In its half-year results, which were released on Tuesday, British fintech company Wise nearly doubled pre-tax profits, citing a boost from rising interest rates.
For the half-year that concluded on September 30, 2023, Wise recorded revenue of £498.2 million, up 25% from the previous year. The company’s overall income for the period, including interest income, was £656 million, a 58% increase from the previous year.
The corporation made £194.3 million before taxes, a 280% increase from the previous year.
According to Wise, the company profited from rising interest rates, continuing a pattern that began earlier this year and resulted in additional revenue for the business.
In a time of central bank rate hikes, the company has higher customer balances than it did a year ago, which means it has more cash on hand that may be used to generate returns.
Despite Wise’s spectacular profit performance, Jefferies analysts stated in a note that they are still “conservative on TPV [total processed volume] trend, despite stabilisation expected, given VPC [volume per client] likely remains under pressure.”
The analysts pointed out that although the increase in interest income has helped Wise’s performance, it is a “pleasant temporary compensation” for the company’s slowing core total processed volume and is therefore “probably unsustainable.”
Wise’s business is heavily dependent on the wellbeing of its customers. It allows users to transfer money across borders for far less money than traditional banks charge. October’s 1.2% annual rise in U.K. retail spending was the lowest growth since December 2022.
With a market valuation of £7 billion ($8.7 billion), Wise went public on the London Stock Exchange in 2021. After a brutal year for technology stocks, the company’s share price has increased by 25% since the beginning of this year.
Source (CNBC)
