FinTech: Higher Interest Rates Propel Wise To A Solid Jump in Half-Yearly Pre-Tax Profit
Wise handled £57.4 billion in total payment volumes in the six months ending 30 September, a 12% year-on-year increase.
British fintech firm Wise (LON: WISE) has reported a substantial increase in profits, citing a boost from higher interest rates. In its half-year results for the period ending on September 30, 2023, the company revealed a revenue of £498.2 million, up 25% year-on-year. The total income, including interest income, reached £656 million, marking a 58% year-on-year increase. Notably, pre-tax profits soared to £194.3 million, up a remarkable 280% compared to the previous year.
Wise attributes its robust financial performance to higher interest rates, which have allowed the company to generate income from its substantial customer balances. The firm continues to benefit from a trend initiated earlier in the year when interest rate increases contributed to additional income. (CNBC)
Despite the impressive profit figures, Jefferies analysts remain cautious about the fintech’s total processed volume momentum, anticipating ongoing pressure on volume per customer. They acknowledge the temporary compensation provided by higher interest income but express concerns about its sustainability.
However, Simon Taylor, head of strategy at regulatory technology firm Sardine.ai, said in an email to CNBC that Wise had continued to grow its revenue and market share, and therefore benefited more from rising rates than the traditional banking sector.
Wise, known for its cost-effective international money transfer services, operates in a space closely tied to consumer health. The company’s financial success contrasts with recent challenges faced by other payment stocks. Wise’s share price, having risen 25% since the beginning of the year, reflects a resilient performance in the face of market fluctuations. The fintech’s CEO, Kristo Kaarmann, is expected to return from a sabbatical in December.
However, the positive numbers from the company underscore its ability to navigate market dynamics and capitalize on prevailing economic conditions.
Related Story: Investors Cheer Solid Growth From UK Fintech Wise
Latest Alternative Investment News
Circle and Nubank (NYSE: NU) have joined forces to broaden access to the digital dollar in Brazil. This collaboration aims to introduce USDC, Circle’s regulated dollar stablecoin, to Nubank’s extensive…
Berlin-based neobroker Trade Republic has secured a full banking license from the European Central Bank, marking a significant milestone for the fintech. This license empowers Trade Republic to both hold…
HUGO BOSS has reinforced its commitment to sustainability by becoming the inaugural investor in Collateral Good Ventures Fashion I, a climate-centric venture capital fund aimed at expediting sustainability initiatives in…
Elon Musk’s artificial intelligence startup, xAI, aims to secure $1 billion in equity financing to compete with industry leaders such as OpenAI, Microsoft, and Google. The company, co-founded by Musk,…