Banco Latinoamericano de ercio Exterior(BLX) - 2024 Q1 - Quarterly Report

Unaudited Condensed Consolidated Interim Financial Statements This section presents the Bank's financial position, performance, cash flows, and equity changes for the interim period Statement of Financial Position (Balance Sheet) As of March 31, 2024, the Bank's total assets slightly decreased to $10.69 billion, while total equity increased to $1.24 billion Condensed Consolidated Statement of Financial Position (in thousands of US dollars) | | March 31, 2024 (Unaudited) | December 31, 2023 (Audit) | | :--- | :--- | :--- | | Total assets | 10,687,823 | 10,743,792 | | Cash and due from banks | 1,726,295 | 2,047,452 | | Loans, net | 7,383,521 | 7,220,520 | | Total liabilities | 9,449,912 | 9,539,968 | | Total deposits | 4,777,245 | 4,451,025 | | Borrowings and debt, net | 3,933,303 | 4,351,988 | | Total equity | 1,237,911 | 1,203,824 | Statement of Profit or Loss (Income Statement) For Q1 2024, profit increased to $51.3 million, driven by higher net interest income and other income, with EPS rising to $1.40 Statement of Profit or Loss Highlights (in thousands of US dollars, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total interest income | 193,572 | 143,379 | | Total interest expense | (130,687) | (90,759) | | Net interest income | 62,885 | 52,620 | | Total other income, net | 9,703 | 6,555 | | Provision for credit losses | (3,029) | (6,331) | | Total operating expenses | (18,291) | (15,890) | | Profit for the period | 51,268 | 36,954 | | Basic earnings per share | $1.40 | $1.02 | Statement of Comprehensive Income Total comprehensive income for Q1 2024 was $51.0 million, including net profit and an other comprehensive loss Comprehensive Income Summary (in thousands of US dollars) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Profit for the period | 51,268 | 36,954 | | Other comprehensive income (loss) | (293) | (3,194) | | Total comprehensive income | 50,975 | 33,760 | Statement of Changes in Equity Total equity increased to $1.24 billion by March 31, 2024, primarily due to profit, partially offset by dividends Changes in Equity for Q1 2024 (in thousands of US dollars) | Description | Amount | | :--- | :--- | | Balances at January 1, 2024 | 1,203,824 | | Profit for the period | 51,268 | | Other comprehensive income (loss) | (293) | | Dividends declared | (18,321) | | Other changes | 1,433 | | Balances at March 31, 2024 | 1,237,911 | Statement of Cash Flows Q1 2024 saw net cash provided by operating activities of $175.5 million, resulting in a $320.9 million net decrease in cash Cash Flow Summary for Q1 2024 (in thousands of US dollars) | Cash Flow Category | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | 175,539 | 518,211 | | Net cash (used in) provided by investing activities | (89,221) | 76,516 | | Net cash used in financing activities | (407,216) | (521,139) | | (Decrease) increase net in cash and cash equivalents | (320,898) | 73,588 | | Cash and cash equivalents at beginning of the period | 1,987,068 | 1,190,936 | | Cash and cash equivalents at end of the period | 1,666,170 | 1,264,524 | Notes to the Unaudited Condensed Consolidated Interim Financial Statements This section provides detailed explanations and breakdowns for the figures presented in the interim financial statements Note 1: Corporate Information Bladex is a Panama-headquartered multinational bank specializing in Latin American and Caribbean foreign trade financing - Bladex is a specialized multinational bank focused on supporting foreign trade financing in Latin America and the Caribbean[31] - The Bank is regulated by the Superintendence of Banks of Panama (SBP) and also operates a key agency in New York City, USA[52][54][75] Note 2: Basis of Preparation The interim financial statements are prepared in accordance with International Accounting Standard 34 (IAS 34) - The financial statements are prepared in accordance with IAS 34 for interim reporting[56] Note 3: Financial Risk Review This note details the Bank's comprehensive framework for managing credit, liquidity, and market risks Credit Risk The Bank manages credit risk through a grading system, with most loans in Stages 1 and 2, and significant concentration in financial institutions Credit Quality of Loans at Amortized Cost (in thousands of US dollars) | Grade | PD Ranges | Stage 1 | Stage 2 | Stage 3 | | :--- | :--- | :--- | :--- | :--- | | 1-4 | 0.03 - 0.74 | 2,954,393 | — | — | | 5-6 | 0.75 - 3.80 | 3,769,122 | 224,613 | — | | 7-8 | 3.81 - 34.51 | 321,485 | 70,012 | — | | 9-10 | 34.52 - 100 | — | — | 10,107 | | Total Gross | | 7,045,000 | 294,625 | 10,107 | | Loss Allowance | | (34,822) | (17,802) | (6,934) | Reconciliation of Loss Allowance for Loans (in thousands of US dollars) | Description | Stage 1 | Stage 2 | Stage 3 | Total | | :--- | :--- | :--- | :--- | :--- | | Allowance at Dec 31, 2023 | 34,778 | 17,734 | 6,898 | 59,410 | | Net effect of changes | (123) | 698 | 36 | 611 | | Derecognized instruments | (9,631) | (667) | — | (10,298) | | New instruments | 9,835 | — | — | 9,835 | | Allowance at Mar 31, 2024 | 34,822 | 17,802 | 6,934 | 59,558 | - Credit risk concentration is highest in the Financial Institutions sector ($2.61 billion) and Manufacturing sector ($1.77 billion), with largest geographical exposures in Brazil, Colombia, and Mexico[99] Liquidity Risk The Bank maintains a strong liquidity position with an LCR of 210.4%, well above regulatory minimums Liquidity Ratios | Metric | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | LCR at end of period | 210.4% | 205.8% | | LCR Period average | 207.8% | 177.2% | - As of March 31, 2024, the Bank held $1.67 billion in cash and due from banks, with $1.54 billion held at the Federal Reserve of the United States of America, forming the core of its liquidity reserves[133] - The Bank's maturity analysis shows a net positive liquidity position of $181.3 million in the 'Up to 3 months' bucket, indicating sufficient short-term liquidity[130] Market Risk The Bank manages market risk, including interest rate and foreign exchange, with minimal net currency positions Interest Rate Sensitivity Analysis (Effect in thousands of US dollars) | Scenario (Mar 31, 2024) | Effect on Profit or Loss | Effect on Equity | Effect on Equity Value (EVE) | | :--- | :--- | :--- | :--- | | +50 bps | (4,817) | 4,541 | (11,671) | | -50 bps | 4,611 | (4,269) | 11,871 | - The Bank's net foreign currency position was minimal at $204 thousand as of March 31, 2024, indicating effective management of foreign exchange risk[141] Note 4: Fair Value of Financial Instruments All financial instruments measured at fair value on a recurring basis are classified as Level 2, totaling $282.3 million in assets Fair Value Hierarchy - Recurring Basis (in thousands of US dollars, Mar 31, 2024) | | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | Assets | | | | | | Securities at FVOCI | — | 99,099 | — | 99,099 | | Derivative financial instruments | — | 183,177 | — | 183,177 | | Total Assets | — | 282,276 | — | 282,276 | | Liabilities | | | | | | Derivative financial instruments | — | (36,301) | — | (36,301) | | Total Liabilities | — | (36,301) | — | (36,301) | Note 5: Cash and Due from Banks Cash and due from banks totaled $1.73 billion, with the majority held as unrestricted deposits at the Federal Reserve Composition of Cash and Due from Banks (in thousands of US dollars) | Description | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Unrestricted deposits with Federal Reserve | 1,537,393 | 1,884,204 | | Cash and non-interest-bearing deposits | 8,837 | 3,349 | | Cash and interest-bearing deposits | 180,065 | 159,899 | | Total cash and due from banks | 1,726,295 | 2,047,452 | | Less: Time deposits > 90 days & restricted | (60,125) | (60,384) | | Cash for Cash Flow Statement | 1,666,170 | 1,987,068 | Note 6: Securities The securities portfolio increased to $1.11 billion, primarily composed of securities at amortized cost Securities Portfolio (in thousands of US dollars, Mar 31, 2024) | Category | Amortized Cost | FVOCI | | :--- | :--- | :--- | | Principal | 1,000,915 | 97,608 | | Interest receivable | 11,615 | 1,491 | | Allowance | (1,260) | — | | Total | 1,011,270 | 99,099 | Note 7: Loans The net loan portfolio increased to $7.38 billion, predominantly fixed-rate, with 6% to Class A and B shareholders Loan Portfolio Composition (in thousands of US dollars) | Category | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Fixed interest rate | 4,216,164 | 3,828,485 | | Floating interest rates | 3,133,568 | 3,367,082 | | Total Outstanding Balance | 7,349,732 | 7,195,567 | - Interest rates on loans range from 1.95% to 15.17%, with 75% of the fixed-rate loan portfolio having remaining maturities of less than 180 days[182] Note 8: Loan Commitments and Financial Guarantee Contracts Outstanding loan commitments and financial guarantee contracts increased to $1.10 billion, mostly short-term Commitments and Guarantees (in thousands of US dollars) | Type | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Documentary letters of credit | 261,825 | 345,608 | | Stand-by letters of credit and guarantees | 455,327 | 490,626 | | Commitments loans | 287,773 | 227,472 | | Commitments letters of credit | 100,000 | — | | Total | 1,104,925 | 1,063,706 | Note 9: Gain (loss) on financial instruments, net The Bank recorded a net gain of $160 thousand on financial instruments for Q1 2024, down from $1.7 million in Q1 2023 Net Gain (Loss) on Financial Instruments (in thousands of US dollars) | Description | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Gain on derivative financial instruments and foreign currency exchange, net | 160 | 3,071 | | Loss on sale of financial instruments at amortized cost | — | (1,367) | | Total | 160 | 1,704 | Note 10: Derivative Financial Instruments The Bank uses derivatives, primarily interest rate and cross-currency swaps, for hedging, with a total notional amount of $2.68 billion Notional Amounts of Hedging Instruments (in thousands of US dollars, Mar 31, 2024) | Hedge Type | Risk Type | Notional Amount | | :--- | :--- | :--- | | Fair value hedges | Interest rate | 1,182,467 | | Fair value hedges | Interest rate & foreign exchange | 319,389 | | Cash flow hedges | Interest rate & foreign exchange | 1,173,619 | | Total | | 2,675,475 | - For fair value hedges in Q1 2024, the total ineffectiveness recognized in profit or loss was a gain of $200 thousand[241] - For cash flow hedges in Q1 2024, the total ineffectiveness recognized in profit or loss was a gain of $78 thousand[246] Note 11: Other Assets Other assets increased to $30.2 million, mainly due to a new 'Accounts receivable - others' item Summary of Other Assets (in thousands of US dollars) | Item | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Accounts receivable - others | 14,702 | — | | Prepaid expenses | 3,054 | 2,174 | | Interest receivable - deposits | 2,572 | 1,603 | | Severance fund | 2,246 | 2,169 | | IT projects under development | 2,130 | 1,802 | | Other | 5,510 | 9,826 | | Total | 30,214 | 15,595 | Note 12: Deposits Total deposits increased to $4.72 billion, with most having a remaining term of less than 6 months Deposits by Remaining Term (in thousands of US dollars, Mar 31, 2024) | Remaining Term | Amount | | :--- | :--- | | Demand | 533,709 | | Up to 3 months | 2,820,183 | | 3 to 6 months | 874,134 | | 6 months to 1 year | 464,959 | | Over 1 year | 31,294 | | Total | 4,724,279 | Note 13: Securities Sold Under Repurchase Agreements Financing through repurchase agreements increased to $363.8 million, with interest expense of $2.6 million for Q1 2024 Repurchase Agreements (in thousands of US dollars) | Metric | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Financing transactions | 363,804 | 310,197 | | Interest Expense (Q1) | 2,564 | 1,867 (Q1 2023) | Note 14: Borrowings and Debt Total borrowings and debt decreased to $3.93 billion, driven by a reduction in short-term borrowings Borrowings and Debt Composition (in thousands of US dollars, Mar 31, 2024) | Category | Amount | | :--- | :--- | | Short-term borrowings, net | 973,291 | | Short-term debt, net | 173,340 | | Long-term borrowings, net | 536,142 | | Long-term debt, net | 2,250,530 | | Total borrowings and debt, net | 3,933,303 | - The Bank was in compliance with all covenants related to its borrowing agreements as of March 31, 2024[249] Note 15: Lease Liabilities Lease liabilities remained stable at $16.4 million, with the majority due after 5 years Lease Liabilities (in thousands of US dollars, Mar 31, 2024) | Maturity | Undiscounted Lease Liabilities | | :--- | :--- | | Due within 1 year | 1,720 | | After 1 year but within 5 years | 6,760 | | After 5 years | 11,727 | | Total | 20,207 | Note 16: Other Liabilities Other liabilities decreased to $37.3 million, mainly due to the settlement of funds received for debt repayment Summary of Other Liabilities (in thousands of US dollars) | Item | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Accruals and other accumulated expenses | 19,076 | 24,120 | | Funds received for debt repayment | — | 14,735 | | Accounts payable | 8,077 | 5,143 | | Unearned commissions | 10,028 | 9,652 | | Total | 37,265 | 53,734 | Note 17: Earnings Per Share Basic EPS for Q1 2024 was $1.40, based on a profit of $51.3 million and 36.6 million weighted average shares EPS Calculation | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Profit for the period (thousands of US$) | 51,268 | 36,954 | | Weighted average shares (thousands) | 36,609 | 36,360 | | Basic EPS (US$) | 1.40 | 1.02 | Note 18: Fee and Commission Income Net fee and commission income nearly doubled to $9.5 million in Q1 2024, driven by documentary and stand-by letters of credit Fee and Commission Income Breakdown (in thousands of US dollars) | Type | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Documentary and stand-by letters of credit | 5,831 | 3,924 | | Fees and commission income | 2,504 | 662 | | Structured loans | 1,334 | 397 | | Total Fee and Commission Income | 9,669 | 4,983 | Note 19: Business Segment Information The Commercial segment generated $47.7 million profit on $7.6 billion assets, while Treasury generated $3.6 million on $3.0 billion assets Segment Performance (in thousands of US dollars, Q1 2024) | Metric | Commercial | Treasury | Total | | :--- | :--- | :--- | :--- | | Total revenues | 66,076 | 6,512 | 72,588 | | Segment profit | 47,708 | 3,560 | 51,268 | | Segment assets | 7,635,198 | 3,024,983 | 10,660,181 | | Segment liabilities | 257,111 | 9,155,536 | 9,412,647 | Note 20: Related Party Transactions Assets with related parties totaled $82.7 million, and liabilities were $257.6 million as of March 31, 2024 Balances with Related Parties (in thousands of US dollars, Mar 31, 2024) | Type | Amount | | :--- | :--- | | Assets | | | Loans, net | 61,836 | | Securities at amortized cost, net | 14,161 | | Demand deposits | 6,675 | | Total Assets | 82,672 | | Liabilities | | | Time deposits | 257,611 | Note 21: Litigation Bladex is not involved in any significant litigation that would adversely affect its business or financial performance - The Bank is not engaged in any significant litigation[267] Note 22: Applicable Laws and Regulations The Bank complies with SBP regulations, maintaining capital adequacy, leverage, and LCR ratios above requirements Capital and Liquidity Ratios | Ratio | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Capital adequacy index | 13.7% | 13.6% | | Leverage ratio | 10.1% | 9.7% | | LCR | 210.4% | 205.8% | - The Bank maintains a dynamic provision of $136 million, appropriated from retained earnings, which is restricted for dividend distribution[2] - The loan portfolio is classified according to SBP rules, with $7.30 billion classified as 'Normal' out of a total $7.35 billion portfolio as of March 31, 2024[11] Note 23: Subsequent Events The Board of Directors approved a quarterly cash dividend of $0.50 per share for Q1 2024, payable in May - A quarterly cash dividend of $0.50 per share was approved by the Board of Directors on April 16, 2024[3]