Wise records 16% rise in share price

Shares of online money transfer firm Wise experienced a significant surge of 16% on Tuesday following the company’s announcement of a spike in profits driven by rising interest income. Wise reported that its profit before tax tripled to £146.5 million ($186.5 million), while earnings per share more than tripled to 11.53 pence. The company attributed this success to a 34% growth in customers, reaching a total of 10 million users by March 31, 2023, and a 37% increase in volumes to £104.5 billion.

The surge in Wise’s shares led to a closing price of approximately £6.11 on Tuesday, marking an increase of over 16% in a single day. The company’s profitability was supported by the recent rise in interest rates, with the Bank of England raising rates to 5% as a response to persistent high inflation. Similar to other fintech companies, Wise was able to generate income from the interest earned on funds held in customer accounts. This trend has also been observed in the profitability milestones reported by Monzo and Starling Bank, citing increased lending income.

Wise announced that its revenues experienced a substantial growth of 51% to £846.1 million, compared to £559.9 million in the previous year. The overall income reported by the company rose by 73% year-on-year to £964.2 million, bolstered by a surge in customer deposits. However, alongside its positive financial performance, Wise has faced challenges such as a tax investigation involving its CEO, Kristo Kaarmann, regarding a £365,651 tax bill. Kaarmann stated that the investigation is ongoing and emphasised that it was a personal mistake unrelated to the company’s operations.

Furthermore, Wise encountered a regulatory fine of $360,000 from Abu Dhabi authorities for deficiencies in its anti-money laundering controls. Kaarmann assured that this issue has been resolved. Additionally, Kaarmann announced plans to take a three-month sabbatical between September and December, during which the company’s chief technology officer, Harsh Sinha, will assume the CEO duties on an interim basis. While there has been speculation about Sinha potentially assuming the CEO role permanently, Wise has not made any official statements regarding this matter.