) announced a strategic alliance with US-based bank-related
financial company -
) KeyBank NA, in order to issue various different kinds of credit
cards for the bank. This further extends the 15-year old work
relationship between both the companies, which till now involved
debit payment processing and ATMs.
KeyBank offers services related to deposits, lending, cash
management and investments in about 14 states across the US.
These services are doled out to individuals as well as small and
Recently, the bank also acquired a credit card portfolio worth
$725 million, which highlights the role of MasterCard to issue
credit cards and strengthens the payment processing network.
Hence, the companies have come together to produce a special
suite of MasterCard-branded credit cards for consumer, business
and commercial purposes. These new set of MasterCard-branded
credit cards will be launched by KeyBank later this year.
The agreement also complements KeyBank's strategy to bolster
its relationship with customers as it plans to offer rewards on
these cards. On the other hand, the new contract should enhance
MasterCard's payment volumes and number of processed
transactions, thereby supporting the financials.
Such long-term contracts are also crucial for boosting
MasterCard's market position and brand value, particularly
against card giants such as
American Express Co.
).Given the strong competition, currency and interest rate
fluctuations along with stringent regulatory reforms that have
disturbed the pricing, credit allocation and business model of
the card giant, we believe MasterCard will require consistent
top-line growth along with strong expense management in order to
maintain the stability in its margins.
Nevertheless, MasterCard enjoys strong liquidity with no
long-term debt for over a couple of years now, despite the
economic turmoil that eroded the reserves of most of the
organizations. This further augurs long-term organic growth
MasterCard is scheduled to release its fourth-quarter 2012
earnings results before the bell on January 31, 2013. The Zacks
Consensus Estimate pegs the earnings for the fourth quarter at
$4.79 per share, which is about 19% higher than that of the
year-ago quarter. For 2012 and 2013, earnings per share are
expected to climb about 17% and 16%, over the prior year, to
$21.99 and $25.58, respectively. MasterCard carries a Zacks Rank
#2, which implies a near-term Buy rating, while our long-term
recommendation remains Neutral.
AMER EXPRESS CO (AXP): Free Stock Analysis
KEYCORP NEW (KEY): Free Stock Analysis Report
MASTERCARD INC (MA): Free Stock Analysis
VISA INC-A (V): Free Stock Analysis Report
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