MasterCard Incorporated (NYSE:MA) Q4 2014 Earnings Conference Call - Final Transcript

Jan 30, 2015 • 09:00 am ET


MasterCard Incorporated (NYSE:MA) Q4 2014 Earnings Conference Call - Final Transcript


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Ajay Banga

deceleration is due to lower gas prices. Now, excluding auto and gas, retail sales growth was 4.1% for the fourth quarter versus 4.8% for the third quarter, showing just a modest deceleration in spending.

And even though 4% growth is nothing to sneeze at, we haven't yet seen the extra savings from lower gas prices translate into additional discretionary consumer spending. So, while overall retail spending growth softened in the quarter, underlying economic indicators did remain positive, with unemployment levels and consumer sentiment both showing some improvement.

Looking at our own U.S. business, as we've said for the past couple of quarters, the Chase de-conversion is having an impact on our U.S. GDP growth, but if you take that out, the underlying growth remained roughly the same over the course of 2014.

Outside of the U.S., Europe's recovery slowed somewhat in the fourth quarter. It still remains challenge, and across the region consumer confidence and economic sentiment decelerated slightly. And while unemployment levels were high, they remained steady with the prior quarter. But there were a few bright spots. The UK experienced good momentum in the quarter. SpendingPulse data for the UK is showing fourth quarter retail sales growth of 3.6%, up from 2.9% in the third quarter.

Even in Spain, preliminary indicators are showing some early signs of recovery. MasterCard's total European volume growth for the fourth quarter was in the mid-teens and process transaction growth in the low 20s, both of which increased from the last quarter due in part to a number of our recent wins across several European markets.

Latin America, number of indicators there that highlighted the sluggish economic performance across the region, and our fourth quarter SpendingPulse data for Brazil showed retail sales growth of just 0.9%, down from the 2.4% growth that Brazil saw in the third quarter. For the entire region, annual GDP growth is now expected to be around 1%, down slightly from earlier projection of 1.3%.

Mexico, however, is an exception. It continues to benefit from improving its posts toU.S. and actually is undergoing a slow recovery, and our business in the region remain solid. ***Part06***

Ajay Banga

***Part07*** region remain solid. Our fourth quarter GDP and process transaction growth is in the mid-teens, about the same as the last quarter. Across Asia-Pacific, overall business sentiment actually improved in the fourth quarter. Optimism from Indian companies following the recent election has driven some of that, but it has tampered a bit lingering concerns over the slowing economic growth in China.

Consumer confidence across the region is holding steady. Our business in the region continues to do well. GDP growth in the mid-teens, process transaction growth in the mid-20s, about the same as the last quarter. So, overall, the economic environment hasn't changed much from last quarter. The U.S. looks to be in little better shape. Challenge is remaining for Continental Europe, for Brazil, parts of Asia. But despite all of this, you can see the strong fundamentals of our business have not