Mastercard Q1 Results: Profit beats St expectations as consumer spending defies inflation worries

Mastercard reported first-quarter profit that exceeded Wall Street expectations on Wednesday, on higher card spending by consumers despite rising borrowing costs and persistent inflation.

Wage growth and a tight labor market have ensured job security for card users, allowing them to spend without restraint even as the Federal Reserve keeps monetary policy tight.

The payments processor earned $3.31 per share on an adjusted basis, beating estimates of $3.24 a share, according to LSEG data.

"These appear to be solid, though unspectacular, results," HSBC analyst Saul Martinez wrote in a note.

Travel trends in Asia Pacific, which lifted pandemic curbs later than the rest of the world, continued to be a drag due to tougher comparisons from last year.

Mastercard's shares dipped 0.6% as the company's cross-border spending volumes for the first four weeks of April slowed, but it said that was tied to the timing of Easter.

The festival occurred in the first quarter this year compared to April in 2023, leading to tougher year-ago comparisons.

Net revenue rose 10% to $6.35 billion in the first quarter.

No Impact from Settlement

Mastercard CEO Michael Miebach said the company does not expect any "dramatic" impact from the estimated $30 billion settlement it, along with rival Visa, signed in March to limit credit and debit card fees for merchants.

The settlement, one of the largest in U.S. history, could pacify critics who have accused the companies of operating a duopoly and end nearly two-decade-long lawsuits.

However, last week retailers, including Target and Walmart, urged a judge to reject the accord, saying it does not go far enough.

(Reporting by Mehnaz Yasmin and Niket Nishant in Bengaluru; Editing by Arun Koyyur)