MasterCard Inc.'s credit rating was recently raised by Standard & Poor’s, indicating that the company had “excellent profitability” amid a weak economy.
MasterCard , the world’s second largest payments network, saw its New York-based long-term counterparty Purchase's rating go up by one level from BBB+ to A-, Bloomberg.com reports. The move didn’t change the firm’s short term A-2 rating.
“The upgrade reflects the company’s excellent profitability and robust cash-flow generation through the economic cycle,” S&P analyst Vikas Jhaveri said, Bloomberg.com reports. “The company has maintained a conservative financial profile during the past several years and continues to build its capital base.”
MasterCard has posted $3 billion in profit since early 2010. It’s CEO, Ajay Banga, has declared a “war on cash,” and is expanding the firm’s presence in emerging markets through acquisitions as more customers choose to use their cards for purchases rather than use cash.
Visa Inc., the world’s largest payment network, gained 14 percent this year while MasterCard gained 36 percent.
Standard & Poor’s said that macroeconomic trends favor MasterCard, especially in certain countries outside the United States where many people have only now started using plastic, according to Forbes.com.
S&P said it could lower MasterCard’s ratings if regulatory actions and lawsuits regarding new rules under last year’s financial overhaul law reduce the amount banks can charge in interchange fees and threaten the bank’s profitability.