(Reuters) – Mastercard Inc’s quarterly profit missed analyst estimates on Wednesday as the COVID-19 pandemic led to a slowdown in global travel and related spending, sending the payment processor’s shares more than 4% lower.
The pandemic has forced companies to lay off workers by the millions, hurting their spending power, and the hit to air travel has also taken a toll on cross-border card transaction volumes.
Mastercard reported a 36% drop in cross-border volume on a local currency basis in the reported quarter. Gross dollar volume, the dollar value of transactions processed, rose 1% to $1.6 trillion.
Cross-border volumes have continued to fall since the quarter ended, with all first three weeks of October clocking declines of more than 30%, according to an investor presentation.
“We are seeing encouraging progress in the trajectory of domestic spending, while travel spending remains a challenge,” Chief Executive Officer Ajay Banga said in a statement.
American Express Co on Friday warned that business travel spending would not pick up before early 2022 after reporting underwhelming third-quarter profit due to weak spending on travel and entertainment by its card users.
Mastercard’s total operating expenses fell 4% to $1.7 billion in the quarter.
Net income fell 28% to $1.5 billion, or $1.51 per share, in the third quarter ended Sept. 30. Excluding items, profit was $1.60 per share, missing Street estimates of $1.66, according to IBES data from Refinitiv.
Reporting by Noor Zainab Hussain in Bengaluru; Editing by Ramakrishnan M.
Source: Reuters, Mastercard