CAB Payments H1 Earnings Call Highlights

Key Points

• Strong first-half performance: Total income rose 31% year over year to £68 million, while adjusted EPS jumped 157% to 5.4 pence and adjusted return on total capital increased to 26.3%. Adjusted EBITDA grew 82% as costs rose more slowly than income, expanding the EBITDA margin to 35%.
• New shareholder returns and capital framework: CAB Payments declared a 2.1 pence interim dividend, its first since the IPO, and plans mid-single-digit annual dividend growth from 2027. It is targeting a 16.5%–17.5% CET1 ratio, with excess capital available for investment, acquisitions, special dividends or buybacks.
• Growth investments and expansion continue: Income growth was broad-based, led by fintech and corporate clients, while emerging-market volumes rose 21% and correspondent banking revenue reached a record £17 million. The company is investing in its core platform and international expansion, and plans to launch its stablecoin product in the first half of next year after testing and regulatory work.

CAB Payments LON: CABP reported higher first-half income, earnings and returns on capital, while announcing its first interim dividend since its initial public offering and setting out a capital allocation framework aimed at supporting both investment and shareholder distributions.

The company said total income for the first half of 2026 rose 31% year over year to £68 million. Adjusted earnings per share increased 157% from the prior-year period to 5.4 pence, while adjusted return on total capital reached 26.3%, compared with 17.7% for the full year 2025.

Management reaffirmed its medium-term guidance, including a target for high-teens to low-20% compound annual growth in total income excluding net interest income over the next three years, alongside continued positive operational leverage.

Dividend and Capital Framework

CAB Payments declared an interim dividend of 2.1 pence per share, payable in September. Chief Financial Officer James Hopkinson said the distribution represents about 40% of adjusted profit after tax for the first half.

The company intends to grow its full-year dividend annually at a mid-single-digit rate beginning in 2027. It also established a medium-term common equity tier 1, or CET1, capital target range of 16.5% to 17.5%.

Its CET1 ratio stood at 21.7% after deducting the declared interim dividend. Hopkinson said capital above the target range would first be considered for organic investment, additional scale investments or acquisitions, with remaining surplus potentially returned through special dividends or share buybacks, subject to shareholder and regulatory approvals.

“Our priority remains delivering profitable business growth, but we’re also committed to being a capital-light business,” Hopkinson said. The company said it does not currently expect its surplus capital to change materially when the Basel 3.1 framework takes effect on Jan. 1.

Income Growth Across Client Segments

Income growth was broad-based across the company’s client categories. The bank segment, which represented about half of income, increased 13% year over year. Income from fintech and corporate clients rose 69%, including CAB Payments’ first corporate transactions with Emirates and TotalEnergies.

International Development Organization client income rose 47%, excluding two recently concluded multiyear global payment mandates. The company also completed its first syndicated trade finance facility, worth more than $100 million, for a partner bank.

Income excluding net interest income increased 48% year over year and was broadly flat from the second half of 2025. Hopkinson said the annual increase reflected client acquisitions, emerging-market volume growth and higher take rates.

Net interest income declined year over year, as previously guided, though it improved slightly from the preceding half. Average customer deposits rose 6% year over year and 9% half over half, with a shift toward call accounts, while net interest margin benefited from the company’s treasury investment strategy.

• Active clients totaled 601, including 32 added during the first half.
• Emerging-market volumes increased 21%.
• The company reported approximately 30 commercial relationships with central banks.
• Correspondent banking revenue reached a record £17 million in the first half.
• CAB Payments said it had 77 live correspondent banking clients and 60 additional clients in its pipeline.

Margins, Costs and Investment

Adjusted EBITDA increased 82% year over year, while the adjusted EBITDA margin expanded by 10 percentage points to 35%. Total costs rose 13%, below the 31% increase in income, producing positive operational leverage.

Hopkinson said operating costs increased by about £5 million year over year. Nearly £2 million of the increase related to fixed staff costs, primarily from international office and sales-team expansion. Variable staff costs increased by about £1.5 million in line with stronger performance, while cost of sales rose approximately £1.3 million as transaction volumes grew.

The company spent nearly £7 million on capital expenditures during the first half, equal to about 10% of income and within its target range of 8% to 12% of revenue. Management expects second-half capital expenditures to remain around that level, with most investment focused on a new core platform, client connectivity and product development.

Emerging-market foreign-exchange take rates remained around 18 to 19 basis points. Hopkinson said there were no market dislocations during the period, and that take rates were supported by volatility, currency mix and increasing payments contributions to the FX business. He added that emerging-market take rates declined somewhat during the second quarter, though it was unclear whether that trend would continue in the second half.

Expansion and Stablecoin Plans

Neeraj said CAB Payments is continuing to expand its international presence around established payment flows. The company has secured an office in Guyana, plans to open two additional African offices, and is developing relationships in Venezuela and other Latin American markets, including Honduras, Guatemala, Argentina and Ecuador.

The company also said it added Deutsche Bank to its clearing network, alongside Citibank, NatWest and Bank of New York. CAB Payments has 450 partners in its FX network and said it is strengthening its network in South Korea.

On digital assets, Neeraj said the company is focusing on stablecoin conversion into emerging-market currencies, describing the “off-ramp” into local currencies as a more difficult challenge than stablecoin on-ramping. CAB Payments said its stablecoin product has been built and is in testing, while the required ecosystem has been mapped.

The company has applied for Abu Dhabi Global Market permissions and expects them to be delivered during the third quarter. Management said the second half will focus on integration and testing, followed by a planned full stablecoin product launch in the first half of the following year.

Neeraj said the company’s strategy centers on expanding clients, markets and transaction volumes while using technology, including AI-enabled tools, to improve client responsiveness, efficiency and operational leverage.

About CAB Payments (LON:CABP)

CAB Payments Holdings plc and its subsidiaries (CAB Payments) is a market leader in business-to-business cross-border payments and foreign exchange, specialising in hard-to-reach markets. CAB Payments uses its strength of network, technology, and expertise to seamlessly move money where it's needed and is the holding company for Crown Agents Bank, a UK-regulated bank.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.

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