Banco Latinoamericano de ercio Exterior(BLX) - 2023 Q2 - Quarterly Report

Unaudited Condensed Consolidated Interim Financial Statements Unaudited Condensed Consolidated Interim Statement of Financial Position 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 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 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 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 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 Note 1. Corporate Information 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] - Bladex is headquartered in Panama City, Republic of Panama, and is regulated by the Superintendence of Banks of Panama (SBP)[39][21] - The Bank has a significant international presence with an agency in New York City and representative offices in Argentina, Mexico, Colombia, and Peru[42][43][22] Note 3. Financial Risk Review The Bank outlines its management of key financial risks, including credit, liquidity, and market risk exposures A. Credit Risk 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][97] B. Liquidity Risk 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] - The maturity analysis of financial assets and liabilities shows a cumulative net positive position of $1.63 billion[142] C. Market Risk 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] - The Bank's net foreign currency position is minimal at $568 thousand, indicating well-hedged foreign exchange risk[163] Note 4. Fair Value of Financial Instruments 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] 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 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] Note 19. Business Segment Information 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 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] Note 23. Subsequent Events 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]