CAB Payments Returns to Profitable Growth with 12% Income Rise in FY25

Operating leverage finally showing through

Operating costs (ex depreciation and amortisation) increased 10% to £83.9m, but staff costs excluding variable pay were broadly flat after the Q1 restructuring, and headcount fell 13% to 366. Adjusted EBITDA margin nudged up to 30% (from 29%) and the adjusted cost:income ratio improved to 79% (from 80%), with a notable step-up in H2 (74% vs 85% in H1).

Operating Free Cash Flow hit £27.2m (+75%), with conversion of 77% (up from 50%). That is a healthier cash engine to fund growth. Do note depreciation and amortisation rose 25% to £10.6m as prior-year capex began to amortise – a headwind to reported profit but a normal one.

Capital, liquidity and the balance sheet pivot

The bank remains well-capitalised and highly liquid: CET1 22.1%, NSFR 148% and LCR 123%. Average deposits increased 4% to £1.5bn, with a shift to call balances (+27% YoY). Treasury assets were rebalanced – cash at central banks and money market funds reduced, while holdings of high-quality short-duration debt securities increased to £677.5m (from £246.0m).

CAB also implemented an interest rate risk hedging programme, reducing earnings sensitivity to rate moves. Translation: if US and UK rates fall further in 2026, the hit to NII should be more controlled than before.

Client mix and takeaways for resilience

• Banks: £71.9m (+15%), 60% of income – underpinned by higher FX volumes and trade finance balances.
• Fintechs & Corporates: £33.2m (+15%), 28% of income – volumes strong; margins recovering from early-2024 dislocation.
• International Development Organisations: £13.9m (-9%), 12% of income – funding backdrop softer, but H2 improved (+36% vs H1).

Importantly, CAB has added a further US dollar and euro clearing banking partner, which strengthens resilience in core currencies and supports growth capacity.

What could move the share price next

Near-term trading and guidance

Management says January and February 2026 traded well. Over the next three years, CAB is targeting high-teens to low-20s percentage CAGR in Total Income excluding NII, with continued positive operating leverage and meaningful capital generation. Capex will increase in 2026 to build a “future-ready” platform. A formal capital return framework is planned for the FY26 results announcement.

Watch the rate backdrop: management flags lower US rates as a near-term headwind for NII. The new hedging programme helps, but deposit mix and reinvestment yields will still matter.

Strategic expansion and product optionality

New offices opened in New York (Q4 2025) and Abu Dhabi (Q1 2026). FX derivatives capability has been built, ACH rails have expanded, and an A+ rated Guaranteed Deposits product launched. CAB is also exploring blockchain-based payments and central bank-backed stablecoin rails – early stage, but potentially useful in the complex markets where it specialises.

Post-period event: approach from Helios

On 2 March 2026, the Helios Consortium announced a firm intention to make an offer for CAB Payments at USD 1.15 per share in cash, with an unlisted, illiquid, non-voting share alternative. The Independent Board views the offer as highly opportunistic and believes it fundamentally undervalues the Group and its prospects. That sets the scene for a period of corporate intrigue alongside operational delivery.

Josh’s take: why this print matters

• Momentum restored: 30% half-on-half income growth and improved take rates suggest CAB has pricing power and a healthier pipeline.
• Quality of growth: Diversification by corridor and client, faster onboarding, and more partners reduce key-man and market-concentration risk.
• Operating leverage: Costs are now better aligned with revenue. There is more to go, but the H2 ratio shift is encouraging.
• Capital strength: CET1 of 22.1% provides firepower for growth and, potentially, future shareholder returns.

On the flip side, Payments income is still rebuilding, reported EPS dipped due to one-offs, and macro headwinds to NII are real. Execution in the Americas and Europe, plus monetising new products, will be the proof points in 2026.

What to watch in 2026

• Growth ex-NII: does CAB deliver towards the high-teens to low-20s CAGR target while keeping the cost:income ratio trending down?
• Margins and take rates: can the 15bps blended FX take rate hold or improve without relying on episodic dislocations?
• Trade finance distribution: scaling “originate-to-distribute” volumes without adding meaningful balance sheet risk.
• Capital return framework: detail at FY26 results – quantum, form, and prerequisites.
• Outcome of the Helios approach: potential bid dynamics and any read-across for valuation.

Bottom line

These FY25 results look like a turning point for CAB Payments. The business is growing again, more diversified, and generating better operating leverage. If management executes on the 2026 plan – expanding its network, monetising new products, and holding margins while rates drift lower – there is scope for compounding earnings and capital. The Board’s stance on the unsolicited offer underlines that confidence. For now, the numbers say the strategy is working.