By
Chimamanda U. Martha
April 15th, 2024
Despite a few headwinds Wise has recently faced, the company’s stock jumped after revealing a spike in profits and revenue.
British fintech online money transfer firm Wise’s (LON: WISE) stock jumped almost 18% on Tuesday in reaction to a rise in company profits. In a recent statement, the London-based fintech noted that its profit before tax tripled to £146.5 million ($186.5 million). The company also reported that its earnings per share tripled to 11.53 pence.
According to data from MarketWatch, Wise stock has gained 6.58% in the last five days and 16.64% in a month. Since January, WISE rose 11.09%, and a whopping 97.6% in the past year. As of 1:49 pm BST, WISE was trading at £624.40 after climbing nearly 19% on the day. The company’s previous close was £525.40.
Wise has recorded a 34% increase in customer growth, with a total of 10 million as of March 31, 2023. Also, the company’s volume hit £104.5 billion after climbing 37%. For revenue, Wise hit £846.1 million, rising 51% from the £559.9 million the year before. Wise’s total income, buoyed by a spike in customer deposits, jumped 73% year-over-year (YoY), cresting at £964.2 million.
Generally, much of Wise’s profits came from rising interest rates initiated by the Bank of England (BoE). Last week, the BoE increased interest rates for the 13th consecutive time, adding 50 basis points. The Monetary Policy Committee voted 7-2 in favor of the addition, increasing the BoE’s base rate to 5%.
The apex bank has been consistently increasing interest rates to fight rising inflation. In May, the annual consumer price index (CPI) rose 8.7%, higher than the 8.4% expected by economists.
Wise Records Stock Spike Despite Headwinds
The jump in Wise stock is a silver lining amid the company’s issues. Last year, the Abu Dhabi Global Market’s Financial Services Regulatory Authority (FSRA) fined Wise $360,000 for violating anti-money laundering (AML) laws.
In a statement, the FSRA said Wise Nuqud, a local Wise subsidiary, did not create and operate an AML framework enough to comply with the agency’s requirements. Although the FSRA said it did not find any actual money laundering instances, it identified inadequacy and failures in setting up guideline systems and controls.
UK tax authorities added to Wise’s problems last year after accusing CEO and co-founder Kristo Kaarmann of tax evasion. Her Majesty’s Revenue and Customs fined the CEO £365,651, nearly $495,000 at the time, for filing his personal tax returns late for the 2017/2018 tax year. A company spokesman confirmed that Kaarmann had paid the fine and added required late filing penalties.
In a recent conversation with BBC Radio, Kaarmann seemed to downplay the incident. According to him:
“It has really not much to do with the business that we’re running. It was a personal mistake. I was really late with my taxes a long time ago and I paid the fines.”
Nonetheless, Kaarmann said the Financial Conduct Authority (FCA) is investigating the incident. The outcome of the FCA’s investigation may affect his position as CEO if found guilty.