Good morning, everyone, and welcome to our 2024 annual results presentation. We're happy to have you in the room today and those dialed in via webcast. I'm joined here today by our CEO, Neeraj Kapur, David Bee, our Chief Commercial Officer, and Claire Gates, our Global Head of Payments. Neeraj will be covering a lot today, including key highlights, an overview of our 2024 financial performance, and then he'll give a strategic update where he'll be joined by David and Claire. After the presentation, there'll be an opportunity for Q&A, firstly from those in the audience today and then those dialing in remotely via the conference line. With that said, I'll hand it over to Neeraj.
Thanks, Gaurav. Good morning, ladies and gentlemen. I'm very excited to talk to you today about our 2024 full-year results in the context of our strategy for our future. I'm delighted to be joined by my two very capable colleagues, very experienced people from my team, Chief Commercial Officer David Bee and Head of Payments Claire Gates, who we'll hear from later. Before we get into the slides, I want to spend a few minutes giving you some context on our progress against our four-pillar strategy, which I introduced to you at the H1 results last year. This was about improving the network, being more client-focused, leveraging our platforms, and investing and innovating our technology for growth. How does that work in practice? We use our technology backbone as our advantage to sell our solutions to our clients through our relationships in the markets we operate in.
Our business will increasingly become a geographically diverse financial powerhouse in our chosen markets. Our operations will no longer be defined as a single branch offering centrally controlled from London here, but rather as a truly global enterprise with strategic hubs in London, Amsterdam, New York, and Abu Dhabi. Quite simply, this means first and foremost, we remain an organization that is driven by relationships. It is not just about geography. It is about how we engage with our clients, regulators, and partners across the world. It is about relationships. It is also about using technology to deepen trust, improve efficiency, and build the kind of business that thrives in today's complex and rapidly evolving financial landscape. Historically, CAB Payments has operated with a centralized model serving all our clients from here.
While this model serves us well and has become increasingly clear to us that to truly capture the opportunities in front of us, we need to be closer to our clients. It's all about those relationships and immersing ourselves in the markets that they operate in and also understanding their regulators and their governments. Why are we establishing operational hubs in Amsterdam, New York, and Abu Dhabi? We are embedding ourselves in key financial centres where decisions are made, where relationships flourish, and where the future of cross-border payments is being shaped. This expansion is about proximity to opportunity, regulatory alignment, and deepening engagement with institutions that are integral to our business. You might ask, why have you chosen those locations? Each of these locations has been selected with a clear purpose. London remains our core operations and innovation hub.
Amsterdam strengthens our European presence and gives us better access to EU financial institutions and regulatory frameworks post-Brexit. New York connects to the heart of global banking and expands our reach in the Americas. Abu Dhabi cements our role in the Middle East and provides a strategic gateway to North Africa and South Asia. I mean, it's very much a long-term vision designed to drive sustainable growth, mitigate concentration risk, and enable CAB Payments to operate as a truly global business. We're also deepening relationships with central banks. Beyond our geographic expansion, strengthening our relationships with regulators and central banks has been a critical focus for me. These relationships aren't just about compliance. They're the foundation of trust that enables us to win and retain business in key markets. They give us our license to operate.
I recently had the privilege of meeting with governors and staff of the Central Bank of Nigeria, the Central Bank of Bahamas, the Central Bank of Guyana, and the Central Bank of Suriname. These visits were invaluable in helping me understand firsthand the depth of our relationships with these institutions and very much the unique role we play in their financial ecosystems. In Nigeria, the discussions underscored the critical role we play in facilitating cross-border transactions in one of Africa's most dynamic economies. In the Bahamas, we explored opportunities in digital payments and how our solutions align with the region's evolving financial landscape. In Guyana and Suriname, the engagements reaffirmed our ability to support their huge GDP growth driven by extractive industries. What became abundantly clear to me during these meetings is that we're a lot more than an FX payments provider.
We have earned a right to win in these markets. Our reputation, regulatory compliance, and track record of being trusted to do what we say we will do puts us in a unique position to deepen and expand our business. Our ambition is clear to be the most technologically advanced and relationship-driven payments provider in our markets. This is not just a competitive advantage; it is a necessity for long-term success. The identified opportunities are immense, as are the addressable markets. We are now firmly in the execution phase of delivering what we see in front of us. Moving to slide three, I want to use this slide to make our business model clear to you. The left shows that previously the business derived most of its revenues from some market volatility and dislocation in high-margin emerging markets.
The business was highly siloed and missed the opportunity of incremental value the banking relationships and platform could add. The result is a business that was unpredictable and highly correlated to macro conditions, but also highly profitable. We are changing our approach to generate more predictable income and become more demand-led in vast markets that specifically demand our products to deliver material growth. As part of this drive, we are diversifying our clients and geographies. We are integrating our business and products better so they drive each other to provide multiples of volume growth in FX payments. As I mentioned earlier, we are now relationship-driven, becoming more geographically diverse, and using technology to drive our growth. The key thing to bring out on this slide is that our strategy is working. This is evidenced by our operational and strategic KPIs moving in the right direction.
We have a more diversified business with multiple income drivers that will allow us to grow sustainably. We saw increasing market share and good growth in volumes. We grew our revenue-generating client base, and we significantly expanded the use of our balance sheet to generate increased client loyalty and feed our FX and payments business. We mentioned at the beginning of the year that we were taking actions to reshape our business and cost structure to better reflect our growth strategy. These are all well underway and delivering. Slide five is a quick snapshot of 2024. I want to emphasize that our business model is fundamentally robust and resilient. Despite the macroeconomic headwinds in our market, we delivered a cash-generative and profitable financial performance. As I mentioned earlier, our strategic KPIs are purposefully in the right direction.
Our total volumes grew 7% in an overall market that declined in 2024. We grew our client base, all paying customers, by the way, by 7%, and our network by 18%. This is great progress, and my personal interaction with clients and liquidity partners around the world shows that they trust us and want to use us more than ever. From a financial perspective, we generated GBP 105 million of gross income and a respectable 29% adjusted EBITDA margin, and importantly, remained profitable, generating GBP 16 million of adjusted profit after tax in the year. I will go into the details of our financial performance shortly. As a bank, we have a strong CET1 ratio of 19.2%, and we are a deposit-based bank with GBP 1.6 billion of deposits. We have plenty of liquidity and are uniquely placed to serve our clients with our banking platform in place.
Looking through to our financial performance, as you see on slide seven, it was evident that there was a material reduction in revenue versus 2023. We have, however, made strong progress in diversifying our income profile, driven by a mixture of FX payments, fees, and net interest income. Looking at revenue generation, we flagged at the end of last year that we were experiencing lower flows from IDOs and the stronger dollar. The latter has the effect of reducing average transaction values and hence reducing the income we earn as a result. Furthermore, unlike 2023, we did not benefit from any significant market dislocations. There were some, but not as material as the exceptional Naira performance in 2023.
Total gross income fell 23% as a result, but was flat year on year when adjusting for the exceptional Nigerian Naira and also the Central African Franc and the West African Franc, ZAF and ZOF. Our wholesale FX payments business fell 39%, but when adjusted for Naira, ZOF, and ZAF, it fell 7%. Fees from our same currency payments grew 3%. Banking income increased 8% due to better asset allocation, mitigating a falling rate environment. Costs were up 6%, largely driven by investment in enhancing our technology infrastructure and new office space in London, Amsterdam, and New York. On slide eight, I wanted to show you our income stack over the last three years, both by product and by client type. By product type, we view our business as having three primary revenue drivers: FX, payment fees, and interest income.
This illustrates a good proportion of our total income is fairly predictable: banking, payment fees, and the developed market FX portion of income. In 2024, we certainly had a better balance of income, which plays to the strength of our business model and the ability to underpin growth. FX and payments in emerging markets remain our core business and defines our specialism. This is also the source of income volatility, which our new strategy aims to stabilize. If you compare 2022 and 2023 to 2024, you can see just how impactful the Naira and, to a lesser extent, ZAF and XOF were to our business. Revenues from these three corridors dropped GBP 31 million year on year in 2024. Outside of this, our FX and payments performance, notably in emerging markets, included other take rate and volume dynamics, which I will explain on the next slide.
By client type, excluding the noise of the Naira, ZAF, and West African Franc, we can see there is relatively steady progress in all of our client types despite the falling market. This is showing that we are building a strong relationship-built business and remain highly relevant to the needs of our customers. Slide nine shows our developed market volumes have been growing steadily year on year, with this consistently stable take rates demonstrating our ability to provide a valuable service to our developed market clients and successfully compete for business against large institutions. To be clear, developed markets refers to G10 to G10 transactions. Our emerging market volumes declined versus 2023. This is attributable to two factors: a stronger dollar, lowering transaction values, as well as the pullback that we mentioned on IDO volumes.
Firstly, going through take rates, emerging market rates have declined significantly versus last year from 55 basis points to 29 basis points. However, taking out the Naira, ZAF, and ZOF currencies, this drop was materially less, going from 38 to 30 basis points. This illustrates how material the dislocated performance was to our take rates. Why did our underlying take rates fall? This was a function of our lower demand for hard currency in certain key frontier jurisdictions and the actions of some competitors who can operate in different ways to us. Further diversification will be key to growing both volumes and take rates with support from the banking business to build client loyalty. Turning to operating costs on slide 10, cost increased by 6% year on year, as I mentioned earlier. All of these were non-staff costs.
These were largely related to investment in our premises and technology platforms, with higher expenses reflecting the increasing capabilities of our organizational infrastructure as we prepare the group for future growth. A new London office and the additional cost of new offices in Amsterdam were not present, obviously, in the 2023 cost base. Staff costs were held flat year on year at GBP 45.5 million. It's also worth noting that about 70% of our operating costs are fixed, which drove a negative operating leverage for 2024 due to the revenue position, but will be a significant advantage as revenues grow. We are taking a series of actions to reshape our business costs to better fit the strategy that we are undertaking. The major initiative here is a reduction of circa 20% in our workforce FTE, as well as upskilling in frontline areas to drive the growth that I talk about.
The chart shows the impact of these actions on our anticipated staff costs. It is important to note that the changes we are making affect staff costs across both our expensed P&L and the costs that have been capitalized in terms of our capitalized fixed asset expenditure. This organizational reshaping would deliver a GBP 7 million saving in operating expenses and a further GBP 5 million saving in capital expenditure, together with moving a greater proportion of our headcount resources onto the frontline for sales growth. The annualization effect of the hires we made last year, as well as upskilling certain roles this year, are expected to result in broadly flat staff costs in 2025 compared to 2024 and a significantly reduced CapEx cost. Despite the challenging financial performance in the year, it's important to stress that we remain a profitable business, generating GBP 15.5 million of operating free cash.
This was materially down on the prior year due to the lower adjusted EBITDA performance and higher CapEx spend that I spoke about earlier. Our core CapEx increased in the year to GBP 12.5 million versus GBP 7 million a year earlier. Our total CapEx in the year was GBP 15 million. This reflected a push to enhance our operational resilience and enhance our scalability. Cash conversion fell considerably as a result, linked mainly to our lower revenues and our higher CapEx. Going forward, we expect all these metrics to improve with increased revenue and a lower CapEx outlay of under GBP 8 million. I have just mentioned our CapEx grew significantly in 2024 as a result of the completion of a number of major operational resilience programs, which spilled over from 2023, and further investment in preparing our operational infrastructure for future growth.
We expect CapEx to decrease in 2025 in line with our planned project stack, which has allowed for a significant reduction in technology staff. Our CapEx allocation for 2025 will focus on product-related enhancements to drive more volume through our platforms and thereby support our growth ambitions. The banking part of our business remains well capitalized with a strong CET1 ratio, as I mentioned, of 19.2%, significantly greater than the U.K. banking average. We have taken advantage of this healthy margin to allocate more capital to products our clients have increasing demand for in the emerging markets and that create more stickiness. Thus, by increasing trade finance, which generates strong returns in itself, it also has had a circa six times incremental effect on FX payments volumes as well. Our trade finance lending book grew to GBP 180 million versus GBP 59 million at the end of 2023.
Our deposit base grew healthily to GBP 1.6 billion, as a reminder that depositors are purely our FX and payments clients. It shows their loyalty to us as an institution and obviously creates stickiness. At the end of the year, we had GBP 10 million of surplus capital available for growth, which is down from last year, reflecting increased allocation due to the calculation of our operational risk using the last three years of revenue, which were obviously increasing, as well as the increase in trade finance I have just talked about. To summarize our financial performance for 2024, the business remained profitable, cash generative, despite the lower income performance. We continue to have strong liquidity, and we have completed some significant large-scale investments to enhance our operational platforms, and we have more targeted CapEx programs in 2025 focused on product development to support our income growth.
Our income performance was challenging, but we have laid solid foundations with positive actions to start growing revenue in 2025. Our income is becoming more diversified with multiple drivers and will become more stable as a result. We are undertaking cost actions to align our business to our strategy. These actions are delivering now. We will continue to manage costs closely, and with 70% of our costs being fixed, we should demonstrate positive operational leverage as our business grows. Now let's go to the strategic update. I outlined my team's strategic vision for our business at the H1 presentation last year, as well as providing the description of the strategic KPIs that we would use to inform you of our progress. This slide evidences the strong progress we are making on executing our strategy. Our network is growing and is being increasingly utilised.
This allows us to deliver better pricing to our customers, reinforcing our connectivity to hard-to-reach markets. Our revenue-generating client base is growing, which David will go into later, and our corridor concentration is improving to more sensible levels. This also creates a less volatile business. Finally, we are growing our business outside of our core Sub-Saharan African market. All in all, I am very happy with the way things are progressing, but it is very much early days, and there are still plenty of things to do during 2025, and absolutely no time to be complacent. Let's look at tangible progress being made where we are in our journey. We have come a long way in a short time, making our business stronger, more diversified. There is clearly a lot more work to do, but I'm sure you will agree this is a good start.
Our leadership team is complete. Most recently, we hired James Hopkinson, who's here today. Hello, James. Seasoned CFO with emerging markets experience, and he will be supporting me in our strategy delivery. He, together with my CCO, David, our COO, Stuart, as well as the Head of Banking, Matt, the Global Head of Sales, Kirsty, and Global Head of Payments, Claire, who's here today, present us with a refreshed, highly focused bench strength and experience to grow our business. We have very quickly moved to build an increasing proportion of our network outside of Africa, notably in MENA and LATAM. We are rationalizing our client base to only have income-generating clients and have enacted a minimum fee model for clients who are not using us as much as they should. Our platform is more integrated.
We are looking at tighter integration between our FX, payments, and banking businesses, and this allows us to facilitate a one-stop-shop model for our clients to meet their needs throughout the payment cycle. As I mentioned earlier, in the financial section, we've closed key gaps in operational resilience. We are continuing to automate more of our business, and this year we're focusing significantly more on driving product development. I've said throughout that there are plenty of market opportunities for us to grow into. I've also said that the market size and target addressable market numbers are so large they become nearly irrelevant, considering how small our portion of them is of the overall market. There is a lot to go for, is what that means. What I'm focused on is the sustainability of our future revenue streams. To do this, we are prioritizing our activities.
Firstly, the emerging market countries we are targeting are growing at GDPs greater than 4%. Their demands will increase, their sophistication will increase, and their economies become increasingly open to global trade. West Africa is a great example of this, with key exports such as cocoa, oil, precious metals, and other commodities. As part of this journey, a key entry point is being able to build solid relationships with central banks, which I referred to earlier. We are still a key partner to the International Development Organisations. They trust us because we have years of experience, ability to access special markets, and because we are a U.K.-regulated institution. That operates in line with local regulations as well. Our IDO business will face some headwinds this year, which David will elaborate on.
Some of those products that we are working on, such as guaranteed deposits, will drive more IDO flow onto our platform, especially those that cannot deal with non-investment-grade institutions. Our proposed MENA office in Abu Dhabi also offers huge opportunities. Not only are there immense flows originating from the UAE and the Middle East into Africa, but there is also a large development organization opportunity within the Middle East itself. I suppose the real question is, how long is all this going to take? We are making strong progress towards building a steady growth business that is diversified and driven by an efficient organization. I believe that this is a 12 to 18 month journey, with key parts of our initiatives being relationship build and product delivery.
Some of the exciting things that we are working on, which David will go into shortly, include structured payment solutions, guaranteed deposits, FX derivatives, and payments value-added services. By the end of 2025, we will be in a much better position, with most of our platforms delivering. What I will do now is hand over to David Bee, our Chief Commercial Officer, who will go into the real impact we are making on our clients and how we are defining our relationships with them. Over to you, David. Thank you.
Thank you. And thank you, Neeraj. Good morning to everyone in our offices today. Good morning. To those of you online, thank you for being with us.
With the backdrop of a strong update and growth plans that Neeraj has just kindly shared, specifically our growth initiatives via a focus on senior relationship management with key central banks and key clients, continuing to strengthen the breadth and depth of our network that is already over 120 currencies and 700 currency pairs, switching on our new segments and geographies, placing colleagues on the ground in our priority markets, and supporting a previously margin-driven FX business with a new focus on fees, I'm now excited to share an update. I'm sorry, forgive me. I'm now excited to share an update with you with regard to our clients. I'm also proud to share with you that we have been partnering with at least 25 of those clients over the last 10 years, our strongest relationship being with over 40 years.
We have had a strong relationship and have been trusted partners for several years. Indeed, the team and I were with a governor at a central bank only last week, and we reminded each other that CAB has been supporting their country and its communities for 30 years this year, one of five banks that we have a 30+ year relationship with. They will be in London soon to help celebrate that milestone with us. It is just another reminder of our long history and many loyal clients that we have been fortunate enough to partner with over the years, and long may that continue.
Whilst this morning we are sharing an update on 2024 and many of our growth plans for the future, if you look at the revenue per client on the right-hand side of the slide, you will see great opportunities for us today with two immediate priorities. One, as Neeraj shared earlier, we will be concentrating our efforts on senior relationship management of key clients, an initiative that will help us grow our most valued client segment. We will do this by placing the best of the business in front of clients generating more than GBP 500,000 worth of annual revenue, currently representing 10% of our overall business. By being focused on this important segment, we will look to optimize senior resources, improve client satisfaction, and increase profitability.
The second priority in this space will be our team's focus on improving our offering to grow clients that are currently generating less than GBP 100,000 worth of volume, currently 68% of our wallet. We will do this either through an increased use of our products or, should they prefer, via targeted service that will attract new fees. Again, we will view this as a big opportunity for growth, naturally supported by great relationships and great technology and supported by our revised integrated offering as a result of our new simplified management structure. In terms of our team structure, I'm pleased to share that to drive these priorities, we have added two new Managing Directors to our already best-in-class financial markets leadership team. Kirsty Garrett, an industry expert and experienced banker, joins us from Standard Chartered in a new role as Global Head of Financial Markets Sales.
Claire Gates, an industry payments expert previously at Mastercard, also joins us as Global Head of our payments business. You will be hearing from Claire very shortly. Finally, on this slide, our plans to grow growth will naturally include a spotlight on adding new clients, building on the 546 that we are currently active with across the network. The team and I consider this to be a significant opportunity for our business, and I am pleased to share that this part of our strategy is already in play. In terms of CAB offering more to our FX and payments clients, it is important to share that this aspect of our business is purely client-led, clients asking more from us and wanting to do more with us, client-driven plans that will help to increase demand via an improved offering and enhanced functionality of core services.
This slide shares four of a number of plans that we're currently working on: an enhanced payments functionality that Claire will add more color to very shortly, FX derivatives, in this case FX forwards, not only G10 but importantly emerging markets currencies, and ultimately providing intra-Africa solutions, services that our clients need to help hedge against long-term FX fluctuations. We've also been working on guaranteed deposit offering that will provide an investment-grade rating to augment our existing deposit products. Again, we are responding to significant client demand, for example, from central banks and priority clients looking to deposit in line with their wider investment mandates. Both guaranteed deposits and FX derivatives are being led by our new Head of Banking, Matt Torty, who joined the executive committee in Q4.
In collaboration with our treasury and markets team, we'll be launching both our forwards and deposit products to serve more clients in the coming months. In addition, Matt and our markets teams will also provide structured solutions for clients looking for liquidity in less liquid markets, again driven by client demand, a service that will also be delivered this year. This is particularly appealing for larger corporates trading locally in high-growth countries, a new segment where we are seeing increased demand and opportunity. Once again, key to our success here is leveraging key senior relationships with central banks, allowing us to enter their local markets with full transparency, with their confidence, and with their full support.
This, plus our ability to leverage the fact that we are a U.K.-regulated bank, is absolutely key and aspects that are many the aspects of business that many of our direct competition are simply unable to compete against. On this slide, as Neeraj also referenced, we reflect on our commitment to do more with our clients via the provision of our trade finance capabilities as part of our commitment to scale up. You will also be aware that trade finance plays a crucial role in facilitating international trade for emerging markets economies and, in turn, has a positive impact on their economic performance. In addition, along with the need for a best-in-class emerging markets trade business, comes the need for a best-in-class FX business. It is our ability to integrate the two whilst also leveraging our banking license that differentiates us from our competitors.
Our integrated offering simply makes us easier to do business with. Importantly, providing these services to local institutions gives us the ability to serve countries that would otherwise risk being left out of the financial system. This, again, solidifies our position with central banks and local regulators and reflects our core values and unwavering commitment to building ethical business practices and sustainable operations. As a Certified B Corps member, we are part of a global community of like-minded businesses aiming to make a positive impact to help move money where it's needed. Along with FX, loyalty between the bank and our clients plays a key part in trade finance. As Neeraj previously referenced, this was evidenced in 2024 by generating GBP 535 million of gross trade finance volume. In turn, the same trade finance clients also executed over GBP 3.2 billion of volume through our FX platform.
To further enhance this offering, I'm also very excited to share a key update, not only a first in our space but an aspect that is now recognized by our industry, that CAB is now able to provide our emerging markets clients with the ability to negotiate the repayment of trade finance facilities with the client's local currency. And by association, providing CAB with an additional route to obtaining local liquidity to support even more foreign exchange. Clients no longer have to use their valuable high currency to repay their loans; they now have optionality. This aspect is a market first in our segment. It further reinforces the mutual dependency we have on our clients and strengthens our overall business model. None of our direct competitors has the experience or the ability to do this as effectively.
Now, understanding the importance of integrating our trade finance offering to our future FX and payments business model, the team and I now plan to grow it. In the past, we were limited by the size of our balance sheet, and we are, after all, a relatively small and niche bank that was largely led by being an emerging markets FX powerhouse. We are keen to reinforce that FX and payments offering will remain core to our business. Albeit important, the trade finance business support that we previously provided to our clients and inherent advantages this brought to our business was ultimately capped.
Under the leadership of Parth Padrae, who recently joined CAB Payments in the second half of last year, a leading industry expert who also lectures in trade finance, we have now embarked on an originate-to-distribute strategy, which will not only see us exploring different channels and ways of originating trade finance but reduces impact to our balance sheet and switches the revenue dynamic from interest income to a capital-light fee income. This will become a key tool in allowing us to scale up our offering. The great news is that we're already executing. We executed our first asset sale in February, with more expected in the coming months.
Finally, as this slide suggests, this is part of a journey, a journey that will allow us to scale our trade finance volumes by leveraging our partnerships and combining client capital with our own origination capabilities, resulting in a very powerful proposition. We are demonstrating our capability and our client intent. With plenty of sizable institutions that want exposure into African commodity trades but do not have the origination know-how, CAB can help bridge that gap with confidence. Thank you for the opportunity to share our progress, exciting markets ahead for our clients, and exciting times for our business. As a team, we remain 100% committed to continuous improvement. I will now hand over to Claire, our new Global Head of Payments.
Thanks, David, and nice to be speaking to you all today. As you heard from Neeraj earlier, 25% of our gross income comes from payments.
Typical payments would be the central bank debt repayments, government pension payments, corporate invoices, and salaries on behalf of intermediaries. Whilst we've also seen and heard about pressure on your FX take rate, flows which have an FX and a payment component are stickier and command a take rate premium. Over the last decade, there's been a lot of innovation and investment focused predominantly on the retail payment space. Today, we are seeing it focused on the B2B cross-border payments. This is really exciting, and CAB Payments is uniquely placed with our existing customer base, extensive proprietary network, and experience dealing and delivering payments in very challenging markets. What are we actually doing to accelerate our payment business? We're enhancing our pay-ins. This year, we'll make it even easier for our large customers to connect with us.
They will not need to do the heavy technical integration, as our technology will enable them to switch on with minimal effort, resulting in faster implementation time leading to faster revenue. We will be able to ramp up our payment business more quickly. We are expanding our payout capabilities. Our partnership with Visa enables CAB to now cost-effectively make smaller B2B transactions across 53 markets, 14 of which are net new to CAB. As I said earlier about payments such as salary payouts, B2B invoices, also to address the growing gig economy. Also, significantly adding value to our IDO and NGO proposition, where until now, we were only able to offer an FX wholesale solution, and other parties would do the payout to individuals. Now CAB can address these payment needs, delivering a one-stop solution in hard-to-reach markets. I am pleased to confirm we went live with our first client last Friday.
Also, for those clients who do not want to open bank accounts to service cross-border payments, as when you open bank accounts, that means often tracked cash resources to monitor, track, and reconcile, we launched CAB Accountless. Clients transfer money into a current within a currency of their choice to the CAB Accountless. We do the FX conversion and make the payment. The solution reduces the lift and effort needed from the client side. We are building out our value-added services from real-time payment capabilities to mobile wallet, as well as smart payment routing. This gives us full control to send payment traffic to the most efficient and cost-effective payment channel, differentiating our service, allowing us to price accordingly. We can move on to the next slide. We are on a journey to be the leading B2B payment solution provider for Africa and emerging markets.
We have a scalable and flexible platform and operationally ready to ramp up revenue and roll out new regions. We will continue to grow coverage through third parties and develop more value-added services in order to protect our margin. These features and capabilities, with our depth of expertise and relationships, put us in an excellent position to deliver the $50 billion in transaction volume. With that said, I hope you can see why we are enhancing our payment proposition is core to our future growth plans. I'll now hand back to Neeraj.
Thanks, Claire. Thanks, David. That's excellent, really insightful, and I hope everybody enjoyed the update from both Claire and David. You heard about some of the really exciting projects we are working on to create a diversified and growing FX and payments business. Our strategy is working, and there is tangible evidence of progress. We are excited about our growth. We are clear in our vision what we need to achieve and how we are going to do it. Our business is, one, built on relationships, two, technology-driven, and three, truly global. With that, let's move to Q&A and go on.
We'll take questions from the room first.
Morning. Thank you for the presentation. Very interesting. You have obviously done a lot in terms of resetting the revenue or the revenue trajectory, and the work on products sounds really interesting too. I have got a few questions. The first one is about trade finance, I suppose, how we should think about the impact on the P&L. I suppose related, you have touched on this, the sort of capital intensity of growing that and how it connects into the rest of the business. What are you doing to address that? Who are the third-party relationships, I suppose, you can lean into to grow that? The next question was, I suppose, about kind of modeling this business from a high level. I mean, it is essentially an FX and payments business still. Should we still think about it as a sort of take rate times volume type business?
Is that the right way to model this? The last question I had was around payments and your comment about sort of FX payments flows together being stickier. How is it different to what you were doing in the past where you're going to? I just want to understand that. What is it that you're doing that's going to make it more relevant to clients to sort of become more demanded, as you described earlier on, Neeraj?
Yeah, no, thanks, for the r eally great questions. We'll start with the last one, actually, which I think Claire will be able to answer for you.
Yeah, historically, our payment infrastructure was built on Swift Network, which was very good for high-value transactions. What we've now done with our partnership with Visa is, as I said, enabled these 53 markets to be operating at more cost-effective, meaning that we could do lower transactions. Also, additionally, we're able to pay out to accounts of the NGO and IGO proposition. We're also adding the mobile wallet side of things. So we're going deeper into the vertical.
Yeah, I mean, that does create the stickiness, and clearly, it allows our customer to use us for the whole of that transaction rather than just part of it, which is what we were doing earlier. We were doing the wholesale part, and someone else would then have to complete what is called the last mile. Now we have the capability to do all of it, and that's what certainly a lot of our IDOs are asking for. On your second question around the way to model, obviously, we are an FX payments organization, and clearly, there is a tape rate volume equation that gives us a revenue. What we're doing is we're enhancing that with fee-driven activities that surround that FX payments model to give us additional income from the same customer base by doing some additional activities.
David talked about being able to provide local currency solutions where previously it would just be about FX payments in one currency to another. By doing that, we can add services which our clients absolutely value highly and probably more so than just the take rate itself. That is the idea. David, do you want to add anything to that?
No, I think you've covered it. Certainly, being able to use currencies and other markets and just what we're trying to do is to augment what we've already got and build and scale. I think Neeraj answered the question.
Your first question, which you have to remind me about.
I can't remember it myself.
Trade finance.
Trade finance question. Trade finance, yeah. Yeah, yeah, yeah. I'll give you the kind of mathematical bit, and then David can give you how do you actually do it. The mathematical bit is really about saying that, look, it's clear to everybody that we do not have the capital to really be a large-scale trade finance bank, right? That's not what we and there's no aspiration for us to do that. However, what we see from our clients is that they are very much in that business. We're talking about central banks, other banks in emerging market countries where the gross product, if you like, is about selling commodities. These countries are doing extremely well. If you compare GDPs across those continent of Africa, for example, and South America, some of these countries have got very, very strong GDP growth based on that.
Being part of that, part of their ecosystem has a lot of value to us. What we are seeing is large-scale banks have moved away from supporting those territories for lots of good reasons of their own. What that has left is clearly a vacuum for the local banks to try and fill, and ultimately, what they have is a lack of liquidity. What we have is the origination channels and the understanding of trade finance in terms of how that works from a service perspective. We also are increasingly improving our relationships with development banks and guarantee providers who are absolutely in the business of wanting to invest in that kind of trade finance business in those territories for very obvious reasons. The good thing about trade finance is it's very short maturity.
In terms of risk and return for development banks, it's great, and they have absolutely, as you will all know, billions to invest in those areas. What they do not have is the origination and the filtering of that origination for the best deals. Where our relationship builds on that is to basically put the two together and be the people who both originate and then service between development banks and guarantee providers and the emerging market demand. Do you want to?
Yeah, and I think just building on that, we have the local market expertise in terms of our expertise with regards to emerging markets. We have got the product knowledge. We have the talent within the company. We are, as Neeraj just mentioned, fundamentally an FX and payments house, but with that FX skill set that we have, giving clients the optionality in terms of repayment is also a massive competitive advantage. There are very few, if any, actually, certainly in our market segment where we do business and compete, that can actually provide that service and solution. It is an integrated offering. It makes us easier to do business with. If you add that to the payments business and the banking business that we are building as well, it just makes us easier to do business. The trade piece is augmenting what we already do.
We've got the skill set, and we've got the experience.
Thank you. Thanks, bet.
Thanks, all. Two client segments I'd like a bit more clarity on. One thing was jumped out at me in the results, the EMFI client segment. That was robust. It was flat. I suspect part of that is South North debt repayments, but there must be more to it than that. Can you go into that in a bit more detail on why that was so robust and did not fall off as much as others? The second one, the other payments line, which the way I understand it is same currency payments, also fairly robust. Maybe you could explain what's your competitive advantage in that segment? Because it still is a fairly chunky revenue line and the outlook for that going forward. Those two things.
David, you want to take the EMFI?
Yeah. I mean, the EMFI is partly driven by, or it's actually partly driven by the fact that we have a fantastic history in terms of working with commercial banks. We've also got an amazing network, which has been led by one of the leadership team here, Darren Gaffney. It's a combination of fantastic history. We've got brilliant relationships on the ground. We've also got fantastic relationships with central banks, which actually really counts when you're dealing with local commercial banks. That's something Neeraj and I and the rest of the leadership team are really focusing on as well. It's history, it's knowledge, it is there's a local knowing the local authorities as well as absolutely key into this space. We're a trusted partner as well.
Also the fact that we provide 120 currencies and 700 crosses, it makes us a major competitor so we can provide constant solutions and constant liquidity. Some to the payments, maybe Gates?
Yeah, it really adds and enforces what you just spoke about. We have a very extensive proprietary network, and we are trusted, we are regulated, and all of these things really resonate with the clients.
Thank you.
Good morning, everyone. This is Craig Bergmann from Barclays. Just two questions, please, on my side. I think you mentioned a lot of product launches to come, and you talked a bit about the capital requirements, capital light for the trade finance. Overall, with all the product that you're going to launch, can you mention a bit how you expect it to impact the capital requirements for next year? Just overall on CapEx, I think you said that more than 50% of the CapEx would be on product launches. What about the rest, basically, and how much of that will be through capitalise costs, please?
Right, yeah, okay. Good questions. Thank you, Craig Bergmann. I think the first part of your question in terms of capital utilization is that our product set in itself is a capital-light product set. The products we're talking about, and this includes deposits, and deposits are quite important because they do create sticky relationships with our customers. Because when customers put large-scale deposits into us, they're not putting them into us because we're Citibank or HSBC. They're putting them into us because they then want to use those deposits for a purpose, generally payments and FX. One of the problems that we have, as many small banks have, is that we are not an investment-grade bank, and therefore the governance of the banks that we're dealing with abroad does not allow them to put large-scale deposits with us because of that thing.
What we have done, Matt has done a great job in the banking space of actually creating a product that has an investment-grade rating to allow those customers to place larger deposits with us and thereby allowing them to transact larger volumes on the FX and payments side with us rather than with others. Because wherever the money is, is where they generally then use it. That is one of the things. It is still very much a capital-light situation. On the other kind of product developments, they are actually, I would say, more about integration. David mentioned about the fact that we are trying to build solutions with our customers that take our existing products and create something that, when you bring them together, is a solution to whatever they are trying to do. We could call that a product, but you could call that a solution, right?
Now, this is, again, fee-driven. There is no capital requirement that comes with that either. I think the final piece, which we talked about in a reasonable amount of detail, is the way that we're using our trade finance business to actually capture the development bank and guarantee capital to come in and allow us to generate fee income through origination fees and servicing fees, as well as get the multiple that we get from the FX and payments side by having those transactions routed through us in some way. As you can see, there is no development of our products that starts creating more strain on capital. I think the real thing is that as we grow, one of the real drivers of capital utilization in this bank is operational capital, which is just a percentage of our revenue, three-year average revenue.
As revenues increase, we will, under the regulations, have to hold more capital for the fact that we are getting more revenue. That is really going to be the future driver of capital requirement, okay? I'm sorry, your second question.
Second question is about the CapEx.
Yeah. As I mentioned, the previous CapEx was increased to make sure that we had the right level of resilience in our platforms. This is quite important. It does also feed to the regulatory space as well. The regulator does require us to have a level of resilience in our systems to be able to do what we do. There is a lot of regulatory change that comes to all banks, regardless of what we do, that we need to deal with. There is a kind of level of capital expenditure that you'll see in every bank that you have to look at. When we go forwards, what we want to do is that we've done that kind of heavy lifting. We now want to be very focused on income-generating capital investment, right?
Therefore, the majority of what we invest in will be to help us grow our products and services for our customers. However, we can't get away from the regulatory burden that we have to have because it's our license to operate, and the part of that capital expenditure will be for that as well. In terms of amount, that is reducing from a total of GBP 15 million of capital expenditure in 2024 to GBP 8 million in 2025, and probably of that level going forwards, to give you an idea.
Thank you. Portia from Canaccord. I've got two, please. Firstly, on take rate, excluding Naira, ZAF, and XOF, Neeraj, you mentioned volume impact and competition operating in a different way as the reasons why that moderated year on year. Could you just elaborate on the latter point about competition operating in a different way?
I think from our perspective, we have recently obtained an IMTO license from the Nigerian Central Bank. That means that we can operate in quite high volumes in Naira, and by doing high volumes in Naira, we can do some really interesting trades. I think that there are a lot of areas where people operate in lots of different currencies across Africa, which are not necessarily through those kind of channels. That is fine. You can do those kind of things, but the volumes are much, much lower, but the margins are much, much better because you are having to go and fish all these kind of places that you can find these currencies. What we are doing is saying, no, what we want to do is focus on the larger scale and the larger opportunities with the larger counterparties.
We therefore have to forego the opportunity of any kind of uplift in that kind of take rate kind of thing. Now, as we've said, one of the focuses that we have is rather than the fact that we are highly focused on just take rate, which, as you know, is a market-driven phenomenon, so if it goes up or down, we have to take that. The point is that we are augmenting with fee-driven activities. The fee-driven activities require us still to do FX payments, but they require us to do more than that and at higher volume. That is why we are taking a different route. That is what we're trying to get at with that comment, nothing more.
Got it. Okay, thank you. Could you just elaborate on the first off-balance sheet asset sale that you referred to, just a bit more detail about the parties involved, how it was originated, the advantages of doing those sorts of transactions?
Obviously, we're not going to tell you about the parties involved, but we can tell you a little bit more about details. David, do you want to talk about that?
Yeah. We did our first trade in February. It was with a relationship we've been speaking to for a while. We have the way that we work, we do sort of a smaller ticket initially in terms of our first trades. It has been a commitment with regard to our expertise, the client's balance sheet and capital, and our relationship. It just brought the whole thing together. We expect to do many more trades over the coming months. It was our first trade, as Neeraj said. We won't be sharing the name, but it was a relationship we've been speaking to for a while.
Any more from you all? Any questions from the?
No questions online. No questions on the phone. There's two questions.
Are two questions via the webcast, sorry.
Is there any guidance on the future of the large MBB banks that were an important part of the IPO story? That is the first question. The second part is, Visa provides services to many other banks and payment companies that compete with CAB Payments. How does this partnership differentiate you from your competitors?
Claire, do you want to talk about why Visa is different for us versus how they might be used by others?
I can't really comment on how they're used by others. All I can say is what this gives us is it augments what we've got today and what we're really renowned for, our capabilities to be able to make payments in really hard-to-reach markets. We've done it really well at the higher ticket size. We now can do it in a more cost-effective way because we can use this capability and add value-added services that we maybe build or augment with other third-party partnerships or build in-house. It really is the ecosystem of a proposition that we will be delivering.
Okay, great. What is the first thing?
The first question was about the major market banks. It was an important part of the IPO story. where are we at?
It still is, absolutely, and we still are dealing with major market banks. In fact, I mean, David can speak about this. We are looking at ways that we can do more with them. A lot of the things we have talked about today, including the deposit guarantee product, including the fee-driven areas that we are getting into, will help us do more with major market banks. Do you want to talk more about what you are doing?
Yeah, absolutely. That just remains ongoing in terms of what we're doing. The partnerships that we have with the major market banks continue to look at us primarily for foreign exchange and in markets where some of the major markets' banks have pulled out of some countries, and so we're able to provide the liquidity in different countries. That continues.
There is just one more question, which is, how has the closure of USAID affected IDO flows year to date?
David, do you want to just give a quick chat about it?
Sure. It has definitely impacted the industry. There's no question about that. In fact, prior to this meeting, I was on with an IDO client this morning. They're looking for alternatives in terms of geographies. They're looking at alternatives in terms of their model with regard to how they get fees and then starting to think about how they can work with their banks and looking at investing and working with banks in terms of being able to put money to work. Actually, this has been two parts, obviously looking at alternatives, other markets, and countries from an investment perspective, and also in terms of the overall model of how people take funds and where they can work with their banks and other investors.
Great, thanks. No more questions on the phone line or over the web. Neeraj, you.
Great. As we end this presentation, I want you to remember a few things from what we've said this morning. We've gone through quite a lot of things. We remain a highly profitable and cash-generative business, number one. My team and I are focused on delivering material growth through really the four things that we talked about: global expansion through the key hubs, London, Amsterdam, New York, Abu Dhabi; the strengthening of our relationships, prioritizing deep connections with clients, regulators, and central banks to drive trust and business growth in our chosen markets; clearly tech-driven growth, investing in AI, automation, real-time payments to enhance efficiency, security, and scalability. It is about sustainable success, global reach, trusted partnerships, cutting-edge tech where it is set to lead cross-border financial flows in emerging markets.
Through all these things, we are building a company that's not just prepared for the future; it's defining it.
This presentation has now ended.