MasterCard Inc <MA.N>, the world’s second-biggest credit and debit card company, said Russian President Vladimir Putin’s plan to create a domestic card payment system would create “serious complications” for its operations in the country.
Putin, lashing back against U.S. and EU sanctions over the crisis in Ukraine, has said Russia needs its own card system to reduce its reliance on Western companies.
Russia’s parliament passed legislation last week that would allow for the creation of domestic credit and debit cards as well as require Western card companies to pay a security deposit to operate in the country.
MasterCard and larger rival Visa Inc <V.N> stopped providing services to some Russian banks after U.S. President Barack Obama imposed sanctions on Russia in March.
“There are provisions (in the legislation) there that I believe would create serious complications for the way that we can operate in (Russia),” MasterCard Chief Executive Ajay Banga said on a post-earnings call with analysts on Thursday.
“Russia will be tough to work through,” said Banga, a self-described “worrier”.
MasterCard’s Russian operations account for just over 2 per cent to its total net revenue, and the company said the sanctions had little impact on its first-quarter results.
However, a competing card system in the fast-growing Russian market would likely constrain future growth for both MasterCard and Visa, analysts say.
Visa said last week that the sanctions were already hurting its card transaction volumes in Russia and that it expected revenue growth to slow further this quarter.
MasterCard, whose shares rose as much as 4.3 per cent in morning trading, said its net income rose 14 per cent to $US870 million, or 73 cents per share, in the quarter. Analysts on average had expected earnings of 72 cents per share.
The company also stuck to its forecast of net revenue growth of between 11 per cent and 14 per cent between 2013 and 2015.
MasterCard’s worldwide purchase volume increased 10 per cent in local currency terms to $US759 billion, with much of the growth coming from Latin America, Asia and Europe.
U.S. purchase volumes rose 9 per cent to $US268 billion.
Global consumer confidence returned to pre-financial crisis levels in the first three months of this year, according to a survey by research company Nielsen, and was at its highest since the first quarter of 2007.
MasterCard’s net revenue rose about 14 per cent to $US2.18 billion in the three months ended March 31, beating the average estimate of $US2.14 billion, according to Thomson Reuters I/B/E/S.
The company’s shares were up 2.3 per cent at $US75.26 in early afternoon trading. Up to Wednesday’s close, the shares had fallen about 11 per cent since the start of the year, underperforming the S&P 500 Index <.INX>, which rose 1.6 per cent.
(Reporting by Tanya Agrawal in Bangalore; Editing by Saumyadeb Chakrabarty and Ted Kerr)
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