CAB Payments, the parent of Crown Agents Bank, has announced its first earnings results since it went public via an IPO on the London Stock Exchange in July, with strong top-line numbers in H1 2023.

The company reported a 94% increase in revenue year-on-year for the half to £71.8m, while adjusted EBITDA increased by 180% to £39.9m. This led to a 17 percentage point increase in adjusted EBITDA margin, which sits at 56% for H1 2023.

This puts the emerging markets B2B-focused player firmly on course to achieve its previously stated FY 2023 targets, which sit at around £160m revenue and an adjusted EBITDA margin of 55-60% for the year.

CAB Payments builds B2B payments presence in H1 2023

CEO Bhairav Trivedi took the opportunity to restate the company’s focus during the earnings call, explaining that CAB Payments uses proprietary, “dedicated emerging market infrastructure” to deliver cross-border payments in a single hop, rather than the multiple hops required using the traditional SWIFT network. 

Here the company continues to invest in building out its network, and now has 152 Nostro accounts – up from 135 at the start of 2023.

Trivedi highlighted that the company is catering to a fast-growing market that currently has a TAM of $2.3tn in flows, and serves a blue-chip client base across a wide variety of industries and specialisations. At present, CAB Payments has 520 clients, 44 of which were added in H1 of this year, and says it is on track to secure an additional 100 clients over the course of 2023.

CAB Payments is also continuing to shift its focus to digital money transfers, which it says are quicker with lower error rates, and now has over 90% of its FX transactions delivered through its digital channels.

FX, interest income drive growth for CAB Payments

The company’s strong H1 2023 results are particularly notable because CAB Payments’ business has traditionally been highly seasonal, with Q2 historically being its lowest-revenue quarter. This is the result of it catering particularly to development organisations, whose budgets create seasonal peaks in spending.

The company’s results were in part driven by strong growth in its transactional business segments, which saw combined YoY revenue growth of 64%, with payments increasing 30% while FX grew 87%. Within this, local market changes have traditionally played a role, with the company typically benefitting from volatility. 

Here, Nigeria’s naira has been one of CAB Payments’ strongest currencies, although changing central bank policies saw income from it rise in Q1 but drop in Q2, bringing it to pre-2021 margin levels. This has resulted in naira revenue of £15m for the half, up from £6m in H1 2022 but down from H2 2022’s £22m, and the company expects naira to remain significant but lower than its peaks in the future.

While the company has also grown its customer base, CAB Payments expects about 90% of its income to be generated from existing customers in 2023, with the remaining 10% from new customers. It expects new customers to help drive revenue more as they are with the company longer.

Meanwhile, the company also saw a significant increase in net interest income as a result of Federal Reserve and Bank of England interest rate raises, which offset naira reductions. Combined with trade finance and liquidity services, this saw revenue from other banking services increase 371% to £16.8m in H1 2023.

Future outlook

CAB Payments expects its future performance to continue to grow, with Trivedi highlighting a number of tailwinds for the company. It expects its core focus markets of Africa, LatAm, APAC and the Middle East to continue to grow at around 5% per year, while it is also seeing an increased interest in using specialist providers such as CAB Payments as opposed to banks.

The company is also growing its customer base across four distinct client sets. Major market banks currently contribute the lowest amount of revenue, at around 5%, but are growing at 73% YoY. Emerging market financial institutions, meanwhile, account for 35% of revenue and are seeing 29% growth, while non-bank financial institutions and fintechs make up 30% of revenue and are growing by 67%. However, international development organisations, which make up 30% of revenue, are expected to grow at 91%. 

CAB Payments also continues to grow its global infrastructure, with the goal of accessing new markets. It has already increased its traded currency pairs up from around 500 to around 600, and has added Brazil and the Pacific Islands. Its current focus is on expanding in Europe and the US, which would open up “critical markets”, and it is currently in the process of obtaining licences in both jurisdictions.

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Lucy Ingham

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Lucy is Head of Content & Editor-in-Chief at FXC Intelligence, overseeing all content and taking deep dives into the trends and data driving changes in payments. Before joining FXC Intelligence, Lucy worked as a technology journalist and editor, interviewing CEOs and major names across enterprise technology, including fintech. She has an MSc in Development Anthropology from Durham University.