Banco Latinoamericano de Comercio Exterior, S. A. (NYSE:BLX) Q4 2023 Earnings Conference Call February 23, 2024 10:00 AM ET Company Participants Jorge Salas - Chief Executive Officer Ana de Mendez - Chief Financial Officer Samuel Canineu - Chief Commercial Officer Conference Call Participants Operator Good morning, ladies and gentlemen and welcome to Bladex's Fourth Quarter 2023 Earnings Conference Call. A slide presentation is accompanying today's webcast and is also available on the Investors section of t ...

5.52% 6.48% 6.99% 7.37% 7.65% 3.89% 4.66% 5.20% 5.54% 5.73% 4Q22 1Q23 2Q23 3Q23 4Q23 NIS NIS 1.92% 1.83% NIS 1.79% NIS 1.82% NIS 1.63% Rate of Interest-Earning Assets Rate of Interest-Bearing Liabilities 2023 8 Effect of higher market rates on the share of assets funded by equity. Letters of Credit Fees 4.9 7.4 2022 2023 YoY +51% 19.8 2022 2023 654% | --- | --- | --- | --- | --- | --- | |----------------------------------------------------|-------|-------------|-------|-------|-------| | (USD millions, exce ...

PANAMA CITY, Feb. 22, 2024 /PRNewswire/ -- Banco Latinoamericano de Comercio Exterior, S.A. ("Bladex" or the "Bank"), today announced that its Board of Directors (the "Board") has authorized a repurchase program of up to $50 million of the Bank's common stock over time. This reflects the Bank's commitment to returning excess capital to shareholders that is not needed to sustain the Bank's strength and stability, deliver value to customers, and support future growth.  Bladex remains committed to continuing t ...

PANAMA CITY, Feb. 22, 2024 /PRNewswire/ -- Banco Latinoamericano de Comercio Exterior, S.A. ("Bladex" or the "Bank"), announced today its Board of Directors' approval of a quarterly cash dividend of US$0.50 per share corresponding to the fourth quarter of 2023. The cash dividend is payable March 19, 2024 to the Bank's stockholders as of March 4, 2024 record date. As of December 31, 2023, Bladex had 36,539,860.73 shares outstanding of all classes. Bladex, a multinational bank originally established by the ce ...

FORM 6-K BANCO LATINOAMERICANO DE COMERCIO EXTERIOR, S.A. (Exact name of Registrant as specified in its Charter) SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Unaudited condensed consolidated interim financial statements as of September 30, 2023, and for the three and nine months ended September 30, 2023 and 2022 | --- | --- | |------------------------------- ...

Financial Data and Key Metrics Changes - The company reported a quarterly net income of approximately $46 million for Q3 2023, representing a 70% year-on-year increase and a 23% sequential increase [6][14]. - Net interest income reached a record $60.5 million, an 11% increase from the previous quarter and a 51% increase year-on-year, with a net interest margin of 2.48%, reflecting a 71 basis point improvement year-on-year [13][9]. - Total assets exceeded $10 billion, increasing by 8% year-on-year, driven by robust loan portfolio balances [60]. Business Line Data and Key Metrics Changes - Fee income increased by 77% year-on-year, reaching $11 million, with letters of credit fees rising to $6.2 million, up 76% from last year [19][4]. - The commercial portfolio, including loans and off-balance sheet letters of credit, reached a record $8.2 billion, up 5% from last year [60]. - The customer base increased by over 30% year-on-year, with corporate clients now representing 63% of the loan portfolio [5]. Market Data and Key Metrics Changes - The company’s funding sources remain diversified, with deposits representing 50% of total funding, reaching $4.2 billion, a 23% year-on-year increase [17][57]. - The net interest spread increased to 1.83%, driven by higher lending spreads and efficient cost of funds [18]. Company Strategy and Development Direction - The company is focused on profitable growth, with a strategic plan aimed at achieving sustainable mid-teen returns by 2026 [55]. - The management is actively pursuing new client onboarding and product cross-selling to drive business volumes, particularly in the letter of credit and vendor finance sectors [7][5]. - The company anticipates closing the year with an efficiency ratio of approximately 27%, better than the initial estimate of 32% [22]. Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the geopolitical situation, particularly the Israel-Hamas conflict, noting mixed implications for the Latin American region [44][52]. - The company revised its 2023 return on equity guidance from 11%-13% to a new range of 14%-15% by year-end, reflecting strong performance and profitability [22][39]. - Management highlighted the importance of maintaining a strong capital position and liquidity, with a focus on maximizing shareholder returns [50]. Other Important Information - The company’s asset quality remains strong, with non-performing loans (NPLs) below 0.1% [3][64]. - The board declared a dividend of $0.25 per share, unchanged from previous quarters, representing 20% of quarterly earnings [62]. Q&A Session Summary Question: What are the $2.2 million in other net fees in the quarter? Are they sustainable going forward? - The fees represent opportunistic pre-committed transactions, with an estimated run rate of around $1 million going forward [51]. Question: Any plans to modify your dividend policy, given the amazing results? - Discussions regarding capital management, including dividends and potential buybacks, are ongoing at the board level, focusing on maximizing total shareholder return [27]. Question: Could you give us some color about the guidance expectations for 2024? - The company is currently working on the 2024 budget and will provide guidance in the next call [28].

| --- | --- | |------------------------|-------| | | | | | | | 3Q23 Earnings Results | | | October 2023 | | Credit Book $9.2 Bn ↑ 1% QoQ |↑ 4% YoY Net Income $45.8M ↑ 23% QoQ |↑ 70% YoY Strong Fee Income and Efficiency Improvement while Investing in Transformation NIM 2.48% ↑ 6 bps QoQ | ↑ 71 bps YoY 2 3 (USD millions, except for %) Stable Loan Portfolio and Strong Growth on Deposits Higher Profits and RoE Expansion Fostered by increased Margins Increased NII and Margin Expansion ত Efficiency Ratio 27.2% ↓ ...

[Unaudited Condensed Consolidated Interim Financial Statements](index=2&type=section&id=Unaudited%20condensed%20consolidated%20interim%20financial%20statements) [Unaudited Condensed Consolidated Interim Statement of Financial Position](index=5&type=section&id=Unaudited%20condensed%20consolidated%20interim%20statement%20of%20financial%20position) The Bank's balance sheet expanded, with total assets reaching $10.13 billion, driven by growth in cash and deposits Statement of Financial Position Highlights (in thousands of US dollars) | Account | June 30, 2023 (Unaudited) | December 31, 2022 (Audit) | | :--- | :--- | :--- | | **Total Assets** | **10,133,692** | **9,283,910** | | Cash and due from banks | 1,820,024 | 1,241,586 | | Loans, net | 6,820,865 | 6,760,434 | | **Total Liabilities** | **9,006,170** | **8,214,563** | | Total deposits | 4,099,238 | 3,205,386 | | Borrowings and debt, net | 4,048,071 | 4,416,511 | | **Total Equity** | **1,127,522** | **1,069,347** | [Unaudited Condensed Consolidated Interim Statement of Profit or Loss](index=6&type=section&id=Unaudited%20condensed%20consolidated%20interim%20statement%20of%20profit%20or%20loss) Profitability surged as net interest income grew 83% to $107.1 million and net profit more than doubled to $74.0 million Profit or Loss Highlights (in thousands of US dollars, except per share data) | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Total interest income | 302,881 | 109,057 | | Total interest expense | (195,803) | (50,637) | | **Net interest income** | **107,078** | **58,420** | | Provision for credit losses | (11,022) | (8,944) | | **Profit for the period** | **74,020** | **34,141** | | **Basic earnings per share (in US dollars)** | **2.03** | **0.94** | [Unaudited Condensed Consolidated Interim Statement of Comprehensive Income](index=7&type=section&id=Unaudited%20condensed%20consolidated%20interim%20statement%20of%20comprehensive%20income) Total comprehensive income increased to $73.6 million, driven by higher net profit despite a small loss in OCI Comprehensive Income Summary (in thousands of US dollars) | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Profit for the period | 74,020 | 34,141 | | Other comprehensive income (loss) | (469) | 9,542 | | **Total comprehensive income for the period** | **73,551** | **43,683** | [Unaudited Condensed Consolidated Interim Statement of Changes in Equity](index=8&type=section&id=Unaudited%20condensed%20consolidated%20interim%20statement%20of%20changes%20in%20equity) Total equity grew to $1.13 billion, supported by $74.0 million in net profit, partially offset by dividends Reconciliation of Equity (in thousands of US dollars) | Description | Amount | | :--- | :--- | | Balances at January 1, 2023 | 1,069,347 | | Profit for the period | 74,020 | | Other comprehensive income (loss) | (469) | | Dividends declared | (18,220) | | Other changes (net) | 2,844 | | **Balances at June 30, 2023** | **1,127,522** | [Unaudited Condensed Consolidated Interim Statement of Cash Flows](index=9&type=section&id=Unaudited%20condensed%20consolidated%20interim%20statement%20of%20cash%20flows) Cash and cash equivalents increased by $566.6 million, led by a strong turnaround in operating cash flow Cash Flow Summary (in thousands of US dollars) | Cash Flow Category | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | 986,241 | (920,295) | | Net cash provided by (used in) investing activities | 3,013 | (289,867) | | Net cash (used in) provided by financing activities | (422,698) | 798,971 | | **Increase (decrease) net in cash and cash equivalents** | **566,556** | **(411,191)** | | Cash and cash equivalents at end of the period | 1,757,492 | 799,810 | [Notes to the Unaudited Condensed Consolidated Interim Financial Statements](index=10&type=section&id=Notes%20to%20the%20unaudited%20condensed%20consolidated%20interim%20financial%20statements) [Note 1. Corporate Information](index=10&type=section&id=1.%20Corporate%20information) Bladex is a specialized multinational bank based in Panama focused on financing foreign trade in Latin America - The Bank's primary mission is to support foreign trade and economic integration in Latin America and the Caribbean[39](index=39&type=chunk) - Bladex is headquartered in Panama City, Republic of Panama, and is regulated by the **Superintendence of Banks of Panama (SBP)**[39](index=39&type=chunk)[21](index=21&type=chunk) - The Bank has a significant international presence with an agency in New York City and representative offices in Argentina, Mexico, Colombia, and Peru[42](index=42&type=chunk)[43](index=43&type=chunk)[22](index=22&type=chunk) [Note 3. Financial Risk Review](index=11&type=section&id=3.%20Financial%20risk%20review) The Bank outlines its management of key financial risks, including credit, liquidity, and market risk exposures [A. Credit Risk](index=11&type=section&id=A.%20Credit%20risk) Credit exposure is managed through grading, with the gross loan portfolio at $6.80 billion and Stage 2 loans at $166.5 million Credit Quality of Loans at Amortized Cost (in thousands of US dollars) | Stage | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Stage 1 (12-month ECL) | 6,627,780 | 6,634,190 | | Stage 2 (Lifetime ECL) | 166,489 | 98,723 | | Stage 3 (Credit-impaired) | 10,107 | 30,107 | | **Gross Loans** | **6,804,376** | **6,763,020** | | **Loss Allowance** | **(42,668)** | **(55,200)** | Reconciliation of Loss Allowance for Loans (in thousands of US dollars) | Description | Amount | | :--- | :--- | | Allowance at Dec 31, 2022 | 55,200 | | Net effect of changes | 4,359 | | Derecognized instruments | (12,865) | | New instruments | 17,118 | | Write-offs | (21,144) | | **Allowance at June 30, 2023** | **42,668** | - The largest credit concentrations by industry are in Financial Institutions (**$2.84B**) and Manufacturing (**$1.62B**), with top country exposures in Brazil, Mexico, and Colombia[96](index=96&type=chunk)[97](index=97&type=chunk) [B. Liquidity Risk](index=25&type=section&id=B.%20Liquidity%20risk) The Bank maintains a strong liquidity position with a Liquidity Coverage Ratio of 136.24% and total liquid assets of $1.76 billion Key Liquidity Ratios | Ratio | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | LCR (at period end) | 136.24 % | 167.46 % | - The Bank's liquid assets increased to **$1.76 billion** from **$1.19 billion** at year-end 2022[156](index=156&type=chunk) - The maturity analysis of financial assets and liabilities shows a cumulative net positive position of **$1.63 billion**[142](index=142&type=chunk) [C. Market Risk](index=32&type=section&id=C.%20Market%20risk) Market risk is managed via derivatives, with a +50 bps rate shift impacting profit by +$3.1 million and equity by -$4.6 million Interest Rate Sensitivity Analysis (Effect of +/- 50 bps change) | Scenario | Effect on Profit or Loss (thousands) | Effect on Equity (thousands) | | :--- | :--- | :--- | | +50 bps | 3,148 | (4,573) | | -50 bps | (3,345) | 4,734 | - The Bank has a net asset-sensitive position with a total interest rate sensitivity gap of **$1.19 billion**[158](index=158&type=chunk) - The Bank's net foreign currency position is minimal at **$568 thousand**, indicating well-hedged foreign exchange risk[163](index=163&type=chunk) [Note 4. Fair Value of Financial Instruments](index=37&type=section&id=4.%20Fair%20value%20of%20financial%20instruments) Most financial instruments are valued using Level 2 inputs, with disclosed fair values close to carrying amounts - The vast majority of financial instruments measured at fair value are categorized under **Level 2** of the fair value hierarchy[182](index=182&type=chunk) Carrying Amount vs. Fair Value (in thousands of US dollars, as of June 30, 2023) | Item | Carrying Amount | Fair Value | | :--- | :--- | :--- | | Loans at amortized cost | 6,820,865 | 6,845,824 | | Securities at amortized cost | 1,009,857 | 973,210 | | Borrowings and debt, net | 4,048,071 | 4,034,583 | [Note 10. Derivative Financial Instruments](index=45&type=section&id=10.%20Derivative%20financial%20instruments) The Bank uses derivatives with a total notional amount of $1.54 billion to hedge interest rate and FX risks Notional Amount of Hedging Instruments (in thousands of US dollars) | Hedge Type | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Fair value hedges | 527,180 | 546,504 | | Cash flow hedges | 1,009,805 | 1,186,950 | | **Total Notional** | **1,536,985** | **1,733,454** | - The primary risks being hedged are **interest rate risk** and a combination of interest rate and foreign exchange risk[207](index=207&type=chunk) [Note 19. Business Segment Information](index=61&type=section&id=19.%20Business%20segment%20information) The Commercial segment is the primary profit driver, contributing $70.6 million of the Bank's total profit Segment Performance for Six Months Ended June 30, 2023 (in thousands of US dollars) | Segment | Total Income | Segment Profit | Segment Assets | | :--- | :--- | :--- | :--- | | Commercial | 105,009 | 70,624 | 7,148,031 | | Treasury | 11,546 | 3,396 | 2,972,345 | | **Total** | **116,555** | **74,020** | **10,120,376** | [Note 22. Applicable Laws and Regulations](index=64&type=section&id=22.%20Applicable%20laws%20and%20regulations) The Bank complies with all key regulatory requirements, including a Capital Adequacy Index of 13.63% Key Regulatory Ratios | Ratio | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Liquidity Coverage Ratio (LCR) | 136.24% | 167.46% | | Capital Adequacy Index | 13.63% | 13.21% | | Leverage Ratio | 9.72% | 9.74% | - The Bank maintains a dynamic provision of **$136 million**, appropriated from retained earnings, as required by SBP Rule No. 4-2013[300](index=300&type=chunk) [Note 23. Subsequent Events](index=67&type=section&id=23.%20Subsequent%20events) The Board of Directors approved a quarterly cash dividend for the second quarter of 2023 after the period end - A quarterly cash dividend of **$0.25 per share** was approved by the Board on July 20, 2023, payable on August 15, 2023[301](index=301&type=chunk)

Company Participants Conference Call Participants Carlos Raad Thank you, Carlos, and good morning everyone joining us today. I'm excited to share our second quarter results. I'll start by presenting the highlights of our performance for the quarter and then, Annie, our CFO, will discuss the results in detail. After that, I will comment on our views on the economic dynamics of the region for the second half of the year. And then, as always, we will open the call for questions. Also, I want to highlight anoth ...

Key Results: Sustained Strong Financial Performance in 2Q23 Credit Book $9.1 Bn ↑ 5% QoQ |↑ 5% YoY | --- | --- | |------------------------------------|-------| | | | | | | | 2Q23 Earnings Results July 2023 | | | | | Increased NII and Margin Expansion NII $54.5M ↑3 % QoQ |↑ 67% YoY Efficiency Ratio 27.2% ↑ 38 bps QoQ| ↓ 815 bps YoY Net Income $37.1M 0% QoQ |↑ 61% YoY 2 Strong Fee Income and Strict Cost Control while Investing in Transformation Deposits $4.1 Bn ↑ 14% QoQ |↑ 31% YoY ত Net Fees $6.5M ↑ 35% QoQ ...