Wise's Profits Soar 280% in H1 2023 Amid Higher Interest Rates

British fintech firm Wise records a staggering 280% YoY surge in pre-tax profits for H1 2023, reaching £194.3 million, driven by higher interest rates. The half-year revenue stands at £498.2 million, marking a 25% YoY increase, with a total revenue of £656 million, showcasing a 58% YoY rise. Wise's strong performance, despite industry caution, is linked to a larger customer balance accumulation during central bank rate hikes, resulting in increased interest and dividends.

Analysts express caution on Wise's total processed volume (TPV) momentum, anticipating continued pressure on volume per customer (VPC). The fintech giant, operating in the consumer-focused industry, defies market expectations as it benefits more from higher interest rates than traditional banks. Wise's market capitalization is £7 billion ($8.7 billion), and its share price has risen by 25% since the beginning of the year.

Wise's success contrasts recent declines in payment equities, challenging the notion of a fintech downturn. The firm, publicly listed on the London Stock Exchange since 2021, experiences a steady market response, with shares remaining stable following the profit announcement. The leadership transition, with Harsh Sinha taking over from CEO Kristo Kaarmann during a sabbatical, does not impact Wise's remarkable financial performance.

Last week, Wise paused new business account registrations due to high demand and later resumed online business account signups in the UK. The company's revenue growth and market share expansion continue, showcasing the resilience and positive impact of higher interest rates on the fintech sector.