Banco Latinoamericano de ercio Exterior(BLX) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a net income of $31 million for Q4 2022, totaling $92 million for the year, marking a 47% annual increase [25] - Total assets increased by 15% year-on-year to $9.3 billion, driven by an 18% growth in the loan portfolio, which reached $6.8 billion [26] - Net interest income (NII) rose by 71% year-on-year, with net interest margin increasing by almost 40 basis points [19][30] - Return on equity (ROE) for 2022 reached close to 9%, up by 284 basis points from the previous year [32] Business Line Data and Key Metrics Changes - The company has expanded its client base by 29%, with 42% of average growth in 2022 coming from new clients added during the year [24] - Fee income from letters of credit increased by 16% year-on-year, totaling $14 million for the year [40] - The syndication and structuring business also saw a 15% increase in fees, reaching close to $5 million [40] Market Data and Key Metrics Changes - Economic activity in Latin America grew almost 4%, with foreign trade flows reaching record highs [20] - Trade flows are expected to grow an additional 2% in 2023, reaching nearly $3 trillion, which is 37% higher than pre-pandemic levels [48] Company Strategy and Development Direction - The company aims for single-digit growth of 3% to 4% in 2023, focusing more on profitability rather than aggressive growth [50] - The strategic plan includes optimizing capital allocation, increasing cross-sales, and expanding the customer base without changing credit risk appetite [23] - The management is focused on enhancing product offerings and process automation to improve profitability [52] Management's Comments on Operating Environment and Future Outlook - The management views 2023 as a year of transition, with expectations of lower growth and interest rates, while inflation may remain persistent [46] - The company is committed to maintaining conservative credit underwriting standards despite economic headwinds [50] - The management anticipates that net interest margin will continue to expand, projecting levels between 2.1% and 2.4% for the year [53] Other Important Information - The company maintains a Basel III Tier 1 ratio of 15.3%, indicating a sound capital position [36] - The cost-to-income efficiency ratio improved to 33% in 2022, down from 38% in the previous two years [43] Q&A Session Summary Question: Opportunities from near-shoring in Mexico - The company is starting to see business opportunities from near-shoring, particularly in Mexico, with clients seeking capital for investments [59] Question: Roadmap to reach the $10 billion to $11 billion commercial portfolio target - The growth pace will depend on regional dynamics, but the company remains on track to meet the target by expanding its product offerings and customer base [61] Question: Concerns about non-performing loans (NPLs) - The increase in NPLs is attributed to one specific exposure, and the company maintains conservative credit underwriting standards [64] Question: Expectations for net interest margin and profitability with stable expenses - The company expects net interest margin to continue expanding, supported by new structured products and a normalized interest rate environment [66][68]