NEW YORK (Reuters) –
MasterCard Inc (MA.N), the world's second-largest credit card network, reported better-then-expected quarterly earnings Thursday as it raised fees charged to banks and cut expenses, sending its shares up 7 percent.

"It is a question of cost control," said Robert Dodd, an analyst at Morgan, Keegan & Co. "Marketing and advertising expenses were much lower than I expected."

The company's larger rival, Visa Inc (V.N), also reported better-than-expected quarterly earnings on Wednesday, helped by lower expenses.

But MasterCard Chief Financial Executive Robert Selander said the downturn in consumer spending would make it difficult for the company to meet its target of average annual revenue growth of 12 percent to 15 percent in the period 2009-2011.

"We don't expect the economic slowdown across the world will improve until sometime next year," Selander said in a conference call with analysts.

MasterCard's second-quarter net income was $349 million, or $2.67 per share, compared with a loss of $747 million, or $5.70 per share, a year earlier.

Excluding special items, earnings were $2.67 a share, topping analysts' average forecast of $2.43, according to Reuters Estimates.

Expenses declined 13 percent to $722 million, excluding special items, as the company trimmed advertising and marketing spending by 36 percent and reduced personnel and administrative costs.

Net revenue rose 2.7 percent to $1.3 billion, boosted by higher fees charged to banks and increased use of credit and debit cards by consumers. Those gains were partially offset by the appreciation of the U.S. dollar, in particular against the euro and the Brazilian real.

Processed transactions grew 7.9 percent in the quarter to 5.6 billion.

But gross dollar volume fell 0.6 percent to $595 billion on a local-currency basis, reflecting a decrease in the United States and a slowdown in Europe, Canada, Asia and Latin America.

"MasterCard reported a very solid quarter, with revenue and transaction growth slightly ahead, volumes largely in line, and earnings per share upside from expense cuts," JPMorgan analysts said in a research note.

MasterCard shares were up $13.27 to $201.82 in morning trading on the New York Stock Exchange after touching a 10-month high of $209.27 earlier in the session.

(Reporting by Juan Lagorio; Editing by Gerald E. McCormick and John Wallace)