Wise: Fintech’s shares crater as it forecasts slower income growth

Money transfer firm Wise’s shares have cratered after it forecast a slowdown in income growth this year, as the boost it received from historic interest rate hikes dies down.

The London-listed fintech’s stock price plunged as much as 23 per cent in early trading on Thursday, its biggest intraday drop ever and wiping more than £1bn from its market capitalisation.

It issued guidance expecting underlying income growth of 15 per cent to 20 per cent for its 2025 financial year over 2024.

However, this would mark a slowdown on the 31 per cent it simultaneously posted for its last financial year ending on 31 March 2024, with interest rates likely to have peaked in several key regions.

Wise added that it expected an underlying pretax profit margin of between 13 per cent and 16 per cent in the medium term. This figure came in at 21 per cent for the last financial year.

The firm reported a pretax profit of £481m for the 12 months, more than tripling from £146.5m the previous year. On an underlying basis, this number also more than tripled to £241.8m.

Its revenue grew 24 per cent to £1.05bn over the year.

Wise, which offers current accounts and allows customers to send cash overseas, has enjoyed a boost from higher interest rates across the globe. Its interest income more than tripled over the 12 months to £485.2m, from £140.2m.

The firm said it would aim to return 80 per cent of this income to customers. However, as Wise is not a licenced bank in the UK, it is not able to pay interest to British users.

“I believe policymakers in government are looking forward to fixing it as it doesn’t make sense for customers and for the public,” co-founder and chief executive Kristo Käärmann said on Thursday.

The firm, launched in 2011, has enjoyed a boom in customer numbers in recent times. Its active customer base grew 29 per cent to 12.8m in the last financial year.

Meanwhile, its cross-border payment volumes grew 13 per cent to £118.5bn. Wise claimed to have saved customers more than £1.88bn over the year.

“We are investing in infrastructure and customer experiences to serve as much of this huge, under-served cross-border payments market as possible, including starting FY25 by reducing fees further for our customers,” Käärmann added.

Wise is set to be challenged by HSBC’s new international payments app and debit card, Zing, which launched in December.

However, Wise boasts lower transaction fees than Zing and continues to outpace its direct competitors. Rivals Monese and Revolut both posted losses in 2022.

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