Banco Latinoamericano de ercio Exterior(BLX) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue increased by 17% quarter-on-quarter and 29% year-on-year, while net profit rose by 10% quarter-on-quarter, remaining stable year-on-year at $14 million [8][20] - The loan portfolio and investment portfolio grew for the fourth consecutive quarter, with a net portfolio growth of 5% quarter-on-quarter [8][11] - Non-performing loans (NPLs) remained low at 0.2% of total loans, reflecting sound asset quality [8][24] Business Line Data and Key Metrics Changes - The credit investment portfolio grew by $134 million last quarter, with a total of $523 million by the end of the quarter, predominantly investment grade [15] - The bank's fee income for the quarter was $4.3 million, showing a sequential increase of 41% and more than double the figure from the second quarter of last year [21] - The oil and gas portfolio increased by 71%, while the metals and manufacturing sector grew by 40% [14] Market Data and Key Metrics Changes - Latin American trade flows are expected to grow by 21% in 2021 and an additional 8% in 2022, driven by world growth, particularly in the U.S. and China [14] - The Dominican Republic, Guatemala, and Mexico were the primary focus for growth during the quarter, particularly in resilient sectors [13] Company Strategy and Development Direction - The company created a new executive position, EVP of Strategy and PMO, to enhance organizational structure and execution capabilities [9] - The share buyback plan announced in May is being executed as planned, and the quarterly dividend was maintained at $0.25 per share [10][31] - The company aims to return to its historical mix of financial institutions and corporate clients while avoiding small and medium businesses [41] Management's Comments on Operating Environment and Future Outlook - The management expressed cautious optimism about growth in Latin America as economies reopen and commodity prices rise, with the IMF revising growth projections for the region to 5.8% [6][7] - Inflationary pressures are expected to lead to interest rate increases in the region, which could benefit the company's profitability [36][37] Other Important Information - The bank's total allowance for credit losses represented 71 basis points of the total credit portfolio as of June 30, 2021 [28] - The Basel III Tier 1 capitalization remains strong at 23.6%, reflecting the low-risk nature of the bank's exposures [29] Q&A Session Summary Question: How is Bladex looking to capitalize on the increase in interest rates going forward? - Management indicated that rising interest rates could potentially increase margins on the asset side, benefiting profitability, especially in Brazil and Chile [36][37] Question: Can you provide insight into the credit quality and its concentration? - The bank primarily focuses on large corporations and banks, with no exposure to small businesses, maintaining a clean credit book [39][41] Question: What explains the $4.4 million charge to other comprehensive loss on the balance sheet? - The charge is related to the valuation of derivatives used for hedging liabilities in Mexican pesos, which can show volatility in the interim [43][44]