Amex settlement turns MasterCard’s $276 million profit to $746.7 million loss

MasterCard Inc., the world's second-biggest credit-card company, posted a $746.7 million loss on costs to settle an antitrust lawsuit with American Express Co. The shares fell 4.8 per cent in early New York trading.

The net loss of $5.74 a share in the second quarter compared with earnings of $252.3 million, or $1.85, a year earlier, the Purchase, New York-based company said today in a statement. Excluding the expense, profit was $276 million, or $2.11 a share. Second-quarter revenue rose 25 per cent to $1.2 billion.

MasterCard fell to $257.76 in early trading. The company rose 3.3 per cent in New York Stock Exchange composite trading yesterday, along with Visa Inc., the world's biggest credit and debit network, which reported a 41 per cent rise in profits after the close of regular markets.

MasterCard's transaction growth has been torrid since the company went public in 2006, fueled by the growing number of consumers globally using plastic for everyday payments. That rapid growth has fueled a premium share valuation for MasterCard, which trades at 23 times expected 2009 earnings.

But there are signs of slowing growth in spending volume on the company's network. Globally, gross volume grew 12.8 per cent in the second quarter in local currency terms, with the US growing 6.2 per cent. In the 2007 second quarter, those rates were 13.3 per cent and 9.8 per cent, respectively.

MasterCard said on 25 June it agreed to pay as much as $1.8 billion to settle a complaint that it blocked banks from issuing American Express cards. The network said then it would book an after-tax charge of about $1 billion in the second quarter. (See: MasterCard agrees to pay American Express $1.8 billion in antitrust settlement)