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Visa, MasterCard and the Power of Plastic

Stocks in this article: AXP DFS MA V MS

Then there's Discover. Since it was spun off in 2007 by Morgan Stanley (MS), the company has successfully diversified. Acquisition and innovation have taken the company into student, home and personal loans with much success. Over this time, Discover has remembered its origins and continued to make progress within its core processing and lending segment.

Discover's total revenue, net of interest expense, increased 2.8% year over year to $2.06 billion. The improvement came on the back of Discover card sales volume growth from its portfolio of clients. Moreover, the company reported its net interest income improved by 8.8% year over year to $1.51 billion, driven by strong loan growth and higher net interest margins.

Total loans improved by 5% year over year to $62.7 billion, helped by a 4% increase in credit card loans. Strength was felt across all line of the company's loan portfolio. Discover was able to generate a 5% increase in private student loans and a 26% jump in personal loans.

Meanwhile, MasterCard has positioned itself second in the U.S. plastic market with 26% market share in payment volume. However, during the company's third quarter it was the company's oversees segment that shone. The company announced its net income rose to $879 million, or $7.27 per share, from $772 million, or $6.17 per share, last year. On the top line MasterCard generated a 16% rise in revenue to $2.22 billion for the three months that ended Sept. 30.

Excluding the company's U.S. results, the dollar amount people spend using MasterCard-branded cards rose by nearly 19% on a local currency basis. The international results greatly outperformed the domestic market segment, which only saw spending increase by 10%.

MasterCard was able to beat analysts' expectations on both the top and bottom lines. The experts on Wall Street were expecting only $6.94 per share and on revenue of $2.14 billion. Going forward, the Street will be keeping its eye on the company's international growth. Sustained high levels of growth in the emerging and international segment could allow the company to form another foothold position.

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