Wise has reported a pre-tax profit rise of 280 per cent in the six months ended 30 September.

Profits before tax for the British FinTech stood at £193.4 million compared with the £51.3 in the same period of 2022.

Income for the FinTech increased by 58 per cent to £656 million, which it said was largely driven by the interest income on customer balances. Revenue saw a 25 per cent increase to £498 million which the company attributed to strong customer growth.

Gross profit also increased by 86 per cent to £489 million, which led to an 11.5 percentage point increase in Wise’s gross profit margin to 75 per cent. Wise said that this was also driven by higher interest income, as well as lower foreign exchange (FX) costs over the period.

“The majority of the gross margin increase was driven by the higher interest rate earned on the growing balances that our customers hold with us – and we’re currently not able to return this interest to customers at the level we aspire to,” explained Matt Briers, chief financial officer at Wise.

Wise also saw its variable costs (cost of sales and net credit losses on financial assets), increase by nine per cent, which it said was due to a 12 per cent increase in cross-border volumes that were partly offset by the benefit of lower FX costs.

Briers said: “Given the favourable FX result (which could be only a temporary benefit), we do not expect the gross profit margin to remain this high throughout the remainder of FY24, but we do expect that, overall, our gross profit margin will be higher for FY24 compared to FY23.”

Over the summer Wise was among 13 FinTechs who called on the government for an “urgent review” on hidden international fees.

The coalition signed a letter revealing private research which suggests consumers and SMEs in the UK lost a total of £5.6 billion in mostly hidden foreign exchange fees in 2022 alone.

The letter said the hidden fees occur despite the widespread practice of firms claiming their currency conversion services have 'zero fees' or 'zero per cent commission'.

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