Turning now to our thoughts on the economy and the state of business around the world. Our assumptions remain unchanged and we don''t expect any global economic improvement until sometime in 2010.
However, in a report published in October, the International Monetary Fund believes there are some early positive signs. The IMF Report said that following the deep global recession, economic growth has turned positive, largely as a result of wide ranging public intervention activities that have supported demand and lowered uncertainty and systemic risk across the financial markets. While the recovery is expected to be slow, as support from public policies gradually unwinds, the IMF believes that the shape of the recovery will vary.
Economies that suffered financial crises are likely to experience weaker recovery than those affected mainly by the collapse in global demand. Advanced economies like the U.S., U.K. and Western Europe are projected to expand sluggishly through much of 2010, with unemployment continuing to rise until later in the year.
The IMF projects that advanced economies will grow 1.3% in 2010, better than the decline of 3.4% they''re forecasting for this year. Emerging and developing economies are generally further ahead on the road to recovery, led by resurgence in Asia, primarily in China and India.
Overall, economies in this category are projected to grow from a rate of 1.7% in 2009 to 5.1% in 2010. Other emerging economies are staging modest recoveries supported by policy stimulus and improving global trade and financial conditions.
We continue to have concerns about the health of the consumer, as reflected in spending trends. There are several indicators we monitor to keep track of this, namely the rate of unemployment, the stabilization of housing prices, the rate of savings and various indices of consumer confidence across our key markets.
In summary, I believe the worst is behind us and there are certainly some encouraging signs in the recent economic data.
Turning to the latest MasterCard SpendingPulse data for the U.S. retail sector for the month of September, the results indicate an improvement over August, signaling the potential for a stabilizing environment for the remainder of the year.
Retail sales, excluding autos, declined 2.1% versus September last year. When excluding both autos and gas, retail sales actually rebounded, growing 2.1%. This is a positive sign considering the average of the prior three months, June through August, declined 2.4% on a year-over-year basis. This is the strongest pace of growth for retail sales, excluding autos and gas, since July of last year.
The trend is generally improving with more sectors showing year-over-year growth in the month of September than are showing declines. Some of these growing sectors include E-Commerce, Luxury, Electronics and Airlines. While the year-over-year U.S. growth statistics are improving, the country is still in a stable spending environment, rather than rebounding into a strong expansion.
In fact, despite September''s growth in many of the sectors, some are still well below the highs of 2006 and 2007 from an overall dollar perspective. For example, sales in Luxury Goods showed signs of improvement this September, as the sector comparables begin to reflect the spending freeze that began in the last two weeks of September 2008, but this sector has been one of the hardest hit during the downturn as consumers stopped making discretionary purchases.
When we look at our MasterCard process volumes and transactions through October 28, it shows the following. Our cross border volumes continued to stabilize across all regions. The rate of growth on a worldwide basis turned positive in low single-digits, which was better than the decline of 0.3% we saw for the third quarter.
The Asia-Pacific region continues to demonstrate significant growth on a sequential basis and the U.S. rate of decline has decreased to low single-digits. Well, not a perfect proxy for gross dollar volume, U.S. processed volume growth has turned slightly positive through the first four weeks of October relative to the low single-digit decline we saw in the third quarter, which also signals potential signs of stabilization.
Process volumes for the rest of the world also improved relative to the third quarter. Process transactions continue to grow in the 8% range, similar to the second and third quarters of 2009.
I''ll now turn the call over to Martina for a detailed update on our financial results and operational metrics. Martina?
Martina Hund-Mejean
Thanks Bob and good morning everyone. Let me begin on page three of the deck where we''ll focus on the non-GAAP columns, which exclude all special items. As Bob said, we are pleased to have delivered another strong quarter of financial results.
Third quarter net revenue grew 2% to $1.4 billion over the comparable period last year. Net revenue grew 3.9% for the quarter on a constant currency basis. This revenue increase was primarily driven by pricing changes of approximately six percentage points and a 7.6% increase in the number of process transactions. These factors were partially offset by the impact of slightly lower cross border volumes in local currency terms, which translated to a 6.4% decline on a U.S. dollar basis.
We have continued to effectively manage our total operating expenses, which decreased 13.3% for the quarter. Foreign exchange contributed 1.3 percentage points to the decline. As a result, our operating income was $680 million for the quarter and we delivered a quarterly operating margin of 49.8%. This represents an 8.8 percentage points improvement over last year''s third quarter.
MasterCard''s effective tax rate was 32.9% in the third quarter of 2009, both excluding and including special items, primarily reflecting adjustments to our effective tax rate as a result of a settlement with the IRS over prior tax years. On the bottom line, we delivered net income of $456 million or $3.48 per diluted share.
|
