H1 income +31% y-o-y, growth guidance reiterated

H1 results saw Total Income rise to £67.6m, up 31% y-o-y (H125: £51.8m) with Income excl. Deposit Net Interest Income up 48% to £52.3m. This was mostly driven by volume growth in Emerging Markets and take-rate expansion, which benefitted from the fees derived from CAB’s additional services to EM central banks. Management have reiterated confidence in their growth guidance of high-teens to low-twenties percentage CAGR in Total Income (excl. Deposit NII).

Adj. EBITDA was £23.8m, up 82% (H125: £13.1m); adj. EBITDA margin was 35.3% (H125: 25.3%); PBT grew 4.7x, to £14.6m (H125: £3.1m); and basic EPS grew 4.1x from 0.9p to 3.7p.

CAB’s capital position firmed, with net assets +15% y-o-y to £171.5m, and the CET1 ratio up from 19.5% to 21.7%, the highest of UK-listed banks (see page 2). Management have announced a new capital management framework including an inaugural interim dividend of 2.1p and a progressive dividend from 2027. Over the medium term, CAB seeks to maintain a CET1 ratio of 16.5% - 17.5% (c. 2% above total capital requirement). Surplus capital will be used for attractive growth opportunities, with any additional surplus returned to shareholders through share buybacks and /or special dividends.

Management state "There is a lot to be excited about" while progressing current growth opportunities and pursuing new ones. For example, the relatively new offices in Amsterdam, New York, and Abu Dhabi are expected to deliver further volume growth. A Guyana office is to open in H2 with further offices planned for Nigeria and Cote d’Ivoire. Deutsche Bank is a new addition to CAB’s strategic clearing network (in addition to Citi, NatWest, Bank of New York and others) which they expect to drive further growth of correspondent banking clients. New products continue to be rolled out (such as mobile payments and smart routing) with further offerings at a relatively advanced stage, such as Stablecoin solutions in EM, the initial offering of which is set for testing in H2 and for rollout in H127.