession process.

“If somebody were to emerge into the open as crown prince, he would be shot down the next day,” Zetsche said, without elaborating further.

Daimler has a number of internal candidates who have the opportunity to prove themselves as being worthy, Zetsche added somewhat cryptically.

External candidates could bring a fresh point of view, but they tend to emerge at companies that are in trouble.

“If you are doing well, like all the three German automakers are, it is more likely that a successor will come from within,” Zetsche added.

Zetsche, who is 61, has a contract that runs until 2016.

Asked whether his replacement had already been born, Volkswagen’s Winterkorn said, “He has definitely been born, but I don’t know what his name is.”

The 67-year-old Volkswagen chief, whose contract also runs out in 2016, was also asked whether he has one or several candidates in mind to follow in his footsteps, to which he said, “It would be bad if that were not the case.”

Winterkorn further said that he felt it would be an advantage if a successor came from within the company, because that person would know the processes and key people.

“An outsider would find it difficult,” Winterkorn said.

(Reporting by Irene Preisinger, additional reporting by Jan Schwartz, writing by Edward Taylor; Editing by Susan Fenton)

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JPMorgan tops pay table with $740,000 for London bankers: survey

LONDON (Reuters) – U.S. bank J.P. Morgan (JPM.N) pays managing directors at its investment bank in London an average of 461,000 pounds ($737,877), substantially more than pay across its rivals, according to a survey.

Emolument, a website that benchmarks salaries, said on Thursday the average salary and bonus for JPMorgan managing directors was more than 13 percent higher than the next best paying bank, Deutsche Bank (DBKGn.DE), which paid its managing directors an average of 402,000 pounds.

Bank of America Merrill Lynch (BAC.N) paid an average of 376,000 pounds, according to Emolument, which said its estimates were based on responses from 640 bankers regarding their 2013/14 salaries and bonuses.

UBS (UBSN.VX), Citigroup (C.N) and Morgan Stanley (MS.N) each paid managing directors an average of more than 350,000 pounds, the survey showed. Goldman Sachs (GS.N), long considered one of the top paying banks, ranked ninth in the survey with average pay of 330,000, and Barclays ranked 13th.

(Reporting by Steve Slater; Editing by Clara Ferreira Marques)

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Alibaba plays trademark card to protect lead as China’s $8 billion e-commerce spree nears

BEIJING (Reuters) – A trademark spat between Chinese e-commerce giant Alibaba Group Holding Ltd and rival flared into public view after JD published an Alibaba letter urging publishers to be careful about advertising in promotions for China’s annual “Singles’ Day” spree, the world’s largest online shopping day.

In the letter, dated Oct. 16 and published on Thursday on a JD social media account, Alibaba’s marketplace warned Chinese publishers against running ads with the “Double Eleven” motif that are not official Alibaba promotions. The slogan has become a well known reference to Nov. 11, when Singles’ Day takes place each year, encouraging unattached consumers to buy goods as gifts for themselves.

Tmall said in the letter that “Double Eleven” is a registered trademark. According to research by Reuters, in 2013, Alibaba registered at least six trademarks associated with “Double Eleven” with the State Administration of Industry and Commerce.

The letter highlights fierce competition among e-commerce firms in China over their marketing efforts around Nov. 11, a day that has proved an online shopping bonanza. Total sales processed on Singles’ Day last year approached $8 billion.

In the letter, which was published on a JD Weibo account, Tmall also condemned some of Alibaba’s e-commerce rivals, without identifying names, and said media outlets would be liable for breach of trademark if they published any ads that infringed on Alibaba’s rights.

“We express our extreme indignation and condemn some e-commerce companies for their demeaning activities,” Alibaba’s Tmall said in the letter, without disclosing specific examples of activities to which it objected. Tmall said publishers would bear joint liability for any breach of China’s advertising law.

Officials at Alibaba and JD weren’t immediately available for comment on Thursday.

JD said on Weibo that Alibaba’s warning was counter to “the open spirit of the Internet and the principles of fair competition, and said the move would limit consumer choice and damage consumer interests.

For its part, Alibaba’s letter amounted to a muscular effort to protect its lead on a hugely important day of sales.

Last year on Nov. 11, Alibaba’s payment system alone processed $5.8 billion worth of transactions – more than the amount sold in the United States on Black Monday and Cyber Friday – with almost a third of China’s population visiting Alibaba websites during the 24-hour period last year.

JD, a distant second to Alibaba in Chinese e-commerce, posted sales of $1.6 billion during its own Singles’ Day promotion last year, which extended over 12 days.

Other internet merchants, including Inc, have already been rolling out promotions for the November shopping event. Amazon China announced on Wednesday that the company will focus on international brands during this year’s Singles’ Day event, allowing local customers to buy items and get direct shipments from the firm’s international websites. 

(1 US dollar = 6.1139 Chinese yuan)

(Reporting by Gerry Shih, Matthew Miller and Shanghai and Beijing Newsrooms; Editing by Kenneth Maxwell)

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Futures point to lower open despite strong GDP report

NEW YORK (Reuters) – U.S. stock index futures pointed to a slightly lower open on Thursday despite a reading on third-quarter economic growth that was stronger than expected.

Gross domestic product grew at a 3.5 percent annual rate in the third quarter, beating expectations for a pace of 3 percent, though down from the 4.6 percent rate in the second quarter.

Separately, jobless claims unexpectedly rose in the latest week, though they remained at levels consistent with a firming labor market.

The data was especially scrutinized a day after the Federal Reserve ended its stimulative bond-buying program. Without quantitative easing – which fueled market gains over recent years, though its end was widely expected – investors are looking to when the central bank will begin raising interest rates. The Fed has said its first rate hike would be dependent on the strength of economic data.

In comments released after a two-day meeting, the U.S. central bank expressed confidence in U.S. economic prospects and dropped a characterization of U.S. labor market slack as “significant,” which many traders took as indicating a more hawkish tone.

Equities were volatile following the Fed’s comments, with major indexes at one point trading sharply lower before rebounding. The SP 500 is up 6.4 percent over the past nine sessions, and at its session low on Wednesday found support near its 50-day moving average, a sign that the trend remains positive.

Dow component Visa Inc late Wednesday reported adjusted earnings that topped expectations, and said the mobile payment industry would be “a great driver” for business. MasterCard Inc also posted a better-than-expected profit, while revenue was up almost 13 percent.

Shares of Visa rose 4.6 percent to $224.49 in premarket trading while MasterCard added 2.4 percent to $77.84.

So far this reporting season, 75.3 percent of SP 500 companies have exceeded profit expectations, according to Thomson Reuters data, above the long-term average of 63 percent.

U.S.-listed shares of major European banks were among the biggest movers of the premarket session on Thursday, continuing to see weakness since the results of the European Central Bank’s stress tests were published over the weekend.

The Euro STOXX banking index fell 1.5 percent.

Among the most active names, Deutsche Bank fell 2.4 percent to $30.45 on the New York Stock Exchange, while HSBC Holding was off 1.3 percent at $50.03 and UBS AG fell 1.8 percent to $16.82.

Futures snapshot at 8:45:

* SP 500 e-minis were falling 3.5 points, or 0.18 percent, with 279,267 contracts changing hands.

* Nasdaq 100 e-minis were down 10 points, or 0.25 percent, in volume of 49,684 contracts.

* Dow e-minis were down 22 points, or 0.13 percent, with 35,461 contracts changing hands.

(Editing by Nick Zieminski)

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MasterCard profit beats estimates as card usage rises

(Reuters) – MasterCard Inc reported a better-than-expected 15.5 percent jump in quarterly profit as a rise in global consumer confidence encouraged its customers to use cards to make purchases.

Shares of the world’s second-largest debit and credit card company rose 2 percent in premarket trading on Thursday.

MasterCard’s net income rose to $1.02 billion, or 87 cents per share, in the third quarter ended Sept. 30 from $879 million, or 73 cents per share, a year earlier.

Net revenue rose 12.8 percent to $2.5 billion.

Analysts on average had expected earnings of 78 cents per share on revenue of $2.45 billion, according to Thomson Reuters I/B/E/S.

“We delivered strong results for the quarter, reporting double-digit revenue and net income growth, despite a mixed economic environment,” Chief Executive Ajay Banga said in a statement.

Worldwide purchase volume, or the total amount of purchases made with MasterCard-branded cards, increased 11 percent to $843 billion in local currency terms.

The company said U.S. purchase volume rose 8.2 percent to $288 billion.

Consumer confidence in the third quarter improved globally as concerns about the economy and job prospects eased, according to a survey by global information company Nielsen. U.S. consumer confidence also rose in August to its highest level since October 2007.

Bigger rival Visa Inc reported a better-than-expected adjusted quarterly profit on Wednesday.

MasterCard’s shares were trading at $77.30 before the bell.

Up to Wednesday’s close of $75.99, the shares have lost about 9 percent this year, underperforming the SP 500 Index’s about 7 percent rise.

(Reporting by Amrutha Gayathri in Bangalore; Editing by Sriraj Kalluvila)

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U.S. jobless claims rise, but underlying labor market trends firming

WASHINGTON (Reuters) – The number of Americans filing new claims for unemployment benefits rose for a second straight week last week, but remained at levels consistent with a firming labor market.

Initial claims for state unemployment benefits increased 3,000 to a seasonally adjusted 287,000 for the week ended Oct. 25, the Labor Department said on Thursday.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 250 to 281,000. Claims at these levels indicate a strengthening in labor market conditions.

A Labor Department analyst said there were no special factors influencing the state level data.

The Federal Reserve on Wednesday offered a rather upbeat view of the labor market, dropping its characterization of labor market slack as “significant.” Fed officials now view the underutilization of labor resources as “gradually diminishing.”

The claims report showed the number of people still receiving benefits after an initial week of aid increased 29,000 to 2.38 million in the week ended Oct. 18.

The so-called continuing claims data covered the period for the household survey from which the unemployment rate for October will be calculated.

Continuing claims fell 58,000 between the September and October survey periods, suggesting a decline in the jobless rate. The unemployment rate fell below 6 percent in September for the first time since July 2008.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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Trade, defense spending buoy U.S. third-quarter growth

WASHINGTON (Reuters) – A smaller trade deficit and a surge in defense spending buoyed U.S. economic growth in the third quarter, but other details of Thursday’s report hinted at some loss of momentum in activity.

Gross domestic product grew at a 3.5 percent annual rate, the Commerce Department said on Thursday, beating economists’ expectations for a 3.0 percent pace.

While the pace of growth in business investment, housing and consumer spending slowed from the second quarter, all those categories contributed to growth.

Despite decelerating from the fourth quarter’s brisk 4.6 percent pace, it was the fourth quarter out of five that the economy has expanded at or above a 3.5 percent clip.

The data came one day after the Federal Reserve ended its asset purchasing program. Fed officials said there was sufficient underlying strength in the broader economy.

The narrower trade deficit reflected a plunge in imports, which fell at their fastest pace since the fourth quarter of 2012. That was largely attributed to a drop in oil imports.

Trade added 1.32 percentage points to growth. Although there are concerns a strengthening dollar and slowing euro zone and Chinese economies will crimp U.S. export growth, economists believe the impact will be marginal.

Government spending was also a boost, with defense spending rising at its fastest pace since the second quarter of 2009.

One of the few areas that was a drag on growth was inventories, which subtracted 0.57 percentage point from GDP after adding 1.42 percentage points in the second quarter.

Growth in business investment slowed in the third quarter, with spending on equipment rising at only a 7.2 percent rate. Economists had expected a second straight quarter of double-digit growth.

Business spending on structures and intellectual products also slowed. Data on Tuesday suggested further moderation in the pace of equipment investment in the fourth quarter, but it is still expected to remain strong enough to keep the economy on a higher growth pace.

While growth in consumer spending decelerated to a 1.8 percent pace from the second-quarter’s 2.5 percent pace, it still contributed 1.22 percentage points to GDP growth.

Consumer spending accounts for more than two-thirds of U.S. economic activity.

The moderate pace of consumer spending helped keep inflation pressures under wraps during the quarter, with the two price indexes in the report decelerating sharply.

Declining gasoline prices and accelerating job growth, which is expected to lift wages, will provide tailwinds for consumer spending in the fourth quarter.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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