CAB Payments anticipates an increase in activity during the second half of the year, despite facing challenges in the first half along some vital transportation corridors.
CAB Payments, a leading cross-border payment infrastructure provider focusing on Africa, has released its financial results for the first half of 2024. Despite a challenging global economic environment, the company demonstrated a robust performance.
Declining Revenues and Volumes
The company reported a decline in various revenue streams. Wholesale FX revenues dropped by 39% year-on-year (YoY) to £23m, while Payments FX revenues saw a 30% decrease, totalling £7m. However, other payments rose by 8% to £7m, offering a glimmer of positivity.
Total volumes also saw a 4% increase to £17.6bn, but market-wide payment flows were down approximately 5% in CAB Payments' core Sub-Saharan Africa market and globally by around 10%, according to the company's own analysis. As a result, CAB Payments' gross revenue declined by 22% to £56m in H1 2024. Total transactional income was down 32% to £37m.
Gross Revenue Prospects and Growth Markets
Despite the declines, CAB Payments remains optimistic about its prospects. The company expects gross revenue to rise in H2 2024 due to seasonal uplifts in volume, expansion into new markets, and the introduction of new products.
CAB Payments also anticipates double-digit growth in underlying transactions beyond its top three corridors for 2023. The company expects total gross revenue for 2024 to be "marginally down" compared to last year.
Key Markets for Inbound Payments
The African markets seeing the highest inbound payment flows for CAB Payments are likely those with the largest remittance inflows, such as Nigeria, Egypt, and Morocco. These countries historically receive billions of dollars annually.
Other important CAB Payments markets with high inbound flows via mobile money include Uganda, Rwanda, Zambia, Malawi, Gabon, Congo Brazzaville, and Tanzania, as indicated by Airtel Money's partnership with pawaPay, which supports international payments into mobile wallets across these countries.
Remittance flows to Sub-Saharan Africa exceeded $50 billion in 2023 and are expected to grow modestly to around $54 billion in 2025, indicating sustained high inbound payment activity, especially in more developed or better-connected markets.
Net Interest Income and CEO's Remarks
Net interest income increased by 2% for CAB Payments. This income now constitutes approximately 29% of CAB Payments' overall revenue, surpassing the Payments segment's 27%.
Neeraj Kapur, the newly appointed CEO of CAB Payments, described the company's performance in H1 as "resilient". He expressed confidence in CAB Payments' ability to navigate the current market conditions and deliver growth in the future, particularly in African markets beyond those already mentioned.
[1] Source: Airtel Money & pawaPay partnership announcement [2] Source: World Bank remittance data [3] Source: CAB Payments financial results H1 2024 [4] Source: Sub-Saharan Africa remittance forecast 2023-2025 [5] Source: African Development Bank remittance data
The declining revenues and volumes in CAB Payments' operations, particularly in Wholesale FX and Payments FX, indicate a challenging situation within the finance industry and the business sector, despite a robust performance demonstrated by the company during the first half of 2024. Despite the declines, CAB Payments remains optimistic about its prospects in the second half of 2024, anticipating growth from seasonal uplifts in volume, expansion into new markets, and the introduction of new products, indicating a continued focus on both the finance and business sectors.
