6 months ago • 2 mins
What’s going on here?
UK payments group Wise proved that it deserves its name on Tuesday, announcing a booming yearly profit.
What does this mean?
When Wise went public back in 2021, the company was greeted with all kinds of fanfare – but its share price has fallen by almost half since then, making that bravado seem just a little bit unwise. That said, things have been better this past financial year: the fintech, which specializes in international money transfers, saw customers’ cash balances rise more than 50% in the 12 months through to March. And those piles of cash were then compounded by rising interest rates, helping pre-tax profit more than triple. So despite the staggering economy hitting customers’ transactions, Wise sees interest galore in its future – and investors, who agreed, sent shares up around 20%.
Why should I care?
For markets: Don’t bank on them.
Wise has been making hay while the sun shines (read: while interest rates rise) – but not everyone can keep living it large. UK banks, for one, could be in for a serious shakeup. See, financial institutions have responded to rate hikes by boosting the interest they charge on loans – but they’ve been a whole lot slower to up the interest they offer on folks’ savings. Thing is, government pressure’s mounting, and analysts at JPMorgan think banks might soon have to mend their ways. That could be nice for savers, but not so nice for banks’ profits – especially if the UK has a “hard landing”.
For you personally: Go forth and multiply.
Mind you, there are some pretty juicy interest rates on offer already. And sure, a couple of extra percentage points probably won’t change your life – but every little helps in times like these, and decent rates can help defend your cash against inflation. If you’ve got some money on the sidelines then, shop around and make sure you’re getting a decent rate.
Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.
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