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Why Mastercard’s General and Administrative Expenses Rose

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Dec. 21 2017, Updated 10:30 a.m. ET

Personnel expenses

The general and administrative expenses of Mastercard (MA) comprises personnel expenses, foreign exchange activity, professional fees, data processing, and telecommunications and other expenses.

In the first three quarters of 2017, Mastercard incurred general and administrative expenses of ~$3.2 billion compared to ~$2.7 billion in the first three quarters of 2016.

Mastercard (MA) posted personnel expenses of $1.9 billion in the first three quarters of 2017 compared to $1.6 billion in 9M16. This increase resulted from the engagement of more employees in geographic expansion, digital areas, and advisors’ capabilities. However, acquisitions also contributed to this increase.

Mastercard delivered a return on equity (or ROE) of 73.0% on an LTM (last-12-months) basis. Among its peers (XLF), Global Payments (GPN), First Data Corporation (FDC), and Planet Payment (PLPM) delivered ROE of ~8.5%, ~45.2%, and ~88.3%, respectively.

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Data processing and other expenses

Mastercard (MA) incurs data processing and telecommunication expenses for maintaining its computer systems, global payments network, and telecommunication systems.

The company saw a 17.0% increase in these expenses in 9M17 compared to 9M16 due to its business growth. The acquisitions were also major contributors to this rise.

Mastercard incurred other expenses of $502.0 million in the first three quarters of 2017 compared to $499.0 million in 9M16, reflecting more cardholder services. However, the company saw fall in its loyalty expenses.

In the first three quarters of 2017, Mastercard incurred professional fees of $240.0 million compared to $231.0 million in the same period of 2016.

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