Wise sees 280 per cent boost in profit from high interest rates
Wise has reported a 280 per cent increase in profit as high interest rates continue to boost the fintech’s bottom line.
The firm reported a pre-tax profit of £194.3m for the half-year ending on 30 September, up 280 per cent year-on-year, due to higher foreign exchange income and “interest income on customers’ balances,” which continued to be a major tailwind for the company.
London-based Wise allows customers to transfer money to different countries and open accounts in multiple currencies.
Fees earned on foreign exchange transactions came in at £498.2m, up 25 per cent from the same period last year. Meanwhile, interest earned on customer cash balances jumped 848 per cent to £157.8m.
Wise reported total revenue of £656m for the period.
CityAM revealed last week that the firm had been forced to freeze onboarding all new business clients across the UK and Europe due to “high demand”.
Harsh Sinha, Wise’s interim boss while founder Kristo Käärmann is on sabbatical, told the Financial Times on Tuesday that the company had not anticipated how much due diligence it would require due to sanctions relating to the war in Ukraine.
The company reported a 33 per cent increase in customer balances and a 16 per cent increase in total transaction volumes across its platform to £57.4bn.
The group raised its full-year income growth guidance to between 33 per cent and 38 per cent, from 28 per cent to 33 per cent.
Jefferies analysts said in a note that the tailwind from higher interest rates, while “likely unsustainable”, was a “welcome temporary compensation” for a slowdown in core total processed volume.
Wise, which listed in London in 2021, has seen its shares rise 26 per cent year-to-date.
Wise share rose nearly two per cent in London on Tuesday morning.