Wise pre-tax profits triple on higher interest rates

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UK payments group Wise has reported annual profits more than tripled as it benefited from rising interest rates and expects the trend to continue, sending its shares up almost 20 per cent.

The fintech, whose listing in 2021 was hailed as a rare triumph for the London market, said its interest income from customers’ cash balances rose sharply in the 12 months to the end of March.

That helped drive the group’s pre-tax profits to £146.5mn, up from £43.9mn in the previous year. Wise said it expected income to climb between 28 per cent and 33 per cent this financial year.

Analysts at Peel Hunt said the group’s “guidance was better than expected”.

Despite a slowing economy curbing volumes per customer at the end of the year, Wise said it had been helped by “unusual trends” this year, including “strong interest income”, which it expected would continue to grow.

Customers’ cash balances rose by more than 50 per cent to £10.7bn in the 12 months to the end of March, split nearly evenly between personal and business accounts.

Shares in Wise surged almost 20 per cent in early trading on Tuesday, cutting their decline since the fintech listed to just over 30 per cent.

In full-year results, Wise said transaction volumes per customer had declined in the last quarter of its financial year, a trend that it anticipated would continue. Overall volumes per customer were flat for the 12 months to the end of March, Wise said, pointing to a slowdown in international property sales in the second half.

The fintech is seeking to move on from several scandals over the past year. In June, the UK’s Financial Conduct Authority launched an investigation into chief executive Kristo Käärmann over deliberately defaulting on tax payments. In August, its subsidiary was fined by the United Arab Emirates’ financial regulator over failures in its anti-money laundering controls.

In May, Käärmann announced he would be taking a three-month sabbatical starting in September to spend time with his family.

The company also announced that chief financial officer Matt Briers, who has held the post since 2015, would depart by March 2024 to focus on recovering from an accident he suffered in 2022.