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.
The accompanying notes are an integral
part of these unaudited condensed consolidated interim financial statements.
Banco Latinoamericano
de Comercio Exterior, S. A. (“Bladex Head Office” and together with its subsidiaries “Bladex” or the “Bank”),
headquartered in Panama City, Republic of Panama, is a specialized multinational bank established to support the financing of foreign
trade and economic integration in Latin America and the Caribbean (the “Region”). The Bank was established pursuant
to a May 1975 proposal presented to the Assembly of Governors of Central Banks in the Region, which recommended the creation of
a multinational organization to increase the foreign trade financing capacity of the Region. The Bank was organized in 1977, incorporated
in 1978 as a corporation pursuant to the laws of the Republic of Panama, and initiated operations on January 2, 1979. Under a contract
law signed in 1978 between the Republic of Panama and Bladex, the Bank was granted certain privileges by the Republic of Panama,
including an exemption from payment of income taxes in Panama.
The Bank operates
under a general banking license issued by the National Banking Commission of Panama, predecessor of the Superintendence of Banks
of Panama (the “SBP”).
In the Republic
of Panama, banks are regulated by the SBP through Executive Decree No. 52 of April 30, 2008, which adopts the unique text of Law
Decree No. 9 of February 26, 1998, modified by Law Decree No. 2 of February 22, 2008. Banks are also regulated by resolutions and
agreements issued by this entity. The main aspects of this law and its regulations include: the authorization of banking licenses,
minimum capital and liquidity requirements, consolidated supervision, procedures for management of credit and market risks, measures
to prevent money laundering, the financing of terrorism and related illicit activities, and procedures for banking intervention
and liquidation, among others.
Bladex Head
Office has an agency in New York City, USA (the “New York Agency”), which began operations on March 27, 1989. The New
York Agency is principally engaged in financing transactions related to international trade, mostly the confirmation and financing
of letters of credit for customers in the Region. The New York Agency, also has authorization to book transactions through an International
Banking Facility (“IBF”).
The Bank has representative
offices in Buenos Aires, Argentina; in Mexico City, Mexico; in Lima, Peru; and in Bogota, Colombia.
These unaudited condensed consolidated
interim financial statements were authorized for issue by the Board of Directors on October 8, 2019.
These unaudited condensed consolidated
interim financial statements of Banco Latinoamericano de Comercio Exterior, S. A. and its subsidiaries have been prepared in accordance
with International Accounting Standard 34 Interim Financial Reporting (IAS 34) issued by the International Accounting Standards
Board ("IASB"). As all the disclosures required by IFRS for annual period consolidated financial statements are not included
herein, these unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated
financial statements and the notes thereto as of and for the year ended December 31, 2018, contained in the Bank’s annual
audited consolidated financial statements. The unaudited condensed consolidated interim statements of profit or loss, other comprehensive
income, changes in equity and cash flows for the periods presented are not necessarily indicative of results expected for any future
period.
Certain amounts in the consolidated
financial statements of the prior year was reclassified in order to align them with the presentation of the actual period. These
reclassifications did not change total assets, liabilities, equity, nor the profit for the period.
Except as described below, the
accounting policies applied in these interim financial statements are the same as those applied in the consolidated financial statements
of the Bank at and for the year ended December 31, 2018.
Changes in accounting policies
are also expected to be reflected in the consolidated financial statements of the Bank at and for the year ended December 31, 2019.
At inception of a contract,
the Bank assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the
right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract
conveys the right to control the use of an identified asset, the Bank assesses whether:
This policy is applied to contracts
entered into, or changed, on or after January 1, 2019.
At inception or on reassessment
of a contract that contains lease component, the bank allocates the consideration in the contract to each lease component on the
basis of their relative stand-alone prices. However, for the leases of land and buildings in which it is a lessee, the Bank has
elected not to separate non-lease components and to account for the lease components as a single lease component.
The Bank applied IFRS 16 with
a date of initial application of 1 January 2019. As a result, the Bank has changed its accounting policy for lease contracts as
detailed below.
The Bank applied IFRS 16 using
the modified retrospective approach, under which the cumulative effect of initial application is recognized in retained earnings
at 1 January 2019. The details of the changes in accounting policies are disclosed below:
Previously, the Bank determined
at contract inception whether an arrangement is or contains a lease under IFRIC 4. Under IFRS 16, the Bank assesses whether a contract
is or contains a lease based on the definition of a lease based on the definition of a lease, as explained in Note 3.1.
On transition to IFRS 16, the
Bank elected to apply the practical expedient to grandfather the assessment of which transactions are leases. It applied IFRS 16
only to contracts that were previously identified as leases. Contracts that were not identified as leases under IAS 17 and IFRIC
4 were not reassessed for whether there is a lease. Therefore, the definition of a lease under IFRS 16 was applied only to contracts
entered into or changed on or after 1 January 2019.
As a lessee, the Bank previously
classified leases as operating or finance leases based on its assessment of whether the leases transferred significantly all of
the risks and rewards incidental to ownership of the underlying asset to the Bank. Under IFRS 16, the Bank recognizes right-of-use
assets and lease liabilities for most leases. These leases are on the consolidated statement of financial position.
At transition, lease liabilities
were measured at the present value of the remaining lease payments, discounted at the Bank´s internal funding cost rate as
at 1 January 2019.
The right-of-use assets are measured
at their book value as if IFRS 16 had been applied since the commencement date, discounted using total lease payments at present
value, using the Bank's internal funding cost rate, the weighted average term of the contract, adjusted for any prepayment, incremental
cost, dismantling cost and depreciation that would have been recognized from the beginning of the contract until the date of implementation
of the standard.
The Bank used the following practical
expedients when applying IFRS 16 to leases previously classified as operating leases under IAS 17:
The Bank do not require to make
any adjustments on transition of IFRS 16 for its leases like a lessor, except when figure as an intermediate lessor. The Bank accounted
its leases in accordance with IFRS 16 on the date of initial application.
Under IFRS 16, the Bank should
the evaluate the classification of the sublease by reference to the right-of-use assets, and not by reference to the underlying
asset. At transition, the Bank revalued the classification of a sublease contract previously classified as an operating lease under
IAS 17. The Bank concluded that the sublease is an operating lease under IFRS 16.
The Bank applied IFRS 15 to revenue
from contracts with customers to assign the consideration in the contract to each lease component and that is not a lease.
On transition to IFRS 16, the
Bank recognized and additional $17.3 million of right-of-use assets and $21.0 million of lease liabilities, recognizing the difference
in retained earnings. When measuring the lease liabilities, the Bank discounted the lease payments using its internal funding cost
rate at 1 January 2019. The weighted average rate applied is 4.81%.
The determination of whether
an arrangement is a lease, or contains a lease, is based on the substance of the arrangement and requires an assessment of whether
the fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to
use the asset.
Leases where
the lessor does not transfer to the Bank substantially all the risks and benefits incidental to ownership of the leased items are
classified as operating leases. Operating lease payments are recognized as an expense in profit or loss on a straight-line basis
through the lease term. Rental payable is recognized as an expense as incurred.
Leases where
the Bank does not transfer substantially all risks and benefits of ownership of the asset are classified as operating leases. Initial
direct costs incurred in negotiating operating leases are added to the carrying amount of the leased asset and recognized over
the lease term on the same basis as rental income. Rental income is recognized as revenue as earned. In the event that the contract
is cancelable, they are recognized as income over the term of the lease.
The following table presents
the details of interest-bearing deposits in banks and pledged deposits:
All securities and other financial
assets as of September 30, 2019 and December 31, 2018 are presented as follows:
The amortized cost of these
securities by country risk and type of debt, excluding the amounts of interest receivable and allowance for expected credit losses
are as follows:
Securities at amortized cost
by contractual maturity are shown in the following tables:
Securities at amortized cost
classified by issuer’s credit quality indicators are as follows:
The fair value of financial
instruments at FVOCI by country risk and type of debt, excluding interest receivable, are as follows:
As of September 30, 2019, and
December 31, 2018, securities at fair value through other comprehensive income were pledged to secure repurchase transactions accounted
for as secured financings with a carrying value of $4.6 million, for both periods.
The following table presents
the realized gains or losses on sale of securities at fair value through other comprehensive income:
Securities at FVOCI classified
by issuer’s credit quality indicators are as follows:
The amortized cost and fair
value of securities at FVOCI by contractual maturity are shown in the following tables:
The following table presents the
fair value of the debt instrument at fair value with changes in profit or loss:
The composition of the gross
loan portfolio by economic activity is as follows:
|
September 30, 2019
|
|
|
|
|
|
Corporations
|
|
|
Financial institutions
|
|
|
|
|
|
|
|
|
Rating
|
|
|
Private
|
|
|
State-owned
|
|
|
Private
|
|
|
State-owned
|
|
|
Sovereign
|
|
|
Total
|
|
|
1-4
|
|
|
|
880,913
|
|
|
|
445,129
|
|
|
|
1,075,304
|
|
|
|
231,100
|
|
|
|
53,123
|
|
|
|
2,685,569
|
|
|
5-6
|
|
|
|
434,465
|
|
|
|
130,762
|
|
|
|
1,191,082
|
|
|
|
351,168
|
|
|
|
-
|
|
|
|
2,107,477
|
|
|
7
|
|
|
|
216,541
|
|
|
|
176,709
|
|
|
|
254,481
|
|
|
|
51,637
|
|
|
|
-
|
|
|
|
699,368
|
|
|
8
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
9
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
10
|
|
|
|
61,845
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
61,845
|
|
|
Total
|
|
|
|
1,593,764
|
|
|
|
752,600
|
|
|
|
2,520,867
|
|
|
|
633,905
|
|
|
|
53,123
|
|
|
|
5,554,259
|
|
|
December 31, 2018
|
|
|
|
|
|
Corporations
|
|
|
Financial institutions
|
|
|
|
|
|
|
|
|
Rating
|
|
|
Private
|
|
|
State-owned
|
|
|
Private
|
|
|
State-owned
|
|
|
Sovereign
|
|
|
Total
|
|
|
1-4
|
|
|
|
975,588
|
|
|
|
388,773
|
|
|
|
797,439
|
|
|
|
54,000
|
|
|
|
-
|
|
|
|
2,215,800
|
|
|
5-6
|
|
|
|
795,399
|
|
|
|
332,412
|
|
|
|
1,476,861
|
|
|
|
464,800
|
|
|
|
59,026
|
|
|
|
3,128,498
|
|
|
7
|
|
|
|
58,008
|
|
|
|
21,727
|
|
|
|
184,390
|
|
|
|
105,300
|
|
|
|
-
|
|
|
|
369,425
|
|
|
8
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
9
|
|
|
|
64,701
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
64,701
|
|
|
10
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Total
|
|
|
|
1,893,696
|
|
|
|
742,912
|
|
|
|
2,458,690
|
|
|
|
624,100
|
|
|
|
59,026
|
|
|
|
5,778,424
|
|
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
The following table provides a breakdown of loans
classified by country risk:
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2019
|
|
|
|
2018
|
|
|
Country:
|
|
|
|
|
|
|
|
|
|
Brazil
|
|
|
1,008,066
|
|
|
|
1,156,223
|
|
|
Mexico
|
|
|
812,297
|
|
|
|
867,441
|
|
|
Colombia
|
|
|
779,043
|
|
|
|
625,932
|
|
|
Chile
|
|
|
605,700
|
|
|
|
176,976
|
|
|
Guatemala
|
|
|
314,296
|
|
|
|
328,830
|
|
|
Panama
|
|
|
266,250
|
|
|
|
485,546
|
|
|
Argentina
|
|
|
262,525
|
|
|
|
604,112
|
|
|
Costa Rica
|
|
|
259,361
|
|
|
|
370,087
|
|
|
Ecuador
|
|
|
211,015
|
|
|
|
188,445
|
|
|
Dominican Republic
|
|
|
196,667
|
|
|
|
301,067
|
|
|
Trinidad and Tobago
|
|
|
189,803
|
|
|
|
144,874
|
|
|
Peru
|
|
|
115,799
|
|
|
|
78,191
|
|
|
Honduras
|
|
|
112,239
|
|
|
|
89,205
|
|
|
Paraguay
|
|
|
103,500
|
|
|
|
158,685
|
|
|
Singapore
|
|
|
68,800
|
|
|
|
38,500
|
|
|
El Salvador
|
|
|
61,133
|
|
|
|
70,048
|
|
|
France
|
|
|
42,160
|
|
|
|
|
|
|
Jamaica
|
|
|
39,302
|
|
|
|
21,727
|
|
|
Germany
|
|
|
35,500
|
|
|
|
17,500
|
|
|
United States of America
|
|
|
25,000
|
|
|
|
-
|
|
|
Luxembourg
|
|
|
22,099
|
|
|
|
17,664
|
|
|
Hong Kong
|
|
|
11,800
|
|
|
|
-
|
|
|
Belgium
|
|
|
6,904
|
|
|
|
13,278
|
|
|
Bolivia
|
|
|
5,000
|
|
|
|
14,187
|
|
|
Uruguay
|
|
|
-
|
|
|
|
9,906
|
|
|
Total
|
|
|
5,554,259
|
|
|
|
5,778,424
|
|
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
The remaining loan maturities are summarized as follows:
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2019
|
|
|
|
2018
|
|
|
Current:
|
|
|
|
|
|
|
|
|
|
Up to 1 month
|
|
|
675,779
|
|
|
|
820,184
|
|
|
From 1 month to 3 months
|
|
|
953,180
|
|
|
|
966,210
|
|
|
From 3 months to 6 months
|
|
|
1,313,077
|
|
|
|
1,281,615
|
|
|
From 6 months to 1 year
|
|
|
922,780
|
|
|
|
769,280
|
|
|
From 1 year to 2 years
|
|
|
557,668
|
|
|
|
719,564
|
|
|
From 2 years to 5 years
|
|
|
1,008,411
|
|
|
|
1,110,489
|
|
|
More than 5 years
|
|
|
61,519
|
|
|
|
46,381
|
|
|
|
|
|
5,492,414
|
|
|
|
5,713,723
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired
|
|
|
61,845
|
|
|
|
64,701
|
|
|
Total
|
|
|
5,554,259
|
|
|
|
5,778,424
|
|
As of September 30, 2019, the
range of interest rates on loans fluctuates from 1.20% to 12.18%, respectively (as of December 31, 2018 the range of interest rates
fluctuates from 1.20% to 12.25%).
The fixed and floating interest rate distribution
of the loan portfolio is as follows:
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2019
|
|
|
|
2018
|
|
|
Fixed interest rates
|
|
|
2,595,000
|
|
|
|
2,706,834
|
|
|
Floating interest rates
|
|
|
2,959,259
|
|
|
|
3,071,590
|
|
|
Total
|
|
|
5,554,259
|
|
|
|
5,778,424
|
|
As of September 30, 2019, and
December 31, 2018, 71% of the loan portfolio at fixed interest rates has remaining maturities of less than 180 days.
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
The following table presents
an aging analysis of the loan portfolio by credit classification in stages 1, 2 and 3:
|
|
|
September 30, 2019
|
|
|
|
|
|
|
|
Stage 1
|
|
|
Stage 2
|
|
|
Stage 3
|
|
|
|
Total
|
|
|
Gross carrying amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
5,220,786
|
|
|
|
271,628
|
|
|
|
50,892
|
|
|
|
5,543,306
|
|
|
Past due
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90-120 days
|
|
|
-
|
|
|
|
-
|
|
|
|
3,724
|
|
|
|
3,724
|
|
|
151-180 days
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
More than 180 days
|
|
|
-
|
|
|
|
-
|
|
|
|
7,229
|
|
|
|
7,229
|
|
|
Total past due
|
|
|
-
|
|
|
|
-
|
|
|
|
10,953
|
|
|
|
10,953
|
|
|
Total
|
|
|
5,220,786
|
|
|
|
271,628
|
|
|
|
61,845
|
|
|
|
5,554,259
|
|
|
|
|
December 31, 2018
|
|
|
|
|
|
|
|
Stage 1
|
|
|
Stage 2
|
|
|
Stage 3
|
|
|
|
Total
|
|
|
Gross carrying amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
5,340,751
|
|
|
|
372,972
|
|
|
|
57,025
|
|
|
|
5,770,748
|
|
|
Past due
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90-120 days
|
|
|
-
|
|
|
|
-
|
|
|
|
2,410
|
|
|
|
2,410
|
|
|
151-180 days
|
|
|
-
|
|
|
|
-
|
|
|
|
2,857
|
|
|
|
2,857
|
|
|
More than 180 days
|
|
|
-
|
|
|
|
-
|
|
|
|
2,409
|
|
|
|
2,409
|
|
|
Total past due
|
|
|
-
|
|
|
|
-
|
|
|
|
7,676
|
|
|
|
7,676
|
|
|
Total
|
|
|
5,340,751
|
|
|
|
372,972
|
|
|
|
64,701
|
|
|
|
5,778,424
|
|
As of September 30, 2019 and
December 31, 2018, the Bank had credit transactions in the normal course of business with 15% and 17%, respectively, of its Class
“A” and “B” stockholders. All transactions were made based on arm’s-length terms and subject to prevailing
commercial criteria and market rates and were subject to all of the Bank’s Corporate Governance and control procedures. As
of September 30, 2019 and December 31, 2018, approximately 12% and 9%, respectively, of the
outstanding loan portfolio was placed with the Bank’s Class “A” and “B” stockholders and their related
parties. As of September 30, 2019, the Bank was not directly or indirectly owned or controlled by another corporation or any foreign
government, and no Class “A” or “B” shareholder was the registered owner of more than 3.5% of the total
outstanding shares of the voting capital stock of the Bank.
Recognition and derecognition
of financial assets
During the periods ended September
30, 2019 and 2018, the Bank sold loans measured at amortized cost. These sales were made based on compliance with the Bank's
strategy to optimize credit risk of its loan portfolio.
The carrying amounts and gains
arising from the derecognition of these financial instruments are presented in the following table. These gains are presented within
the line “Gain (loss) on financial instruments, net” in the consolidated statement of profit or loss.
|
|
|
|
Assignments and
participations
|
|
|
Gains
(losses)
|
|
|
Carrying amount as of September 30, 2019
|
|
|
|
15,000
|
|
|
|
21
|
|
|
Carrying amount as of September 30, 2018
|
|
|
|
71,667
|
|
|
|
(625
|
)
|
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
The allowance for expected credit
losses relating to loans at amortized cost are as follows:
|
|
|
Stage 1 (1)
|
|
|
Stage 2 (2)
|
|
|
Stage 3 (3)
|
|
|
Total
|
|
|
Allowance
for expected credit losses as of December 31, 2018
|
|
34,957
|
|
|
16,389
|
|
|
49,439
|
|
|
100,785
|
|
|
Transfer to lifetime expected credit losses
|
|
|
(2,488
|
)
|
|
|
2,488
|
|
|
|
-
|
|
|
|
-
|
|
|
Transfer to credit-impaired financial instruments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Transfer to 12-month expected credit losses
|
|
|
1,524
|
|
|
|
(1,524
|
)
|
|
|
-
|
|
|
|
-
|
|
|
Net effect of changes in allowance for expected credit losses
|
|
|
(3,017
|
)
|
|
|
6,547
|
|
|
|
7,836
|
|
|
|
11,366
|
|
|
Financial instruments that have been derecognized pduring the period
|
|
|
(25,022
|
)
|
|
|
(6,193
|
)
|
|
|
(500
|
)
|
|
|
(31,715
|
)
|
|
New financial assets originated or purchased
|
|
|
23,366
|
|
|
|
-
|
|
|
|
-
|
|
|
|
23,366
|
|
|
Write-offs
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,405
|
)
|
|
|
(2,405
|
)
|
|
Recoveries
|
|
|
-
|
|
|
|
-
|
|
|
|
28
|
|
|
|
28
|
|
|
Allowance
for expected credit losses as of September 30, 2019
|
|
|
29,320
|
|
|
|
17,707
|
|
|
|
54,398
|
|
|
|
101,425
|
|
|
|
|
Stage 1 (1)
|
|
|
Stage 2 (2)
|
|
|
Stage 3 (3)
|
|
|
Total
|
|
|
Allowance
for expected credit losses as of December 31, 2017
|
|
19,821
|
|
|
33,477
|
|
|
27,996
|
|
|
81,294
|
|
|
Transfer to lifetime expected credit losses
|
|
|
(514
|
)
|
|
|
514
|
|
|
|
-
|
|
|
|
-
|
|
|
Transfer to credit-impaired financial instruments
|
|
|
(111
|
)
|
|
|
(7,864
|
)
|
|
|
7,975
|
|
|
|
-
|
|
|
Transfer to 12-month expected credit losses
|
|
|
4,471
|
|
|
|
(4,471
|
)
|
|
|
-
|
|
|
|
-
|
|
|
Net effect of changes in reserve for expected credit losses
|
|
|
(4,665
|
)
|
|
|
5,823
|
|
|
|
55,153
|
|
|
|
56,311
|
|
|
Financial instruments that have been derecognized during the year
|
|
|
(16,400
|
)
|
|
|
(11,090
|
)
|
|
|
-
|
|
|
|
(27,490
|
)
|
|
New financial assets originated or purchased
|
|
|
32,355
|
|
|
|
-
|
|
|
|
-
|
|
|
|
32,355
|
|
|
Write-offs
|
|
|
-
|
|
|
|
-
|
|
|
|
(41,686
|
)
|
|
|
(41,686
|
)
|
|
Recoveries
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
|
|
1
|
|
|
Allowance
for expected credit losses as of December 31, 2018
|
|
|
34,957
|
|
|
|
16,389
|
|
|
|
49,439
|
|
|
|
100,785
|
|
|
|
(1)
|
12-month expected credit losses.
|
|
|
(2)
|
Lifetime expected credit losses.
|
|
|
(3)
|
Credit-impaired financial assets (lifetime expected credit losses).
|
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
7.
|
Loan commitments and financial guarantee contracts
|
In the normal course of business,
to meet the financing needs of its customers, the Bank is party to loan commitments and financial guarantee contracts. These instruments
involve, to varying degrees, elements of credit and market risk in excess of the amount recognized in the consolidated statement
of financial position. Credit risk represents the possibility of loss resulting from the failure of a customer to perform in accordance
with the terms of a contract.
The Bank’s outstanding
loan commitments and financial guarantee contracts are as follows:
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2019
|
|
|
|
2018
|
|
|
Documentary letters of credit
|
|
|
159,113
|
|
|
|
218,988
|
|
|
Stand-by letters of credit and guarantees - commercial risk
|
|
|
241,998
|
|
|
|
179,756
|
|
|
Credit commitments
|
|
|
175,500
|
|
|
|
103,143
|
|
|
Total loans commitments and financial guarantee contracts
|
|
|
576,611
|
|
|
|
501,887
|
|
The remaining maturity profile
of the Bank’s outstanding loan commitments and financial guarantee contracts is as follows:
|
|
|
September 30,
|
|
|
December 31,
|
|
|
Maturities
|
|
2019
|
|
|
|
2018
|
|
|
Up to 1 year
|
|
|
454,571
|
|
|
|
434,544
|
|
|
From 1 to 2 years
|
|
|
42,040
|
|
|
|
200
|
|
|
From 2 to 5 years
|
|
|
80,000
|
|
|
|
67,143
|
|
|
Total
|
|
|
576,611
|
|
|
|
501,887
|
|
Loan commitments and financial
guarantee contracts classified by issuer’s credit quality indicators are as follows:
|
|
|
September 30,
|
|
|
December 31,
|
|
|
Rating
|
|
2019
|
|
|
|
2018
|
|
|
1-4
|
|
|
247,871
|
|
|
|
94,724
|
|
|
5-6
|
|
|
185,057
|
|
|
|
158,864
|
|
|
7
|
|
|
143,683
|
|
|
|
248,299
|
|
|
Total
|
|
|
576,611
|
|
|
|
501,887
|
|
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
7.
|
Loan commitments and financial guarantee contracts (continued)
|
The breakdown of the Bank’s
loan commitments and financial guarantee contracts’ exposure by country risk is as follows:
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2019
|
|
|
|
2018
|
|
|
Country:
|
|
|
|
|
|
|
|
|
|
Ecuador
|
|
|
137,844
|
|
|
|
247,225
|
|
|
Costa Rica
|
|
|
57,331
|
|
|
|
38,598
|
|
|
Chile
|
|
|
50,008
|
|
|
|
-
|
|
|
Brazil
|
|
|
50,000
|
|
|
|
50,000
|
|
|
Colombia
|
|
|
49,770
|
|
|
|
52,000
|
|
|
France
|
|
|
47,906
|
|
|
|
-
|
|
|
Guatemala
|
|
|
44,852
|
|
|
|
15,293
|
|
|
Luxemburgo
|
|
|
35,500
|
|
|
|
-
|
|
|
Mexico
|
|
|
30,270
|
|
|
|
22,731
|
|
|
Panama
|
|
|
21,994
|
|
|
|
29,175
|
|
|
Peru
|
|
|
17,890
|
|
|
|
2,846
|
|
|
Dominican Republic
|
|
|
16,500
|
|
|
|
16,500
|
|
|
Switzerland
|
|
|
10,000
|
|
|
|
-
|
|
|
El Salvador
|
|
|
5,539
|
|
|
|
824
|
|
|
Canada
|
|
|
657
|
|
|
|
422
|
|
|
Honduras
|
|
|
300
|
|
|
|
250
|
|
|
Bolivia
|
|
|
250
|
|
|
|
293
|
|
|
Uruguay
|
|
|
-
|
|
|
|
750
|
|
|
Germany
|
|
|
-
|
|
|
|
18,000
|
|
|
Argentina
|
|
|
-
|
|
|
|
6,980
|
|
|
Total
|
|
|
576,611
|
|
|
|
501,887
|
|
Letters
of credit, stand-by letters of credit and guarantees
The Bank, on behalf of its client’s
base, issues, confirms and advises letters of credit to facilitate foreign trade transactions. When issuing, confirming
and advising letters of credit, the Bank adds its own unqualified assurance that the bank will pay upon presentation of complying
documents as per the terms and conditions established in the letter of credit. The Bank also issues, confirms and advises stand-by
letters of credit and guarantees, which are issued on behalf of institutional clients in connection with financing between its
clients and third parties. The Bank applies the same credit policies used in its lending process, and once the commitment
is issued, it becomes irrevocable and remains valid until its expiration upon the presentation of complying documents on or
before the expiry date.
Credit commitments
Commitments to extend credit
are binding legal agreements to lend to clients. Commitments generally have fixed expiration dates or other termination clauses
and require payment of a fee to the Bank. As some commitments expire without being drawn on, the total commitment amounts do not
necessarily represent future cash requirements.
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
7.
|
Loan commitments and financial guarantee contracts (continued)
|
The allowance for expected credit
losses relating to loan commitments and financial guarantee contracts is as follows:
|
|
|
Stage 1 (1)
|
|
|
Stage 2 (2)
|
|
|
Stage 3 (3)
|
|
|
Total
|
|
|
Allowance
for expected credit losses as of December 31, 2018
|
|
|
3,089
|
|
|
|
200
|
|
|
|
-
|
|
|
|
3,289
|
|
|
Transfer to lifetime expected credit losses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Transfer to credit-impaired financial instruments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Transfer to 12-month expected credit losses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Net effect of changes in reserve for expected credit
loss
|
|
|
79
|
|
|
|
(103
|
)
|
|
|
-
|
|
|
|
24
|
|
|
Financial instruments that have been derecognized during the period
|
|
|
(2,487
|
)
|
|
|
(9
|
)
|
|
|
-
|
|
|
|
(2,496
|
)
|
|
New instruments originated or purchased
|
|
|
1,906
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,906
|
|
|
Allowance for expected
credit losses as of September 30, 2019
|
|
|
2,587
|
|
|
|
88
|
|
|
|
-
|
|
|
|
2,675
|
|
|
|
|
|
Stage 1 (1)
|
|
|
|
Stage 2 (2)
|
|
|
|
Stage 3 (3)
|
|
|
|
Total
|
|
|
Allowance
for expected credit losses as of December 31, 2017
|
|
|
1,358
|
|
|
|
5,487
|
|
|
|
-
|
|
|
|
6,845
|
|
|
Transfer to lifetime expected credit losses
|
|
|
(31
|
)
|
|
|
31
|
|
|
|
-
|
|
|
|
-
|
|
|
Transfer to credit-impaired financial instruments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Transfer to 12-month expected credit losses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Net effect of changes in reserve for expected credit
loss
|
|
|
13
|
|
|
|
169
|
|
|
|
-
|
|
|
|
182
|
|
|
Financial instruments that have been derecognized during the year
|
|
|
(1,179
|
)
|
|
|
(5,487
|
)
|
|
|
-
|
|
|
|
(6,666
|
)
|
|
New instruments originated or purchased
|
|
|
2,928
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,928
|
|
|
Allowance
for expected credit losses as of December 31, 2018
|
|
|
3,089
|
|
|
|
200
|
|
|
|
-
|
|
|
|
3,289
|
|
|
|
(1)
|
12-month expected credit losses.
|
|
|
(2)
|
Lifetime expected credit losses.
|
|
|
(3)
|
Credit-impaired financial assets (lifetime expected credit losses).
|
The allowance for expected credit
losses on loan commitments and financial guarantee contracts reflects the Bank’s management estimate of expected credit losses
items such as: confirmed letters of credit, stand-by letters of credit, guarantees and credit commitments.
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
8.
|
Impairment loss on financial instruments, net
|
The following table sets forth
the details for the loss on financial instrument recognized in the consolidated statements of profit or loss:
|
|
|
Three months ended September 30
|
|
|
|
|
2019
|
|
|
2018
|
|
|
Gain in derivative financial instruments and changes in foreign currency, net
|
|
|
20
|
|
|
|
(1,554
|
)
|
|
Gain (loss) in financial instruments at fair value through profit or loss
|
|
|
(210
|
)
|
|
|
109
|
|
|
Gain realized in financial instruments at fair value with changes in other comprehensive income
|
|
|
-
|
|
|
|
-
|
|
|
(Loss) gain on sale of loans
|
|
|
21
|
|
|
|
-
|
|
|
|
|
|
(169
|
)
|
|
|
(1,445
|
)
|
|
|
|
Nine months ended September 30
|
|
|
|
|
2019
|
|
|
2018
|
|
|
Gain in derivative financial instruments and changes in foreign currency, net
|
|
|
303
|
|
|
|
(404
|
)
|
|
Gain (loss) in financial instruments at fair value through profit or loss
|
|
|
163
|
|
|
|
(233
|
)
|
|
Gain realized in financial instruments at fair value with changes in other comprehensive income
|
|
|
163
|
|
|
|
-
|
|
|
(Loss) gain on sale of loans
|
|
|
21
|
|
|
|
(625
|
)
|
|
|
|
|
650
|
|
|
|
(1,262
|
)
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
9.
|
Derivative financial instruments
|
Quantitative information on
derivative financial instruments is as follows:
|
|
|
September 30, 2019
|
|
|
|
|
Nominal
|
|
|
Carrying amount of the
hedging instrument
|
|
|
Changes in fair
value used for
calculating
hedge
|
|
|
|
|
Amount
|
|
|
Asset
|
|
|
Liability
|
|
|
ineffectiveness
|
|
|
Fair value hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
402,000
|
|
|
|
1,864
|
|
|
|
(400
|
)
|
|
|
9,880
|
|
|
Cross-currency swaps
|
|
|
249,072
|
|
|
|
895
|
|
|
|
(8,642
|
)
|
|
|
7,482
|
|
|
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
203,000
|
|
|
|
-
|
|
|
|
(1,542
|
)
|
|
|
2,763
|
|
|
Cross-currency swaps
|
|
|
23,025
|
|
|
|
-
|
|
|
|
(2,423
|
)
|
|
|
(1,039
|
)
|
|
Foreign exchange forwards
|
|
|
59,454
|
|
|
|
1,050
|
|
|
|
(391
|
)
|
|
|
16,560
|
|
|
Net investment hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forwards
|
|
|
2,738
|
|
|
|
1
|
|
|
|
-
|
|
|
|
78
|
|
|
Total
|
|
|
939,289
|
|
|
|
3,730
|
|
|
|
(13,398
|
)
|
|
|
35,724
|
|
|
|
|
December 31, 2018
|
|
|
|
|
Nominal
|
|
|
Carrying amount of the
hedging instrument
|
|
|
Changes in fair
value used for
calculating
hedge
|
|
|
|
|
Amount
|
|
|
Asset
|
|
|
Liability
|
|
|
ineffectiveness
|
|
|
Fair value hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
433,500
|
|
|
|
108
|
|
|
|
(6,134
|
)
|
|
|
(1,666
|
)
|
|
Cross-currency swaps
|
|
|
226,757
|
|
|
|
1,134
|
|
|
|
(15,994
|
)
|
|
|
11,676
|
|
|
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
460,000
|
|
|
|
513
|
|
|
|
(3,276
|
)
|
|
|
(2,462
|
)
|
|
Cross-currency swaps
|
|
|
23,025
|
|
|
|
-
|
|
|
|
(1,384
|
)
|
|
|
(2,263
|
)
|
|
Foreign exchange forwards
|
|
|
176,311
|
|
|
|
933
|
|
|
|
(7,177
|
)
|
|
|
(14,854
|
)
|
|
Net investment hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forwards
|
|
|
6,183
|
|
|
|
-
|
|
|
|
(78
|
)
|
|
|
(128
|
)
|
|
Total
|
|
|
1,325,776
|
|
|
|
2,688
|
|
|
|
(34,043
|
)
|
|
|
(9,697
|
)
|
The hedging instruments detailed
in the tables above are presented in the consolidated statement of financial position as derivative financial instruments - assets
or derivative financial instruments - liabilities.
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
9.
|
Derivative financial instruments (continued)
|
The gains and losses resulting
from activities of hedging derivative financial instruments recognized in the consolidated statements of profit or loss are presented
below:
|
|
|
Three months ended September 30, 2019
|
|
|
|
|
Gain (loss)
recognized in
OCI (effective
portion)
|
|
|
Classification of gain
(loss)
|
|
Gain (loss)
reclassified from
OCI to
profit or loss
|
|
|
Gain (loss)
recognized on
derivatives
(ineffective
portion)
|
|
|
Derivatives – cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
(45
|
)
|
|
Gain on financial instruments, net
|
|
|
(63
|
)
|
|
|
-
|
|
|
Cross-currency swaps
|
|
|
703
|
|
|
Gain on financial instruments, net
|
|
|
(9
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
Interest income – loans
|
|
|
(255
|
)
|
|
|
-
|
|
|
Foreign exchange forwards
|
|
|
(3,348
|
)
|
|
Interest expenses – deposits
|
|
|
(368
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
Gain on financial instruments, net
|
|
|
(283
|
)
|
|
|
-
|
|
|
Total
|
|
|
(2,690
|
)
|
|
|
|
|
(978
|
)
|
|
|
-
|
|
|
Derivatives – net investment hedge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forwards
|
|
|
64
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
64
|
|
|
|
|
|
|
|
|
|
|
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
9.
|
Derivative financial instruments (continued)
|
|
|
|
Nine months ended September 30, 2019
|
|
|
|
|
Gain (loss)
recognized in
OCI (effective
portion)
|
|
|
Classification of gain
(loss)
|
|
Gain (loss)
reclassified from
OCI to
profit or loss
|
|
|
Gain (loss)
recognized on
derivatives
(ineffective
portion)
|
|
|
Derivatives – cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
1,903
|
|
|
Gain on financial instruments, net
|
|
|
56
|
|
|
|
-
|
|
|
Cross-currency swaps
|
|
|
870
|
|
|
Gain on financial instruments, net
|
|
|
(9
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
Interest income – loans
|
|
|
(1,849
|
)
|
|
|
-
|
|
|
Foreign exchange forwards
|
|
|
(464
|
)
|
|
Interest expenses – deposits
|
|
|
(1,676
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
Gain on financial instruments, net
|
|
|
70
|
|
|
|
-
|
|
|
Total
|
|
|
2,309
|
|
|
|
|
|
(3,408
|
)
|
|
|
-
|
|
|
Derivatives – net investment hedge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forwards
|
|
|
187
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
187
|
|
|
|
|
|
|
|
|
|
|
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
9.
|
Derivative financial instruments (continued)
|
|
|
|
Three months ended September 30, 2018
|
|
|
|
|
Gain (loss)
recognized in
OCI (effective
portion)
|
|
|
Classification of gain
(loss)
|
|
Gain (loss)
reclassified from
OCI to
profit or loss
|
|
|
Gain (loss)
recognized on
derivatives
(ineffective
portion)
|
|
|
Derivatives – cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
42
|
|
|
Gain on financial instruments, net
|
|
|
-
|
|
|
|
(3
|
)
|
|
Cross-currency swaps
|
|
|
521
|
|
|
Gain on financial instruments, net
|
|
|
-
|
|
|
|
(11
|
)
|
|
|
|
|
|
|
|
Interest income – loans
|
|
|
786
|
|
|
|
-
|
|
|
Foreign exchange forwards
|
|
|
1,913
|
|
|
Interest expenses – deposits
|
|
|
1,135
|
|
|
|
-
|
|
|
|
|
|
|
|
|
Gain on financial instruments, net
|
|
|
(3,948
|
)
|
|
|
-
|
|
|
Total
|
|
|
2,476
|
|
|
|
|
|
(2,027
|
)
|
|
|
(14
|
)
|
|
Derivatives – net investment hedge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forwards
|
|
|
(303
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(303
|
)
|
|
|
|
|
|
|
|
|
|
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
9.
|
Derivative financial instruments (continued)
|
|
|
|
Nine months ended September 30, 2018
|
|
|
|
|
Gain (loss)
recognized in
OCI (effective
portion)
|
|
|
Classification of gain
(loss)
|
|
Gain
(loss)
reclassified from
OCI to
profit or loss
|
|
|
Gain (loss)
recognized on
derivatives
(ineffective
portion)
|
|
|
Derivatives – cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
(1,969
|
)
|
|
Gain on financial instruments, net
|
|
|
-
|
|
|
|
(3
|
)
|
|
Cross-currency swaps
|
|
|
1,561
|
|
|
Gain (loss) on financial instruments, net
|
|
|
-
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
Interest income – loans
|
|
|
1,204
|
|
|
|
-
|
|
|
Foreign exchange forwards
|
|
|
9,212
|
|
|
Interest expenses – deposits
|
|
|
3,362
|
|
|
|
-
|
|
|
|
|
|
|
|
|
Gain on financial instruments, net
|
|
|
(6,124
|
)
|
|
|
-
|
|
|
Total
|
|
|
8,804
|
|
|
|
|
|
(1,559
|
)
|
|
|
(10
|
)
|
|
Derivatives – net investment hedge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forwards
|
|
|
(1,222
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(1,222
|
)
|
|
|
|
|
|
|
|
|
|
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
9.
|
Derivative financial instruments (continued)
|
For the agreements qualifying as fair value hedge,
the Bank recognized the gain or loss on the derivative financial instruments and the gain or loss of the hedged asset or liability
in profit or loss as follows:
|
|
|
Three months ended September 30, 2019
|
|
|
|
Classification in consolidated
statement of profit or loss
|
|
Gain (loss) on
derivatives
|
|
|
Gain (loss) on
hedged item
|
|
|
Net gain (loss)
|
|
|
Derivatives – fair value hedge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
Interest income – securities FVOCI
|
|
|
11
|
|
|
|
83
|
|
|
|
94
|
|
|
|
|
Interest income – loans
|
|
|
(12
|
)
|
|
|
642
|
|
|
|
630
|
|
|
|
|
Interest expenses – borrowings and debt
|
|
|
(761
|
)
|
|
|
(3,171
|
)
|
|
|
(3,932
|
)
|
|
|
|
Gain on financial instruments, net
|
|
|
(1,538
|
)
|
|
|
1,709
|
|
|
|
171
|
|
|
Cross-currency swaps
|
|
Interest income – loans
|
|
|
(118
|
)
|
|
|
279
|
|
|
|
161
|
|
|
|
|
Interest expenses – borrowings and debt
|
|
|
(876
|
)
|
|
|
(687
|
)
|
|
|
(1,563
|
)
|
|
|
|
Gain on financial instruments, net
|
|
|
7,269
|
|
|
|
(4,740
|
)
|
|
|
2,529
|
|
|
Total
|
|
|
|
|
3,975
|
|
|
|
(5,885
|
)
|
|
|
(1,910
|
)
|
|
|
|
Nine months ended September 30, 2019
|
|
|
|
Classification in consolidated
statement of profit or loss
|
|
Gain (loss) on
derivatives
|
|
|
Gain (loss) on
hedged item
|
|
|
Net gain (loss)
|
|
|
Derivatives – fair value hedge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
Interest income – securities FVOCI
|
|
|
34
|
|
|
|
291
|
|
|
|
325
|
|
|
|
|
Interest income – loans
|
|
|
(21
|
)
|
|
|
2,345
|
|
|
|
2,324
|
|
|
|
|
Interest expenses – borrowings and debt
|
|
|
(2,698
|
)
|
|
|
(9,325
|
)
|
|
|
(12,023
|
)
|
|
|
|
Gain on financial instruments, net
|
|
|
(1,973
|
)
|
|
|
1,992
|
|
|
|
19
|
|
|
Cross-currency swaps
|
|
Interest income – loans
|
|
|
(369
|
)
|
|
|
887
|
|
|
|
518
|
|
|
|
|
Interest expenses – borrowings and debt
|
|
|
(1,835
|
)
|
|
|
(3,951
|
)
|
|
|
(5,786
|
)
|
|
|
|
Gain on financial instruments, net
|
|
|
2,266
|
|
|
|
3,200
|
|
|
|
5,466
|
|
|
Total
|
|
|
|
|
(4,596
|
)
|
|
|
(4,561
|
)
|
|
|
(9,157
|
)
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
9.
|
Derivative financial instruments (continued)
|
|
|
|
Three months ended September 30, 2018
|
|
|
|
Classification in consolidated
statement of profit or loss
|
|
Gain (loss) on
derivatives
|
|
|
Gain (loss) on
hedged item
|
|
|
Net gain (loss)
|
|
|
Derivatives – fair value hedge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
Interest income – securities FVOCI
|
|
|
5
|
|
|
|
97
|
|
|
|
102
|
|
|
|
|
Interest income – loans
|
|
|
(65
|
)
|
|
|
870
|
|
|
|
805
|
|
|
|
|
Interest expenses – borrowings and debt
|
|
|
(755
|
)
|
|
|
(3,051
|
)
|
|
|
(3,806
|
)
|
|
|
|
Gain on financial instruments, net
|
|
|
(3,732
|
)
|
|
|
3,835
|
|
|
|
103
|
|
|
Cross-currency swaps
|
|
Interest income – loans
|
|
|
(151
|
)
|
|
|
345
|
|
|
|
194
|
|
|
|
|
Interest expenses – borrowings and debt
|
|
|
(107
|
)
|
|
|
(2,658
|
)
|
|
|
(2,765
|
)
|
|
|
|
Gain on financial instruments, net
|
|
|
(13,728
|
)
|
|
|
10,850
|
|
|
|
(2,878
|
)
|
|
Total
|
|
|
|
|
(18,533
|
)
|
|
|
10,288
|
|
|
|
8,245
|
|
|
|
|
Nine months ended September 30, 2018
|
|
|
|
Classification in consolidated
statement of profit or loss
|
|
Gain (loss) on
derivatives
|
|
|
Gain (loss) on
hedge item
|
|
|
Net gain (loss)
|
|
|
Derivatives – fair value hedge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
Interest income – securities FVOCI
|
|
|
(16
|
)
|
|
|
291
|
|
|
|
275
|
|
|
|
|
Interest income – loans
|
|
|
(79
|
)
|
|
|
1,030
|
|
|
|
951
|
|
|
|
|
Interest expenses – borrowings and debt
|
|
|
(1,310
|
)
|
|
|
(9,150
|
)
|
|
|
(10,460
|
)
|
|
|
|
Gain on financial instruments, net
|
|
|
(7,157
|
)
|
|
|
7,097
|
|
|
|
(60
|
)
|
|
Cross-currency swaps
|
|
Interest income – loans
|
|
|
(639
|
)
|
|
|
1,281
|
|
|
|
642
|
|
|
|
|
Interest expenses – borrowings and debt
|
|
|
(9
|
)
|
|
|
(7,193
|
)
|
|
|
(7,202
|
)
|
|
|
|
Gain in financial instruments, net
|
|
|
(14,900
|
)
|
|
|
13,162
|
|
|
|
(1,738
|
)
|
|
Total
|
|
|
|
|
(24,110
|
)
|
|
|
6,518
|
|
|
|
(17,592
|
)
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
9.
|
Derivative financial instruments (continued)
|
Derivatives financial position
and performance
The following tables detail
the changes of fair value of the underlying item in the consolidated statement of financial position related to fair value hedges:
|
|
|
September 30, 2019
|
|
Fair value hedges
|
|
Carrying
amount
|
|
|
Accumulated
fair value
adjustments
|
|
|
Line item in the consolidated statement of
financial position
|
|
Interest rate risk
|
|
|
|
|
|
|
|
|
|
|
|
Securities at FVOCI
|
|
|
8,176
|
|
|
|
119
|
|
|
Securities and other financial instruments, net
|
|
Loans
|
|
|
16,193
|
|
|
|
193
|
|
|
Loans
|
|
Issuances
|
|
|
(379,308
|
)
|
|
|
692
|
|
|
Borrowings and debt, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange rate risk and interest rate risk:
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
|
15,010
|
|
|
|
24
|
|
|
Loans
|
|
Issuances
|
|
|
(229,248
|
)
|
|
|
(4,968
|
)
|
|
Borrowings and debt, net
|
|
|
|
December 31, 2018
|
|
Fair value hedges
|
|
Carrying
amount
|
|
|
Accumulated
fair value
adjustments
|
|
|
Line item in the consolidated statement of
financial position
|
|
Interest rate risk
|
|
|
|
|
|
|
|
|
|
|
|
Securities at FVOCI
|
|
|
12,221
|
|
|
|
(527
|
)
|
|
Securities and other financial instruments, net
|
|
Loans
|
|
|
66,091
|
|
|
|
97
|
|
|
Loans
|
|
Issuances
|
|
|
349,428
|
|
|
|
5,266
|
|
|
Borrowings and debt, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange rate risk and interest rate risk:
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
|
10,581
|
|
|
|
(1,097
|
)
|
|
Loans
|
|
Issuances
|
|
|
199,356
|
|
|
|
15,024
|
|
|
Borrowings and debt, net
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
9.
|
Derivative financial instruments (continued)
|
Derivatives financial position
and performance (continued)
The following tables detail
the maturity profile of the timing of the nominal amounts of the hedging instruments, by type of risk covered:
|
|
|
September 30, 2019
|
|
|
Risk type
|
|
Foreign
exchange risk
|
|
|
Interest rate
risk
|
|
|
Foreign exchange
and interest
rate risks
|
|
|
Total
|
|
|
Up to 1 month
|
|
|
30,008
|
|
|
|
-
|
|
|
|
-
|
|
|
|
30,008
|
|
|
31 to 60 days
|
|
|
21,330
|
|
|
|
30,000
|
|
|
|
-
|
|
|
|
51,330
|
|
|
61 to 90 days
|
|
|
-
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
50,000
|
|
|
91 to 180 days
|
|
|
5,692
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
55,692
|
|
|
181 to 365 days
|
|
|
5,162
|
|
|
|
363,000
|
|
|
|
-
|
|
|
|
368,162
|
|
|
1 to 2 years
|
|
|
-
|
|
|
|
89,000
|
|
|
|
23,025
|
|
|
|
112,025
|
|
|
2 to 5 years
|
|
|
-
|
|
|
|
23,000
|
|
|
|
249,072
|
|
|
|
272,072
|
|
|
More than 5 years
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Total
|
|
|
62,192
|
|
|
|
605,000
|
|
|
|
272,097
|
|
|
|
939,289
|
|
|
|
|
December 31, 2018
|
|
|
Risk type
|
|
Foreign
exchange risk
|
|
|
Interest rate
risk
|
|
|
Foreign exchange
and interest
rate risks
|
|
|
Total
|
|
|
Up to 1 month
|
|
|
27,458
|
|
|
|
-
|
|
|
|
-
|
|
|
|
27,458
|
|
|
31 to 60 days
|
|
|
16,977
|
|
|
|
115,000
|
|
|
|
-
|
|
|
|
131,977
|
|
|
61 to 90 days
|
|
|
6,908
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
56,908
|
|
|
91 to 180 days
|
|
|
27,177
|
|
|
|
17,000
|
|
|
|
146,505
|
|
|
|
190,682
|
|
|
181 to 365 days
|
|
|
98,813
|
|
|
|
159,500
|
|
|
|
-
|
|
|
|
258,313
|
|
|
1 to 2 years
|
|
|
5,161
|
|
|
|
463,000
|
|
|
|
23,025
|
|
|
|
491,186
|
|
|
2 to 5 years
|
|
|
-
|
|
|
|
89,000
|
|
|
|
11,484
|
|
|
|
100,484
|
|
|
More than 5 years
|
|
|
-
|
|
|
|
-
|
|
|
|
68,768
|
|
|
|
68,768
|
|
|
Total
|
|
|
182,494
|
|
|
|
893,500
|
|
|
|
249,782
|
|
|
|
1,325,776
|
|
Assessment of the sources
of ineffectiveness
As part of its hedging operations
and according to the type of hedge, the Bank is exposed to the following ineffectiveness factors:
|
|
·
|
Cash flow hedges: Type of
hedge used to mitigate the risk of changes in foreign exchange currency rates, as well of changes in interest rate risk that could
include volatility in the projected cash flows. The sources of ineffectiveness arise mainly because of the differences in discount
rates (OIS - Overnight Index Swap).
|
|
|
·
|
Fair value hedges: Type
of hedge used to mitigate both interest rate risk and foreign currency risk. The sources of ineffectiveness come mainly from forward
rates, discount rates and cross currency basis (cost of the operation).
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
9.
|
Derivative financial instruments (continued)
|
For control purposes, derivative
instruments are recorded at their nominal amount in memoranda accounts. Interest rate swaps are made either in a single currency
or cross currency for a prescribed period to exchange a series of interest rate flows, which involve fixed for floating interest
payments, and vice versa. The Bank also engages in certain foreign exchange forward contracts to serve customers’ transaction
needs and to manage foreign currency risk. All such positions are hedged with an offsetting contract for the same currency.
The Bank manages and controls
the risks on these foreign exchange trades by establishing counterparty credit limits by customer and by adopting policies that
do not allow for open positions in the loan and investment portfolio. The Bank also uses foreign exchange forward contracts to
hedge the foreign exchange risk associated with the Bank’s equity investment in a non-U.S. dollar functional currency foreign
entity. Derivative and foreign exchange forward instruments negotiated by the Bank are executed mainly over-the-counter (OTC).
These contracts are executed between two counterparties that negotiate specific agreement terms, including notional amount, exercise
price and maturity.
The maximum length of time over
which the Bank has hedged its exposure to the variability in future cash flows on forecasted transactions is 4.5 years.
The Bank recognized the lifetime
associated cost of the foreign exchange forward contracts into interest income, in profit or loss, as an adjustment to the yield
on hedged items creating an accumulated reserve in OCI, reclassified to profit or loss at their maturity. The Bank estimates that
approximately $374 thousand are expected to be reclassified into profit or loss during the twelve-month year ending September
30, 2020.
The Bank recognized the lifetime
associated cost of the foreign exchange forward contracts into interest expense, in profit or loss, as an adjustment to the yield
on hedge items creating an accumulated reserve in OCI, reclassified to profit or loss at their maturity. The Bank estimates that
approximately $58 thousand are expected to be reclassified into profit or loss during the twelve-month year ending September
30, 2020.
Types of Derivatives and
Foreign Exchange Instruments
Interest rate swaps are contracts
in which a series of interest rate flows in a single currency are exchanged over a prescribed period. The Bank has designated a
portion of these derivative instruments as fair value hedges and another portion as cash flow hedges. Cross currency swaps are
contracts that generally involve the exchange of both interest and principal amounts in two different currencies. The Bank has
designated a portion of these derivative instruments as fair value hedges and another portion as cash flow hedges. Foreign exchange
forward contracts represent an agreement to purchase or sell foreign currency at a future date at agreed-upon terms. The Bank has
designated these derivative instruments as cash flow hedges and net investment hedges.
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
9.
|
Derivative financial instruments (continued)
|
Offsetting
of financial assets and liabilities
In the ordinary course of business,
the Bank enters into derivative financial instrument transactions and securities sold under repurchase agreements under industry
standards agreements. Depending on the collateral requirements stated in the contracts, the Bank and counterparties can receive
or deliver collateral based on the fair value of the financial instruments transacted between parties. Collateral typically consists
of pledged cash deposits and securities. The master netting agreements include clauses that, in the event of default, provide for
close-out netting, which allows all positions with the defaulting counterparty to be terminated and net settled with a single payment
amount.
The International Swaps and
Derivatives Association master agreement (“ISDA”) and similar master netting arrangements do not meet the criteria
for offsetting in the consolidated statement of financial position. This is because they create for the parties to the agreement
a right of set-off of recognized amounts that is enforceable only following an event of default, insolvency or bankruptcy of the
Bank or the counterparties or following other predetermined events.
The following tables summarize
financial assets and liabilities that have been offset in the consolidated statement of financial position or are subject to master
netting agreements:
|
|
a)
|
Derivative financial instruments – assets
|
|
September 30, 2019
|
|
|
|
|
|
|
Gross amounts
offset in the
consolidated
|
|
|
Net amount of
assets
presented in
the
consolidated
|
|
|
Gross amounts not offset in the
consolidated statement of
financial position
|
|
|
|
|
|
Description
|
|
Gross
amounts of
assets
|
|
|
statement of
financial
position
|
|
|
statement of
financial
position
|
|
|
Financial
instruments
|
|
|
Cash
collateral
received
|
|
|
Net Amount
|
|
|
Derivative financial instruments used for hedging at fair value
|
|
|
3,730
|
|
|
|
-
|
|
|
|
3,730
|
|
|
|
-
|
|
|
|
(2,727
|
)
|
|
|
1,003
|
|
|
Total
|
|
|
3,730
|
|
|
|
-
|
|
|
|
3,730
|
|
|
|
-
|
|
|
|
(2,727
|
)
|
|
|
1,003
|
|
|
December 31, 2018
|
|
|
|
|
|
|
Gross amounts
offset in the
consolidated
|
|
|
Net amount of
assets
presented in
the
consolidated
|
|
|
Gross amounts not offset in the
consolidated statement of
financial position
|
|
|
|
|
|
Description
|
|
Gross
amounts of
assets
|
|
|
statement of
financial
position
|
|
|
statement of
financial
position
|
|
|
Financial
instruments
|
|
|
Cash
collateral
received
|
|
|
Net Amount
|
|
|
Derivative financial instruments used for hedging at fair value
|
|
|
2,688
|
|
|
|
-
|
|
|
|
2,688
|
|
|
|
-
|
|
|
|
(1,496
|
)
|
|
|
1,192
|
|
|
Total
|
|
|
2,688
|
|
|
|
-
|
|
|
|
2,688
|
|
|
|
-
|
|
|
|
(1,496
|
)
|
|
|
1,192
|
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
9.
|
Derivative financial instruments (continued)
|
Offsetting of financial assets
and liabilities (continued)
|
|
b)
|
Financial liabilities and derivative financial instruments – liabilities
|
|
September 30, 2019
|
|
|
|
|
|
|
Gross amounts
offset in the
consolidated
|
|
|
Net amount of
liabilities
presented in
the
consolidated
|
|
|
Gross
amounts not offset in the
consolidated statement of
financial position
|
|
|
|
|
|
Description
|
|
Gross
amounts of
liabilities
|
|
|
statement of
financial
position
|
|
|
statement of
financial
position
|
|
|
Financial
instruments
|
|
|
Cash
collateral
pledged
|
|
|
Net
Amount
|
|
|
Securities sold under repurchase agreements
|
|
|
56,065
|
|
|
|
-
|
|
|
|
56,065
|
|
|
|
-
|
|
|
|
(320
|
)
|
|
|
55,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments used for hedging at fair value
|
|
|
13,398
|
|
|
|
-
|
|
|
|
13,398
|
|
|
|
-
|
|
|
|
(14,300
|
)
|
|
|
(902
|
)
|
|
Total
|
|
|
69,463
|
|
|
|
-
|
|
|
|
69,463
|
|
|
|
-
|
|
|
|
(14,620
|
)
|
|
|
54,843
|
|
|
December 31, 2018
|
|
|
|
|
|
|
Gross amounts
offset in the
consolidated
|
|
|
Net amount of
liabilities
presented
consolidated
|
|
|
Gross amounts not offset in the
consolidated statement of
financial position
|
|
|
|
|
|
Description
|
|
Gross
amounts of
liabilities
|
|
|
statement of
financial
position
|
|
|
statement of
financial
position
|
|
|
Financial
instruments
|
|
|
Cash
collateral
pledged
|
|
|
Net
Amount
|
|
|
Derivative financial instruments used for hedging at fair value
|
|
|
34,043
|
|
|
|
-
|
|
|
|
34,043
|
|
|
|
-
|
|
|
|
(35,960
|
)
|
|
|
(1,917
|
)
|
|
Total
|
|
|
34,043
|
|
|
|
-
|
|
|
|
34,043
|
|
|
|
-
|
|
|
|
(35,960
|
)
|
|
|
(1,917
|
)
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
10.
|
Equipment and leasehold improvements
|
Leases
In accordance with the accounting
policy described in note 3.1, the Bank has applied IFRS 16, under the modified retrospective method. The following is the detail
of the equipment and improvements to the leased property that comprise properties and leased assets that do not meet the definition
of investment property:
|
|
|
September 30,
2019
|
|
|
December 31,
2019
|
|
|
Equipment and leasehold improvements, net
|
|
|
6,163
|
|
|
|
6,686
|
|
|
Right-of-use assets
|
|
|
16,406
|
|
|
|
-
|
|
|
|
|
|
23,158
|
|
|
|
6,686
|
|
Following is the movement of
right-of-use assets on the leases for which the Bank is a lessee:
|
|
|
Building
|
|
|
Balance at January 1, 2019
|
|
|
17,435
|
|
|
Depreciation by right-of-use property
|
|
|
(1,083
|
)
|
|
Revaluation currency effect
|
|
|
54
|
|
|
Balance at September 30, 2019
|
|
|
16,406
|
|
The Bank leases buildings for
its offices. The lease of offices spaces typically run for a period of 15 years, and the representative offices for 3 to 5 years.
Some leases include an option to renew the lease for an additional period of the same duration after the end of the contract term.
The Bank sub-leases some of
its properties under operating leases.
Following is a summary of other assets
|
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
|
Accounts receivable (1)
|
|
|
4,099
|
|
|
|
13,333
|
|
|
Interest receivable - deposits
|
|
|
21
|
|
|
|
281
|
|
|
IT projects under development
|
|
|
615
|
|
|
|
357
|
|
|
Other
|
|
|
4,686
|
|
|
|
3,003
|
|
|
|
|
|
9,420
|
|
|
|
16,974
|
|
|
|
(1) As
of December 31, 2018, the sale of financial assets was executed for $12.4 million and related payment was received in January
2019.
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
The maturity profile of the Bank’s deposits,
excluding interest payable, is as follows:
|
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
|
Demand
|
|
|
145,530
|
|
|
|
211,381
|
|
|
Up to 1 month
|
|
|
1,009,041
|
|
|
|
1,192,252
|
|
|
From 1 month to 3 months
|
|
|
891,437
|
|
|
|
412,638
|
|
|
From 3 months to 6 months
|
|
|
584,748
|
|
|
|
533,135
|
|
|
From 6 months to 1 year
|
|
|
213,769
|
|
|
|
462,156
|
|
|
From 1 year to 2 years
|
|
|
6,944
|
|
|
|
70,047
|
|
|
From 2 years to 5 years
|
|
|
-
|
|
|
|
89,213
|
|
|
|
|
|
2,851,470
|
|
|
|
2,970,822
|
|
|
13.
|
Securities sold under repurchase agreements
|
As of September 30, 2019, and
December 31, 2018, the Bank has financing transactions under repurchase agreements for $56.1 million and $39.8 million, respectively.
During the period ended September
30, 2019 and 2018, $724 thousand and $291 thousand was recorded corresponding to interest expenses generated by financing agreements
under repurchase agreements. These expenses are included as interest expense – borrowings and debt line in profit or loss.
Borrowings and debt
are detailed as follows:
|
|
|
September 30, 2019
|
|
|
|
|
Short-Term
|
|
|
Long-term
|
|
|
Carring amount
|
|
Borrowings
|
|
|
Debt
|
|
|
Lease Liabilities
|
|
|
Borrowings
|
|
|
Debt
|
|
|
Lease Liabilities
|
|
|
Total
|
|
|
Principal
|
|
|
1,154,549
|
|
|
|
37,000
|
|
|
|
1,115
|
|
|
|
729,565
|
|
|
|
688,154
|
|
|
|
19,101
|
|
|
|
2,629,484
|
|
|
Prepaid commissions
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,704
|
)
|
|
|
(1,741
|
)
|
|
|
-
|
|
|
|
(3,445
|
)
|
|
|
|
|
1,154,549
|
|
|
|
37,000
|
|
|
|
1,115
|
|
|
|
727,861
|
|
|
|
686,413
|
|
|
|
19,101
|
|
|
|
2,626,039
|
|
|
|
|
December 31, 2018
|
|
|
|
|
Short-Term
|
|
|
Long-term
|
|
|
Carring amount
|
|
Borrowings
|
|
|
Debt
|
|
|
Lease Liabilities
|
|
|
Borrowings
|
|
|
Debt
|
|
|
Lease Liabilities
|
|
|
Total
|
|
|
Principal
|
|
|
1,975,174
|
|
|
|
45,930
|
|
|
|
-
|
|
|
|
886,384
|
|
|
|
614,505
|
|
|
|
-
|
|
|
|
3,521,993
|
|
|
Prepaid commissions
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,790
|
)
|
|
|
(757
|
)
|
|
|
-
|
|
|
|
(3,547
|
)
|
|
|
|
|
1,975,174
|
|
|
|
45,930
|
|
|
|
-
|
|
|
|
883,594
|
|
|
|
613,748
|
|
|
|
-
|
|
|
|
3,518,446
|
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
14.
|
Borrowings and debt (continued)
|
Short-term
borrowings and debt
The breakdown of short-term (original maturity of
less than one year) borrowings and debt, along with contractual interest rates, is as follows:
|
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
|
Short-term borrowings:
|
|
|
|
|
|
|
|
|
|
At fixed interest rates
|
|
|
448,223
|
|
|
|
695,500
|
|
|
At floating interest rates
|
|
|
706,326
|
|
|
|
1,279,674
|
|
|
Total borrowings
|
|
|
1,154,549
|
|
|
|
1,975,174
|
|
|
Short-term debt:
|
|
|
|
|
|
|
|
|
|
At fixed interest rates
|
|
|
37,000
|
|
|
|
2,700
|
|
|
At floating interest rates
|
|
|
-
|
|
|
|
43,230
|
|
|
Total debt
|
|
|
37,000
|
|
|
|
45,930
|
|
|
Total short-term borrowings and debt
|
|
|
1,191,549
|
|
|
|
2,021,104
|
|
|
|
|
|
|
|
|
|
|
|
|
Average outstanding balance during the period
|
|
|
1,066,381
|
|
|
|
1,095,530
|
|
|
Maximum balance at any month-end
|
|
|
1,477,605
|
|
|
|
2,021,104
|
|
|
Range of fixed interest rates on borrowings and debt in U.S. dollars
|
|
|
2.65% to 3.30%
|
|
|
|
2.74% to 3.30%
|
|
|
Range of floating interest rates on borrowings in U.S. dollars
|
|
|
2.74% to 3.11%
|
|
|
|
2.72% to 3.41%
|
|
|
Range of fixed interest rates on borrowings in Mexican pesos
|
|
|
-
|
|
|
|
-
|
|
|
Range of floating interest rate on borrowings in Mexican pesos
|
|
|
8.80% to 9.31%
|
|
|
|
8.49% to 9.39%
|
|
|
Weighted average interest rate at end of the period
|
|
|
3.86%
|
|
|
|
3.18%
|
|
|
Weighted average interest rate during the period
|
|
|
3.67%
|
|
|
|
3.00%
|
|
The outstanding balances of
short-term borrowings and debt by currency, are as follows:
|
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
|
Currency
|
|
|
|
|
|
|
|
US dollar
|
|
|
1,075,000
|
|
|
|
1,926,000
|
|
|
Mexican peso
|
|
|
116,549
|
|
|
|
95,104
|
|
|
Total
|
|
|
1,191,549
|
|
|
|
2,021,104
|
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
14.
|
Borrowings and debt (continued)
|
Long-term borrowings and debt
Borrowings consist of long-term
and syndicated loans obtained from international banks. Debt instruments consist of public and private issuances under the Bank's
Euro Medium Term Notes Program (“EMTN”) as well as public issuances in the Mexican and Japanese markets. The breakdown
of borrowings and long-term debt (original maturity of more than one year), along with contractual interest rates, plus prepaid
commissions as of September 30, 2019 and December 31, 2018, respectively, are as follows:
|
Long-term borrowings:
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
|
At fixed interest rates with due dates from October 2020 to February 2022
|
|
|
66,694
|
|
|
|
63,367
|
|
|
At floating interest rates with due dates from November 2019 to August 2023
|
|
|
662,871
|
|
|
|
823,017
|
|
|
Total long-term borrowings
|
|
|
729,565
|
|
|
|
886,384
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt:
|
|
|
|
|
|
|
|
|
|
At fixed interest rates with due dates from May 2020 to March 2024
|
|
|
501,260
|
|
|
|
503,229
|
|
|
At floating interest rates with due dates from March 2022 to June 2023
|
|
|
186,894
|
|
|
|
111,276
|
|
|
Total long-term debt
|
|
|
688,154
|
|
|
|
614,505
|
|
|
Total long-term borrowings and debt
|
|
|
1,417,719
|
|
|
|
1,500,889
|
|
|
Less: Prepaid commissions
|
|
|
(3,445
|
)
|
|
|
(3,547
|
)
|
|
Total long-term borrowings and debt, net
|
|
|
1,414,274
|
|
|
|
1,497,342
|
|
|
|
|
|
|
|
|
|
|
|
|
Net average outstanding balance during the period
|
|
|
1,326,998
|
|
|
|
1,244,619
|
|
|
Maximum outstanding balance at any month – end
|
|
|
1,417,719
|
|
|
|
1,500,889
|
|
|
Range of fixed interest rates on borrowings and debt in U.S. dollars
|
|
|
2.56% to 3.25%
|
|
|
|
2.25% to 3.25%
|
|
|
Range of floating interest rates on borrowings and debt in U.S. dollars
|
|
|
2.68% to 3.68%
|
|
|
|
3.26% to 4.46%
|
|
|
Range of fixed interest rates on borrowings in Mexican pesos
|
|
|
5.73% to 9.09%
|
|
|
|
5.25% to 9.09%
|
|
|
Range of floating interest rates on borrowings and debt in Mexican pesos
|
|
|
8.59% to 9.67%
|
|
|
|
9.19% to 9.71%
|
|
|
Range of fixed interest rates on debt in Japanese yens
|
|
|
0.52%
|
|
|
|
0.46%
|
|
|
Range of fixed interest rates on debt in Euros
|
|
|
3.75%
|
|
|
|
3.75%
|
|
|
Range of fixed interest rates on debt in Australian dollars
|
|
|
3.33%
|
|
|
|
3.33%
|
|
|
Weighted average interest rate at the end of the period
|
|
|
4.00%
|
|
|
|
4.35%
|
|
|
Weighted average interest rate during the period
|
|
|
4.23%
|
|
|
|
4.09%
|
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
14.
|
Borrowings and debt (continued)
|
Long-term borrowings and
debt (continued)
The balances of long-term borrowings
and debt by currency, excluding prepaid commissions, are as follows (excluded a lease liabilities)
|
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
|
Currency
|
|
|
|
|
|
|
|
|
|
US dollar
|
|
|
1,102,162
|
|
|
|
1,203,101
|
|
|
Mexican peso
|
|
|
168,304
|
|
|
|
143,661
|
|
|
Japanese yen
|
|
|
68,466
|
|
|
|
72,670
|
|
|
Euro
|
|
|
58,538
|
|
|
|
60,315
|
|
|
Australian dollar
|
|
|
20,249
|
|
|
|
21,142
|
|
|
Total
|
|
|
1,417,719
|
|
|
|
1,500,889
|
|
The Bank's funding activities
include: (i) EMTN, which may be used to issue notes for up to $2.3 billion, with maturities from 7 days up to a maximum of 30 years,
at fixed or floating interest rates, or at discount, and in various currencies. The notes are generally issued in bearer or registered
form through one or more authorized financial institutions; (ii) Short-and Long-Term Notes (“Certificados Bursatiles”)
Program (the “Mexican Program”) in the Mexican local market, registered with the Mexican National Registry of Securities
administered by the National Banking and Securities Commission in Mexico (“CNBV”, for its acronym in Spanish), for
an authorized aggregate principal amount of 10 billion Mexican pesos with maturities from one day to 30 years.
Some borrowing agreements include
various events of default and covenants related to minimum capital adequacy ratios, incurrence of additional liens, and asset sales,
as well as other customary covenants, representations and warranties. As of September 30, 2019, the Bank was in compliance with
all those covenants.
The future payments of long-term
borrowings and debt outstanding as of September 30, 2019, are as follows:
|
Payments
|
|
|
Outstanding
|
|
|
2019
|
|
|
|
31,756
|
|
|
2020
|
|
|
|
477,138
|
|
|
2021
|
|
|
|
504,945
|
|
|
2022
|
|
|
|
282,841
|
|
|
2023
|
|
|
|
62,500
|
|
|
2024
|
|
|
|
58,539
|
|
|
|
|
|
|
1,417,719
|
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
14.
|
Borrowings and debt (continued)
|
Long-term borrowings and
debt (continued)
Reconciliation of movements
of borrowings and debt arising from financing activities of consolidated statements of cash flows:
|
Borrowings and debt, net as at January 1, 2017
|
|
|
2,211,567
|
|
|
Net increase (decrease) in short-term borrowings and debt
|
|
|
166,485
|
|
|
Proceeds from long-term borrowings and debt
|
|
|
532,206
|
|
|
Repayments of long-term borrowings and debt
|
|
|
(236,778
|
)
|
|
Change in foreign currency
|
|
|
(11,925
|
)
|
|
Adjustment of fair value for hedge accounting relationship
|
|
|
-
|
|
|
Other adjustments
|
|
|
-
|
|
|
Borrowings and debt, net as at September 30, 2018
|
|
|
2,661,555
|
|
|
Borrowings and debt, net as at December 31, 2018
|
|
|
3,518,446
|
|
|
Net increase (decrease) in short-term borrowings and debt
|
|
|
(826,881
|
)
|
|
Proceeds from long-term borrowings and debt
|
|
|
245,460
|
|
|
Repayments of long-term borrowings and debt
|
|
|
(337,596
|
)
|
|
Payment of lease liabilities
|
|
|
(747
|
)
|
|
Proceeds from lease liabilities
|
|
|
20,965
|
|
|
Change in foreign currency
|
|
|
326
|
|
|
Adjustment of fair value for hedge accounting relationship
|
|
|
5,623
|
|
|
Other adjustments
|
|
|
444
|
|
|
Borrowings and debt, net as at September 30, 2019
|
|
|
2,626,040
|
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
14.
|
Borrowings and debt (continued)
|
Long-term borrowings and
debt (continued)
Lease liabilities
Maturity analysis contractual
undiscounted cash flows of the lease liability is detailed below:
|
|
|
September 30,
2019
|
|
|
Due within 1 year
|
|
|
1,992
|
|
|
After 1 year but within 5 years
|
|
|
10,436
|
|
|
After 5 years but within 10 years
|
|
|
14,031
|
|
|
Total undiscounted lease liabilities
|
|
|
26,459
|
|
|
|
|
|
|
|
|
Short-term
|
|
|
1,116
|
|
|
Long-term
|
|
|
19,101
|
|
|
Lease liabilities included in the statement of financial position at September 30
|
|
|
20,217
|
|
Amounts recognized in the
statement of cash flows
|
|
|
September 30,
2019
|
|
|
Cash outflow for leases
|
|
|
1,491
|
|
Amounts recognized in profit
or loss
|
|
|
Three months ended
|
|
|
|
|
September 30, 2019
|
|
|
Interest on lease liabilities
|
|
|
(227
|
)
|
|
Income from sub-leasing right-of-use assets
|
|
|
43
|
|
|
|
|
Nine months ended
|
|
|
|
|
September 30, 2019
|
|
|
Interest on lease liabilities
|
|
|
(689
|
)
|
|
Income from sub-leasing right-of-use assets
|
|
|
193
|
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
The following table presents
a reconciliation of profit and share data used in the basic and diluted earnings per share (“EPS”) computations for
the dates indicated:
|
|
|
Three months ended September 30
|
|
|
|
|
2019
|
|
|
2018
|
|
|
(Thousands of U.S. dollars)
|
|
|
|
|
|
|
|
Profit for the period
|
|
|
20,440
|
|
|
|
(40,719
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(U.S. dollars)
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
0.52
|
|
|
|
(1.03
|
)
|
|
Diluted earnings per share
|
|
|
0.52
|
|
|
|
0.42
|
|
|
|
|
|
|
|
|
|
|
|
|
(Thousands of shares)
|
|
|
|
|
|
|
|
|
|
Weighted average of common shares outstanding applicable to basic EPS
|
|
|
39,602
|
|
|
|
39,540
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of diluted securities:
|
|
|
|
|
|
|
|
|
|
Stock options and restricted stock units plan
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted weighted average of common shares outstanding applicable to diluted EPS
|
|
|
39,602
|
|
|
|
39,540
|
|
|
|
|
Nine months ended September 30
|
|
|
|
|
2019
|
|
|
2018
|
|
|
(Thousands of U.S. dollars)
|
|
|
|
|
|
|
|
Profit for the period
|
|
|
63,957
|
|
|
|
(9,595
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(U.S. dollars)
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
1.62
|
|
|
|
(0.24
|
)
|
|
Diluted earnings per share
|
|
|
1.62
|
|
|
|
0.79
|
|
|
|
|
|
|
|
|
|
|
|
|
(Thousands of shares)
|
|
|
|
|
|
|
|
|
|
Weighted average of common shares outstanding applicable to basic EPS
|
|
|
39,566
|
|
|
|
39,544
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of diluted securities:
|
|
|
|
|
|
|
|
|
|
Stock options and restricted stock units plan
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted weighted average of common shares outstanding applicable to diluted EPS
|
|
|
39,566
|
|
|
|
39,544
|
|
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
16.
|
Other comprehensive income
|
The breakdown of other comprehensive
income (loss) relating to financial instruments at FVOCI, derivative financial instruments, and foreign currency translation is
as follows:
|
|
|
Financial
instruments
at FVOCI
|
|
|
Derivative
financial
instruments
|
|
|
Foreign
currency
translation
adjustment
|
|
|
Total
|
|
|
Balance as of January 1, 2018
|
|
|
(385
|
)
|
|
|
858
|
|
|
|
1,490
|
|
|
|
1,963
|
|
|
Change in fair value of financial instruments, net of hedging
|
|
|
(688
|
)
|
|
|
(1,533
|
)
|
|
|
-
|
|
|
|
(2,221
|
)
|
|
Change in fair value of equity instruments at FVOCI, net of hedging
|
|
|
(2,816
|
)
|
|
|
1,163
|
|
|
|
-
|
|
|
|
(1,653
|
)
|
|
Reclassification of gains (losses) on financial instruments to the profit or loss (1)
|
|
|
(37
|
)
|
|
|
4,730
|
|
|
|
-
|
|
|
|
4,693
|
|
|
Exchange difference in conversion of foreign currency operation
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,208
|
)
|
|
|
(1,208
|
)
|
|
Other comprehensive income (loss) for the period
|
|
|
(3,541
|
)
|
|
|
4,360
|
|
|
|
(1,208
|
)
|
|
|
389
|
|
|
Balance as of September 30, 2018
|
|
|
(3,926
|
)
|
|
|
5,218
|
|
|
|
282
|
|
|
|
1,573
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2019
|
|
|
(2,800
|
)
|
|
|
3,011
|
|
|
|
209
|
|
|
|
420
|
|
|
Change in fair value of financial instruments, net of hedging
|
|
|
224
|
|
|
|
(2,933
|
)
|
|
|
-
|
|
|
|
(2,709
|
)
|
|
Change in fair value of equity instruments at FVOCI, net of hedging
|
|
|
450
|
|
|
|
-
|
|
|
|
-
|
|
|
|
450
|
|
|
Reclassification of gains (losses) on financial instruments to the profit or loss (1)
|
|
|
168
|
|
|
|
79
|
|
|
|
-
|
|
|
|
247
|
|
|
Exchange difference in conversion of foreign currency operation
|
|
|
-
|
|
|
|
-
|
|
|
|
(152
|
)
|
|
|
(152
|
)
|
|
Other comprehensive income (loss) for the period
|
|
|
842
|
|
|
|
(2,854
|
)
|
|
|
(152
|
)
|
|
|
(2,164
|
)
|
|
Balance as of September 30, 2019
|
|
|
(1,958
|
)
|
|
|
157
|
|
|
|
57
|
|
|
|
(1,744
|
)
|
|
|
(1)
|
Reclassification adjustments include amounts recognized
in profit or loss of the year that had been part of other comprehensive income in this and previous years.
|
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
16.
|
Other comprehensive income (continued)
|
The following table presents
amounts reclassified from other comprehensive income to profit or loss:
|
Three months ended September 30, 2019
|
Details about other comprehensive
income components
|
|
Amount reclassified
from other
comprehensive income
|
|
|
Affected line item in the consolidated statement of
profit or loss
|
|
Realized gains (losses) on securities at FVOCI:
|
|
|
-
|
|
|
Gain on financial instruments, net
|
|
|
|
|
|
|
|
|
|
Gains (losses) on derivative financial instruments:
|
|
|
|
|
|
|
|
Foreign exchange forwards
|
|
|
(255
|
)
|
|
Interest income – loans
|
|
|
|
|
(368
|
)
|
|
Interest expense – borrowings and deposits
|
|
|
|
|
(321
|
)
|
|
Gain on financial instruments, net
|
|
Interest rate swaps
|
|
|
(63
|
)
|
|
Gain on financial instruments, net
|
|
Cross-currency swaps
|
|
|
(9
|
)
|
|
Gain on financial instruments, net
|
|
|
|
|
(1,016
|
)
|
|
|
|
Nine months ended September 30, 2019
|
Details about other comprehensive
income components
|
|
Amount reclassified
from other
comprehensive income
|
|
|
Affected line item in the consolidated statement of
profit or loss
|
|
Realized gains (losses) on securities at FVOCI:
|
|
|
168
|
|
|
Gain on financial instruments, net
|
|
|
|
|
|
|
|
|
|
Gains (losses) on derivative financial instruments:
|
|
|
|
|
|
|
|
Foreign exchange forwards
|
|
|
(1,849
|
)
|
|
Interest income – loans
|
|
|
|
|
(1,676
|
)
|
|
Interest expense – borrowings and deposits
|
|
|
|
|
32
|
|
|
Gain on financial instruments, net
|
|
Interest rate swaps
|
|
|
56
|
|
|
Gain on financial instruments, net
|
|
Cross-currency swaps
|
|
|
(9
|
)-
|
|
Gain on financial instruments, net
|
|
|
|
|
(3,446
|
)
|
|
|
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
16.
|
Other comprehensive income (continued)
|
|
Three months ended September 30, 2018
|
Details about other comprehensive
income components
|
|
Amount reclassified
from other
comprehensive income
|
|
|
Affected line item in the consolidated statement of
profit or loss
|
|
Realized gains (losses) on securities at FVOCI:
|
|
|
-
|
|
|
Gain on financial instruments, net
|
|
|
|
|
|
|
|
|
|
Gains (losses) on derivative financial instruments:
|
|
|
|
|
|
|
|
Foreign exchange forwards
|
|
|
(786
|
)
|
|
Interest income – loans
|
|
|
|
|
742
|
|
|
Interest expense – borrowings and deposits
|
|
|
|
|
(1,957
|
)
|
|
Gain on financial instruments, net
|
|
Interest rate swaps
|
|
|
3
|
|
|
Gain on financial instruments, net
|
|
Cross-currency swaps
|
|
|
-
|
|
|
Gain on financial instruments, net
|
|
|
|
|
(1,998
|
)
|
|
|
|
Nine months ended September 30, 2018
|
Details about other comprehensive
income components
|
|
Amount reclassified
from other
comprehensive income
|
|
|
Affected line item in the consolidated statement of
profit or loss
|
|
Realized gains (losses) on securities at FVOCI:
|
|
|
38
|
|
|
Gain on financial instruments, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains (losses) on derivative financial instruments:
|
|
|
|
|
|
|
|
Foreign exchange forwards
|
|
|
(1,950
|
)
|
|
Interest income – loans
|
|
|
|
|
(1,485
|
)
|
|
Interest expense – borrowings and deposits
|
|
|
|
|
(1,290
|
)
|
|
Gain on financial instruments, net
|
|
Interest rate swaps
|
|
|
(5
|
)
|
|
Gain on financial instruments, net
|
|
Cross-currency swaps
|
|
|
-
|
|
|
Gain on financial instruments, net
|
|
|
|
|
(4,730
|
)
|
|
|
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
17.
|
Fees and commission income
|
Fees and commission income from contracts with customers
broken down by main types of services according to the scope of IFRS 15, are detailed below:
|
|
|
Three months ended September 30, 2019
|
|
|
|
|
Syndicated
loans
|
|
|
Documentary
and standby
letters of credit
|
|
|
Credit
commitments,
net
|
|
|
Total
|
|
|
Openning and confirmation
|
|
|
-
|
|
|
|
2,323
|
|
|
|
432
|
|
|
|
2,755
|
|
|
Negotiation and acceptance
|
|
|
-
|
|
|
|
76
|
|
|
|
-
|
|
|
|
76
|
|
|
Amendment
|
|
|
-
|
|
|
|
30
|
|
|
|
-
|
|
|
|
30
|
|
|
Structuring
|
|
|
480
|
|
|
|
-
|
|
|
|
-
|
|
|
|
480
|
|
|
Other
|
|
|
-
|
|
|
|
-
|
|
|
|
(526
|
)
|
|
|
(526
|
)
|
|
|
|
|
480
|
|
|
|
2,429
|
|
|
|
(94
|
)
|
|
|
2,815
|
|
|
|
|
Nine months ended September 30, 2019
|
|
|
|
|
Syndicated
loans
|
|
|
Documentary
and standby
letters of credit
|
|
|
Credit
commitments,
net
|
|
|
Total
|
|
|
Openning and confirmation
|
|
|
-
|
|
|
|
6,668
|
|
|
|
840
|
|
|
|
7,508
|
|
|
Negotiation and acceptance
|
|
|
-
|
|
|
|
299
|
|
|
|
-
|
|
|
|
299
|
|
|
Amendment
|
|
|
-
|
|
|
|
64
|
|
|
|
(1
|
)
|
|
|
63
|
|
|
Structuring
|
|
|
2,917
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,917
|
|
|
Other
|
|
|
-
|
|
|
|
-
|
|
|
|
(494
|
)
|
|
|
(494
|
)
|
|
|
|
|
2,917
|
|
|
|
7,031
|
|
|
|
345
|
|
|
|
10,293
|
|
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
17.
|
Fees and commission income (continued)
|
|
|
|
Three months ended September 30, 2018
|
|
|
|
|
Syndicated
loans
|
|
|
Letters of credit and
guarantees
|
|
|
Credit
commitments
|
|
|
Total
|
|
|
Openning and confirmation
|
|
|
-
|
|
|
|
2,492
|
|
|
|
369
|
|
|
|
2,861
|
|
|
Negotiation and acceptance
|
|
|
-
|
|
|
|
49
|
|
|
|
-
|
|
|
|
49
|
|
|
Amendment
|
|
|
-
|
|
|
|
24
|
|
|
|
-
|
|
|
|
24
|
|
|
Structuring
|
|
|
918
|
|
|
|
-
|
|
|
|
-
|
|
|
|
918
|
|
|
Others
|
|
|
-
|
|
|
|
-
|
|
|
|
(160
|
)
|
|
|
(160
|
)
|
|
|
|
|
918
|
|
|
|
2,565
|
|
|
|
209
|
|
|
|
3,692
|
|
|
|
|
Nine months ended September 30, 2018
|
|
|
|
|
Syndicated
loans
|
|
|
Letters of credit and
guarantees
|
|
|
Credit
commitments
|
|
|
Total
|
|
|
Openning and confirmation
|
|
|
-
|
|
|
|
8,196
|
|
|
|
571
|
|
|
|
8,767
|
|
|
Negotiation and acceptance
|
|
|
-
|
|
|
|
114
|
|
|
|
-
|
|
|
|
114
|
|
|
Amendment
|
|
|
-
|
|
|
|
77
|
|
|
|
-
|
|
|
|
77
|
|
|
Structuring
|
|
|
2,954
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,954
|
|
|
Others
|
|
|
-
|
|
|
|
-
|
|
|
|
(129
|
)
|
|
|
(129
|
)
|
|
|
|
|
2,954
|
|
|
|
8,387
|
|
|
|
442
|
|
|
|
11,783
|
|
The following table provides
information on the ordinary income that is expected to be recognized on the contracts in force as of September 30, 2019 and December
31, 2018:
|
|
|
Up to 1 year
|
|
|
1 to 2 years
|
|
|
More than 2
years
|
|
|
Total
|
|
|
Ordinary income expected to be recognized on the contracts as of September 30, 2019
|
|
|
1,574
|
|
|
|
109
|
|
|
|
1,129
|
|
|
|
2,812
|
|
|
|
|
Up to 1 year
|
|
|
1 to 2 years
|
|
|
More than 2
years
|
|
|
Total
|
|
|
Ordinary income expected to be recognized on the contracts as of December 31, 2018
|
|
|
1,655
|
|
|
|
377
|
|
|
|
761
|
|
|
|
2,793
|
|
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
18.
|
Business segment information
|
The Bank’s activities
are managed and executed in two business segments: Commercial and Treasury. The business segment results are determined based on
the Bank’s managerial accounting process as defined by IFRS 8 – Operating Segments, which assigns assets, liabilities,
revenue and expense items to each business segment on a systematic basis. The maximum decision-making operating authority of the
Bank is represented by the Chief Executive Officer and the Executive Committee, which review the internal management reports for
each division at least every six months. Segment profit, as included in the internal management reports is used to measure performance
as management believes that this information is the most relevant in evaluating the results of the respective segments relative
to other entities that operate within the same industry.
The Bank’s net interest
income represents the main driver of profits; therefore, the Bank presents its interest-earning assets by business segment, to
give an indication of the size of business generating net interest income. Interest-earning assets also generate gains and losses
on sales, mainly from financial instruments at fair value through OCI and financial instruments at fair value through profit or
loss, which are included in net other income, in the Treasury Segment. The Bank also discloses its other assets and contingencies
by business segment, to give an indication of the size of business that generates net fees and commissions, also included in net
other income, in the Commercial Business Segment.
The Commercial Business Segment
encompasses the Bank’s core business of financial intermediation and fee generation activities catering to corporations,
financial institutions and investors in Latin America. These activities include the origination of bilateral short-term and
medium-term loans, structured and syndicated credits, loan commitments, and financial guarantee contracts such as issued and confirmed
letters of credit, stand-by letters of credit, guarantees covering commercial risk, and other assets consisting of customers’
liabilities under acceptances.
Profits from the Commercial
Business Segment include (i) net interest income from loans; (ii) fees and commissions from the issuance, confirmation and negotiation
of letters of credit, guarantees and loan commitments, and through loan structuring and syndication activities; (iii) gain on sale
of loans generated through loan intermediation activities, such as sales in the secondary market and distribution in the primary
market; (iv) impairment loss on financial instruments; and (v) direct and allocated operating expenses.
The Treasury Business Segment
focuses on managing the Bank’s investment portfolio, and the overall structure of its assets and liabilities to achieve more
efficient funding and liquidity positions for the Bank, mitigating the traditional financial risks associated with the balance
sheet, such as interest rate, liquidity, price and currency risks. Interest-earning assets managed by the Treasury Business Segment
include liquidity positions in cash and cash equivalents, and financial instruments related to the investment management activities,
consisting of securities at FVOCI and securities at amortized cost. The Treasury Business Segment also manages the Bank’s
interest-bearing liabilities, which constitute its funding sources, mainly deposits, short- and long-term borrowings and debt.
Profits from the Treasury Business
Segment include net interest income derived from the above mentioned treasury assets and liabilities, and related net other income
(net results from derivative financial instruments and foreign currency exchange, gain (loss) per financial instruments at FVTPL,
gain (loss) on sale of securities at FVOCI, and other income), recovery or impairment loss on financial instruments, and direct
and allocated operating expenses.
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
18.
|
Business segment information (continued)
|
The following
table provides certain information regarding the Bank’s operations by segment:
|
|
|
For
the three months ended September 30, 2019
|
|
|
|
|
Commercial
|
|
|
Treasury
|
|
|
Total
|
|
|
Interest income
|
|
|
60,994
|
|
|
|
4,520
|
|
|
|
65,514
|
|
|
Interest expense
|
|
|
(165
|
)
|
|
|
(38,691
|
)
|
|
|
(38,856
|
)
|
|
Inter-segment net interest income
|
|
|
(33,893
|
)
|
|
|
33,893
|
|
|
|
-
|
|
|
Net interest income
|
|
|
26,936
|
|
|
|
(278
|
)
|
|
|
26,658
|
|
|
Other income (expense), net
|
|
|
3,418
|
|
|
|
(555
|
)
|
|
|
2,863
|
|
|
Total income
|
|
|
30,354
|
|
|
|
(833
|
)
|
|
|
29,521
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment loss on financial assets
|
|
|
(934
|
)
|
|
|
322
|
|
|
|
(612
|
)
|
|
Gain (impairment loss) on non-financial assets
|
|
|
500
|
|
|
|
-
|
|
|
|
500
|
|
|
Operating expenses
|
|
|
(6,998
|
)
|
|
|
(1,971
|
)
|
|
|
(8,969
|
)
|
|
Segment profit (loss)
|
|
|
22,922
|
|
|
|
(2,482
|
)
|
|
|
20,440
|
|
|
|
|
For
the nine months ended September 30, 2019
|
|
|
|
|
Commercial
|
|
|
Treasury
|
|
|
Total
|
|
|
Interest income
|
|
|
193,809
|
|
|
|
15,789
|
|
|
|
209,598
|
|
|
Interest expense
|
|
|
(551
|
)
|
|
|
(126,438
|
)
|
|
|
(126,989
|
)
|
|
Inter-segment net interest income
|
|
|
(110,959
|
)
|
|
|
110,959
|
|
|
|
-
|
|
|
Net interest income
|
|
|
82,299
|
|
|
|
310
|
|
|
|
82,609
|
|
|
Other income (expense), net
|
|
|
11,537
|
|
|
|
1,080
|
|
|
|
12,617
|
|
|
Total income
|
|
|
93,836
|
|
|
|
1,390
|
|
|
|
95,226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment loss on financial assets
|
|
|
(2,679
|
)
|
|
|
314
|
|
|
|
(2,365
|
)
|
|
Gain (impairment loss) on non-financial assets
|
|
|
500
|
|
|
|
-
|
|
|
|
500
|
|
|
Operating expenses
|
|
|
(22,459
|
)
|
|
|
(6,945
|
)
|
|
|
(29,404
|
)
|
|
Segment profit (loss)
|
|
|
69,198
|
|
|
|
(5,241
|
)
|
|
|
63,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets
|
|
|
5,577,142
|
|
|
|
1,070,607
|
|
|
|
6,647,749
|
|
|
Segment liabilities
|
|
|
89,082
|
|
|
|
5,567,375
|
|
|
|
5,656,457
|
|
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
18.
|
Business segment information (continued)
|
|
|
|
For
the three months ended September 30, 2018
|
|
|
|
|
Commercial
|
|
|
Treasury
|
|
|
Total
|
|
|
Interest income
|
|
|
61,143
|
|
|
|
3,877
|
|
|
|
65,020
|
|
|
Interest expense
|
|
|
-
|
|
|
|
(37,724
|
)
|
|
|
(37,724
|
)
|
|
Inter-segment net interest income
|
|
|
(34,698
|
)
|
|
|
34,698
|
|
|
|
-
|
|
|
Net interest income
|
|
|
26,445
|
|
|
|
851
|
|
|
|
27,296
|
|
|
Other income (expense), net
|
|
|
4,255
|
|
|
|
(1,444
|
)
|
|
|
2,811
|
|
|
Total income
|
|
|
30,700
|
|
|
|
(593
|
)
|
|
|
30,107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment loss on financial assets
|
|
|
(55,134
|
)
|
|
|
-
|
|
|
|
(55,134
|
)
|
|
Impairment loss on non-financial assets
|
|
|
(790
|
)
|
|
|
-
|
|
|
|
(790
|
)
|
|
Operating expenses
|
|
|
(8,553
|
)
|
|
|
(2,298
|
)
|
|
|
(10,851
|
)
|
|
Segment profit (loss)
|
|
|
(33,777
|
)
|
|
|
(2,891
|
)
|
|
|
(36,668
|
)
|
|
|
|
For
the nine months ended September 30, 2018
|
|
|
|
|
Commercial
|
|
|
Treasury
|
|
|
Total
|
|
|
Interest income
|
|
|
173,062
|
|
|
|
11,314
|
|
|
|
184,376
|
|
|
Interest expense
|
|
|
-
|
|
|
|
(102,601
|
)
|
|
|
(102,601
|
)
|
|
Inter-segment net interest income
|
|
|
(91,631
|
)
|
|
|
91,631
|
|
|
|
-
|
|
|
Net interest income
|
|
|
81,431
|
|
|
|
344
|
|
|
|
81,775
|
|
|
Other income (expense), net
|
|
|
12,243
|
|
|
|
(513
|
)
|
|
|
11,730
|
|
|
Total income
|
|
|
93,674
|
|
|
|
(169
|
)
|
|
|
93,505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment loss (gain) on
financial assets
|
|
|
(58,883
|
)
|
|
|
47
|
|
|
|
(58,836
|
)
|
|
Impairment loss on non-financial assets
|
|
|
(3,679
|
)
|
|
|
-
|
|
|
|
(3,679
|
)
|
|
Operating expenses
|
|
|
(28,119
|
)
|
|
|
(8,416
|
)
|
|
|
(36,535
|
)
|
|
Segment profit (loss)
|
|
|
2,993
|
|
|
|
(8,538
|
)
|
|
|
(5,544
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets
|
|
|
5,654,317
|
|
|
|
890,290
|
|
|
|
6,544,607
|
|
|
Segment liabilities
|
|
|
27,451
|
|
|
|
5,528,678
|
|
|
|
5,556,129
|
|
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
18.
|
Business segment information (continued)
|
|
Reconciliation on information on reportable segments
|
|
|
|
|
|
|
|
|
|
|
|
For
the three months ended
September 30
|
|
|
|
|
2019
|
|
|
2018
|
|
|
Profit (loss) for the period
|
|
|
20,440
|
|
|
|
(36,668
|
)
|
|
Impairment loss on non-financial assets - unallocated
|
|
|
-
|
|
|
|
(4,051
|
)
|
|
Total profit (loss) for the period
|
|
|
20,440
|
|
|
|
(40,719
|
)
|
|
|
|
For
the nine months ended
September 30
|
|
|
|
|
2019
|
|
|
2018
|
|
|
Profit (loss) for the period
|
|
|
63,957
|
|
|
|
(5,544
|
)
|
|
Impairment loss on non-financial assets - unallocated
|
|
|
-
|
|
|
|
(4,051
|
)
|
|
Total profit (loss) for the period
|
|
|
63,957
|
|
|
|
(9,595
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
Assets from reportable segments
|
|
|
6,647,749
|
|
|
|
6,544,607
|
|
|
Equipment and leasehold improvements, net - unallocated
|
|
|
22,569
|
|
|
|
6,692
|
|
|
Intangibles, net - unallocated
|
|
|
1,474
|
|
|
|
1,798
|
|
|
Other assets - unallocated
|
|
|
9,400
|
|
|
|
7,661
|
|
|
Unallocated amounts
|
|
|
33,442
|
|
|
|
16,151
|
|
|
Total assets
|
|
|
6,681,192
|
|
|
|
6,560,758
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
Liabilities from reportable segments
|
|
|
5,656,457
|
|
|
|
5,556,129
|
|
|
Other liabilities - unallocated
|
|
|
15,634
|
|
|
|
15,678
|
|
|
Unallocated amounts
|
|
|
15,634
|
|
|
|
15,678
|
|
|
Total Liabilities
|
|
|
5,672,091
|
|
|
|
5,571,807
|
|
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
19.
|
Fair value of financial instruments
|
The Bank determines the fair
value of its financial instruments using the fair value hierarchy established in IFRS 13 - Fair Value Measurements and Disclosure,
which requires the Bank to maximize the use of observable inputs (those that reflect the assumptions that market participants would
use in pricing the asset or liability developed based on market information obtained from sources independent of the reporting
entity) and to minimize the use of unobservable inputs (those that reflect the reporting entity’s own assumptions about the
inputs that market participants would use in pricing the asset or liability developed based on the best information available in
the circumstances) when measuring fair value. Fair value is used on a recurring basis to measure assets and liabilities in which
fair value is the primary basis of accounting. Additionally, fair value is used on a non-recurring basis to assess assets and liabilities
for impairment or for disclosure purposes. Fair value is defined as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of
the asset or liability, the Bank uses some valuation techniques and assumptions when estimating fair value. The Bank applied the
following fair value hierarchy:
Level 1 – Assets or liabilities
for which an identical instrument is traded in an active market, such as publicly-traded instruments or futures contracts.
Level 2 – Assets or liabilities
valued based on observable market data for similar instruments, quoted prices in markets that are not active; or other observable
inputs that can be corroborated by observable market data for substantially the full term of the asset or liability.
Level 3 – Assets or liabilities
for which significant valuation inputs are not readily observable in the market; instruments measured based on the best available
information, which might include some internally-developed data, and considers risk premiums that a market participant would require.
When determining the fair value
measurements for assets and liabilities that are required or permitted to be recorded at fair value, the Bank considers the principal
or most advantageous market in which it would transact and considers the inputs that market participants would use when pricing
the asset or liability. When possible, the Bank uses active markets and observable prices to value identical assets or liabilities.
When identical assets and liabilities are not traded in active markets, the Bank uses observable market information for similar
assets and liabilities. However, certain assets and liabilities are not actively traded in observable markets and the Bank must
use alternative valuation techniques to determine the fair value measurement. The frequency of transactions, the size of the bid-ask
spread and the size of the investment are factors considered in determining the liquidity of markets and the relevance of observed
prices in those markets.
When there has been a significant
decrease in the valuation of the financial asset or liability, or in the level of activity for a financial asset or liability,
the Bank uses the present value technique which considers market information to determine a representative fair value in usual
market conditions.
Recurring valuation:
A description of the valuation
methodologies used for assets and liabilities measured at fair value on a recurring basis, including the general classification
of such assets and liabilities under the fair value hierarchy is presented below:
Financial instruments at
FVTPL and FVOCI
Financial instruments at FVTPL
are carried at fair value, which is based upon quoted prices when available, or if quoted market prices are not available, on discounted
expected cash flows using market rates commensurate with the credit quality and maturity of the security.
Financial instruments at FVOCI
are carried at fair value, based on quoted market prices when available, or if quoted market prices are not available, based on
discounted expected cash flows using market rates commensurate with the credit quality and maturity of the security.
Banco Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
19.
|
Fair value of financial instruments (continued)
|
Financial instruments at
FVTPL and FVOCI (continued)
When quoted prices are available
in an active market, financial instruments at FVOCI and financial instruments at FVTPL are classified in level 1 of the fair value
hierarchy. If quoted market prices are not available or they are available in markets that are not active, then fair values are
estimated based upon quoted prices for similar instruments, or where these are not available, by using internal valuation techniques,
principally discounted cash flows models. Such securities are classified within levels 2 and 3 of the fair value hierarchy.
Derivative financial instruments
The valuation techniques and
inputs depend on the type of derivative and the nature of the underlying instrument. Exchange-traded derivatives that are valued
using quoted prices are classified within level 1 of the fair value hierarchy.
For those derivative contracts
without quoted market prices, fair value is based on internal valuation techniques using inputs that are readily observable and
that can be validated by information available in the market. The principal technique used to value these instruments is the discounted
cash flows model and the key inputs considered in this technique include interest rate yield curves and foreign exchange rates.
These derivatives are classified within level 2 of the fair value hierarchy.
The fair value adjustments applied
by the Bank to its derivative carrying values include credit valuation adjustments (“CVA”), which are applied to OTC
derivative instruments, in which the base valuation generally discounts expected cash flows using the Overnight Index Swap (“OIS”)
interest rate curves. Because not all counterparties have the same credit risk as that implied by the relevant OIS curve, a CVA
is necessary to incorporate the market view of both, counterparty credit risk and the Bank’s own credit risk, in the valuation.
Own-credit and counterparty
CVA is determined using a fair value curve consistent with the Bank’s or counterparty credit rating. The CVA is designed
to incorporate a market view of the credit risk inherent in the derivative portfolio. However, most of the Bank’s derivative
instruments are negotiated bilateral contracts and are not commonly transferred to third parties. Derivative instruments are normally
settled contractually, or if terminated early, are terminated at a value negotiated bilaterally between the counterparties. Therefore,
the CVA (both counterparty and own-credit) may not be realized upon a settlement or termination in the normal course of business.
In addition, all or a portion of the CVA may be reversed or otherwise adjusted in future periods in the event of changes in the
credit risk of the Bank or its counterparties or due to the anticipated termination of the transactions.
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
19.
|
Fair value of financial instruments (continued)
|
Financial instruments measured
at fair value on a recurring basis by caption on the consolidated statement of financial position using the fair value hierarchy
are described below:
|
|
|
September 30, 2019
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities and other financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities at FVOCI - Corporate debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Securities at FVOCI - Sovereign debt
|
|
|
-
|
|
|
|
8,176
|
|
|
|
-
|
|
|
|
8,176
|
|
|
Equity instrument at FVOCI
|
|
|
-
|
|
|
|
2,846
|
|
|
|
-
|
|
|
|
2,846
|
|
|
Debt instrument at fair value through profit or loss
|
|
|
-
|
|
|
|
-
|
|
|
|
8,739
|
|
|
|
8,739
|
|
|
Total securities and other financial assets
|
|
|
-
|
|
|
|
11,022
|
|
|
|
8,739
|
|
|
|
19,761
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments - assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
-
|
|
|
|
1,864
|
|
|
|
-
|
|
|
|
1,864
|
|
|
Cross-currency swaps
|
|
|
-
|
|
|
|
816
|
|
|
|
-
|
|
|
|
816
|
|
|
Foreign exchange forwards
|
|
|
-
|
|
|
|
1,050
|
|
|
|
-
|
|
|
|
1,050
|
|
|
Total derivative financial instrument assets
|
|
|
-
|
|
|
|
3,730
|
|
|
|
-
|
|
|
|
3,730
|
|
|
Total assets at fair value
|
|
|
-
|
|
|
|
14,752
|
|
|
|
8,739
|
|
|
|
23,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments - liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
-
|
|
|
|
390
|
|
|
|
-
|
|
|
|
390
|
|
|
Cross-currency swaps
|
|
|
-
|
|
|
|
11,066
|
|
|
|
-
|
|
|
|
11,066
|
|
|
Foreign exchange forwards
|
|
|
-
|
|
|
|
1,942
|
|
|
|
-
|
|
|
|
1,942
|
|
|
Total derivative financial instruments - liabilities
|
|
|
-
|
|
|
|
13,398
|
|
|
|
-
|
|
|
|
13,398
|
|
|
Total liabilities at fair value
|
|
|
-
|
|
|
|
13,398
|
|
|
|
-
|
|
|
|
13,398
|
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
19.
|
Fair value of financial instruments (continued)
|
|
|
|
December 31, 2018
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities and other financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities at FVOCI
- Corporate debt (1)
|
|
|
-
|
|
|
|
6,157
|
|
|
|
-
|
|
|
|
6,157
|
|
|
Securities at FVOCI - Sovereign
debt (1)
|
|
|
-
|
|
|
|
15,641
|
|
|
|
-
|
|
|
|
15,641
|
|
|
Equity instrument at FVOCI (1)
|
|
|
-
|
|
|
|
6,273
|
|
|
|
-
|
|
|
|
6,273
|
|
|
Debt instrument at fair value through profit or loss
|
|
|
-
|
|
|
|
-
|
|
|
|
8,750
|
|
|
|
8,750
|
|
|
Total securities and other financial assets
|
|
|
-
|
|
|
|
28,071
|
|
|
|
8,750
|
|
|
|
36,821
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments - assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
-
|
|
|
|
621
|
|
|
|
-
|
|
|
|
621
|
|
|
Cross-currency swaps
|
|
|
-
|
|
|
|
1,134
|
|
|
|
-
|
|
|
|
1,134
|
|
|
Foreign exchange forwards
|
|
|
-
|
|
|
|
933
|
|
|
|
-
|
|
|
|
933
|
|
|
Total derivative financial instrument assets
|
|
|
-
|
|
|
|
2,688
|
|
|
|
-
|
|
|
|
2,688
|
|
|
Total assets at fair value
|
|
|
-
|
|
|
|
30,759
|
|
|
|
8,750
|
|
|
|
39,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments - liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
-
|
|
|
|
9,410
|
|
|
|
-
|
|
|
|
9,410
|
|
|
Cross-currency swaps
|
|
|
-
|
|
|
|
17,378
|
|
|
|
-
|
|
|
|
17,378
|
|
|
Foreign exchange forwards
|
|
|
-
|
|
|
|
7,255
|
|
|
|
-
|
|
|
|
7,255
|
|
|
Total derivative financial instruments - liabilities
|
|
|
-
|
|
|
|
34,043
|
|
|
|
-
|
|
|
|
34,043
|
|
|
Total liabilities at fair value
|
|
|
-
|
|
|
|
34,043
|
|
|
|
-
|
|
|
|
34,043
|
|
|
|
(1)
|
At December 31, 2018, investment securities and equity
instrument at FVOCI for $21.8 million and $6.5 million, respectively; were reclassified from level 1 to level 2 of the fair value
hierarchy due to changes in market conditions causing that the quoted prices were no longer active for these financial instruments.
|
Fair value calculations are
only provided for a limited portion of the Bank’s financial assets and liabilities. Due to a wide range of valuation techniques
and the degree of subjectivity used in making the estimates, comparison of fair value information of the Bank and other companies
may not be meaningful for comparative analysis.
Non-recurring
valuation:
The following
methods and inputs were used by the Bank’s management in estimating the fair values of financial instruments whose fair value
is not measured on a recurring basis:
Financial instruments with
carrying value that approximates fair value
The carrying value of certain
financial assets, including cash and due from banks, interest-bearing deposits in banks, customers’ liabilities under acceptances,
interest receivable and certain financial liabilities including customer’s demand and time deposits, securities sold under
repurchase agreements, interest payable, and acceptances outstanding, due to their short-term nature, is considered to approximate
their fair value. These instruments are classified in Level 2.
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
19.
|
Fair value of financial instruments (continued)
|
Non-recurring
basic (continued)
Securities at amortized cost
The fair value has been estimated
upon current market quotations, where available. If quoted market prices are not available, fair value has been estimated based
upon quoted prices of similar instruments, or where these are not available, on discounted expected cash flows using market rates
commensurate with the credit quality and maturity of the security. These securities are classified in Levels 1 and 2.
Loans
The fair value of the loan portfolio,
including impaired loans, is estimated by discounting future cash flows using the current rates at which loans would be made to
borrowers with similar credit ratings and for the same remaining maturities, considering the contractual terms in effect as of
December 31 of the relevant year. These assets are classified in Levels 2 and 3.
Transfer of financial assets
Gains or losses on sale of loans
depend in part on the carrying amount of the financial assets involved in the transfer, and their fair value at the date of transfer.
The fair value of these instruments is determined based upon quoted market prices when available or is based on the present value
of future expected cash flows using information related to credit losses, prepayment speeds, forward yield curves, and discounted
rates commensurate with the risk involved.
Short and long-term borrowings
and debt
The fair value of short and
long-term borrowings and debt is estimated using discounted future cash flows based on the current incremental borrowing rates
for similar types of borrowing arrangements, considering the changes in the Bank’s credit margin. These liabilities are classified
in Level 2.
Valuation framework
The Bank has an established
control framework for the measurement of fair values, which is independent of front office management, verifying the valuation
results of the derivative financial instruments, securities and other financial instrument significantly measured. Specific controls
include:
|
|
-
|
Verification of observable pricing
|
|
|
-
|
Verification of re – performance of model valuations
|
|
|
-
|
A review and approval process for new models and changes to existing models
|
|
|
-
|
Annual calibration and back testing of models against observed market transactions
|
|
|
-
|
Analysis and evaluation of the significant valuation movements
|
|
|
-
|
Review of the significant unobservable inputs, valuation adjustments and changes to the fair value
measurement of Level 3 instruments.
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
19.
|
Fair value of financial instruments (continued)
|
The following table provides
information on the carrying value and an estimated fair value of the Bank’s financial instruments that are not measured
on a recurring basis:
|
|
|
September 30, 2019
|
|
|
|
|
Carrying
|
|
|
Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
value
|
|
|
value
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and deposits on banks
|
|
|
981,484
|
|
|
|
981,484
|
|
|
|
-
|
|
|
|
981,484
|
|
|
|
-
|
|
|
Securities at amortized cost (1) (3)
|
|
|
77,134
|
|
|
|
77,542
|
|
|
|
-
|
|
|
|
61,869
|
|
|
|
15,673
|
|
|
Loans, net (2)
|
|
|
5,479,150
|
|
|
|
5,665,076
|
|
|
|
-
|
|
|
|
5,603,231
|
|
|
|
61,845
|
|
|
Customers' liabilities under acceptances
|
|
|
86,407
|
|
|
|
86,407
|
|
|
|
-
|
|
|
|
86,407
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
2,851,470
|
|
|
|
2,851,470
|
|
|
|
-
|
|
|
|
2,851,470
|
|
|
|
-
|
|
|
Securities sold under repurchase agreements
|
|
|
56,065
|
|
|
|
56,065
|
|
|
|
-
|
|
|
|
56,065
|
|
|
|
-
|
|
|
Borrowings and debt, net
|
|
|
2,626,040
|
|
|
|
2,681,178
|
|
|
|
-
|
|
|
|
2,681,178
|
|
|
|
-
|
|
|
Customers' liabilities under acceptances
|
|
|
86,407
|
|
|
|
86,407
|
|
|
|
-
|
|
|
|
86,407
|
|
|
|
-
|
|
|
Allowance for expected credit losses on loan commitments and financial guarantee contracts
|
|
|
2,675
|
|
|
|
2,675
|
|
|
|
-
|
|
|
|
2,675
|
|
|
|
-
|
|
|
|
|
December 31, 2018
|
|
|
|
|
Carrying
|
|
|
Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
value
|
|
|
value
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and deposits on banks
|
|
|
1,745,652
|
|
|
|
1,745,652
|
|
|
|
-
|
|
|
|
1,745,652
|
|
|
|
-
|
|
|
Securities at amortized cost (1) (3)
|
|
|
86,326
|
|
|
|
85,036
|
|
|
|
-
|
|
|
|
73,869
|
|
|
|
11,167
|
|
|
Loans, net (2)
|
|
|
5,702,258
|
|
|
|
5,958,540
|
|
|
|
-
|
|
|
|
5,884,527
|
|
|
|
74,013
|
|
|
Customers' liabilities under acceptances
|
|
|
9,696
|
|
|
|
9,696
|
|
|
|
-
|
|
|
|
9,696
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
2,970,822
|
|
|
|
2,970,822
|
|
|
|
-
|
|
|
|
2,970,822
|
|
|
|
-
|
|
|
Securities sold under repurchase agreements
|
|
|
39,767
|
|
|
|
39,767
|
|
|
|
-
|
|
|
|
39,767
|
|
|
|
-
|
|
|
Borrowings and debt, net
|
|
|
3,518,446
|
|
|
|
3,558,763
|
|
|
|
-
|
|
|
|
3,558,763
|
|
|
|
-
|
|
|
Customers' liabilities under acceptances
|
|
|
9,696
|
|
|
|
9,696
|
|
|
|
-
|
|
|
|
9,696
|
|
|
|
-
|
|
|
Allowance for expected credit losses on loan commitments and financial guarantee contracts
|
|
|
3,289
|
|
|
|
3,289
|
|
|
|
-
|
|
|
|
3,289
|
|
|
|
-
|
|
|
|
(1)
|
The carrying value of securities at amortized cost is net of the accrued interest receivable of
$0.8 million and the allowance for expected credit losses of $0.1 million as of September 30, 2019, and the accrued interest receivable
of $1.1 million and the allowance for expected credit losses $0.1 million for December 31, 2018.
|
|
|
(2)
|
The carrying value of loans at amortized cost is net of the accrued interest receivable of $40.0
million, the allowance for expected credit losses of $101.4 million and unearned interest and deferred fees of $13.7 million for
September 30, 2019, and the accrued interest receivable of $41.1 million, the allowance for expected credit losses of $100.8million
and unearned interest and deferred fees of $16.5 million for December 31, 2018.
|
|
|
(3)
|
At December 31, 2018, investment securities at amortized cost were reclassified from level 1 to
level 2 of the fair value hierarchy due to changes in market conditions causing that the quoted prices were no longer active for
these financial instruments.
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
19.
|
Fair value of financial instruments (continued)
|
Level 3 fair value measurements
Reconciliation
The following table presents the movement of
instruments measured at Level 3 fair value:
|
Carrying amount as of December 31, 2018
|
|
|
8,750
|
|
|
Unrealized loss
|
|
|
(11
|
)
|
|
Carrying amount as of September 30, 2019
|
|
|
8,739
|
|
Unobservable inputs used in the fair value mesurements
The following tables provides information
about the significant inputs used in the measurement of instruments at Level 3 fair value:
Type of financial
instruments
|
|
Fair value
September 30, 2019
|
|
|
Measurement
techniques
|
|
Significant unobservable inputs
|
|
At fair value through profit or loss (debentures)
|
|
|
8,739
|
|
|
Discounted cash flows
|
|
Discount rate
Premiun or liquidity rate
|
Range of
estimates
|
|
|
Unobservable inputs sensibility
|
|
13.59%
|
|
|
Significant increases would lead to a lower fair value
|
|
51%
|
|
|
Significant increases would lead to a lower fair value
|
Significant unobservable inputs were developed as follows:
a). The discount rate was derived from the discount
rate of a similar company in the same line of business. For the discount rate, the debt-equity structure for the Issuer of the
securities was applied.
b) The premium or liquidity rate was derived from liquidity
cost studies carried out by experts and then subsequently from knowledge of management of similar businesses.
Effect of unobservable inputs in fair value measurement
Although management considers that its estimates of
fair value are appropriate, the use of different methodologies or assumptions can generate different Level 3 fair values for measurements
. Changing one or more assumptions used can generate the following effect:
|
|
|
Effect on income*
|
|
September 30, 2019
|
|
Negative effect
|
|
Positive effect
|
|
|
Other assets at fair value through profit or loss (debenture)
|
|
(984
|
)
|
|
1,097
|
|
* Changes in +100 bps in the unobservable variables.
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
20.
|
Related party transactions
|
The detail of the assets and
liabilities with related private corporations and financial institutions is as follows:
|
|
|
September 30,
|
|
|
Decembre 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Demand deposits
|
|
|
3,083
|
|
|
|
5,179
|
|
|
Loans, net of allowance for loan losses
|
|
|
159,619
|
|
|
|
200,741
|
|
|
Securities at fair value through other comprehensive income, net
|
|
|
3,060
|
|
|
|
2,887
|
|
|
Equipment
and leasehold improvements, net (1)
|
|
|
15,185
|
|
|
|
-
|
|
|
Total asset
|
|
|
180,947
|
|
|
|
208,807
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Demand deposits
|
|
|
-
|
|
|
|
200,000
|
|
|
Time deposits
|
|
|
230,000
|
|
|
|
40,000
|
|
|
Borrowings
and debt, net (2)
|
|
|
18,903
|
|
|
|
-
|
|
|
Total liabilities
|
|
|
248,903
|
|
|
|
240,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingencies
|
|
|
|
|
|
|
|
|
|
Letter of credit "stand.by"
|
|
|
10,000
|
|
|
|
-
|
|
|
Total contingencies
|
|
|
10,000
|
|
|
|
-
|
|
|
|
(1)
|
As of September 30, 2019, the right-of-use assets arising
from contracts where the Bank is a lessee with related parties are included in the composition.
|
|
|
(2)
|
As of September 30, 2019, lease liabilities arising from
contracts where the Bank is a lessee with related parties are included in the composition.
|
The following is the movement of
assets by right to use assets for leases with related parties:
|
|
|
Building
|
|
|
Balance at January 1, 2019
|
|
|
16,084
|
|
|
Depreciation by right-of-use property
|
|
|
(899
|
)
|
|
Balance at September 30, 2019
|
|
|
15,185
|
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
20.
|
Related party transactions (continued)
|
The detail of income and expenses with related parties
is as follows:
|
|
|
For the three months ended September 30
|
|
|
|
|
2019
|
|
|
2018
|
|
|
Interest income
|
|
|
|
|
|
|
|
|
|
Loans
|
|
|
672
|
|
|
|
894
|
|
|
Securities
|
|
|
-
|
|
|
|
-
|
|
|
Total interest income
|
|
|
672
|
|
|
|
894
|
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
(278
|
)
|
|
|
(271
|
)
|
|
Borrowings
and debt (1)
|
|
|
(213
|
)
|
|
|
-
|
|
|
Total interest expense
|
|
|
(491
|
)
|
|
|
(271
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income (expenses)
|
|
|
181
|
|
|
|
623
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
Fees and commissions, net
|
|
|
-
|
|
|
|
-
|
|
|
Gain on financial instruments, net
|
|
|
(1
|
)
|
|
|
9
|
|
|
Other income, net
|
|
|
-
|
|
|
|
-
|
|
|
Total other income, net
|
|
|
(1
|
)
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
Depreciation of equipment and leasehold improvements
|
|
|
(300
|
)
|
|
|
-
|
|
|
Other expenses
|
|
|
(106
|
)
|
|
|
(583
|
)
|
|
Total operating expenses
|
|
|
(406
|
)
|
|
|
(583
|
)
|
|
Net income from related parties
|
|
|
(226
|
)
|
|
|
49
|
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
20.
|
Related party transactions (continued)
|
|
|
|
For the nine months ended September 30
|
|
|
|
|
2019
|
|
|
2018
|
|
|
Interest income
|
|
|
|
|
|
|
|
|
|
Loans
|
|
|
2,560
|
|
|
|
1,962
|
|
|
Securities
|
|
|
-
|
|
|
|
-
|
|
|
Total interest income
|
|
|
2,560
|
|
|
|
1,962
|
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
(917
|
)
|
|
|
(702
|
)
|
|
Borrowings
and debt (1)
|
|
|
(645
|
)
|
|
|
-
|
|
|
Total interest expense
|
|
|
(1,562
|
)
|
|
|
(702
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income (expenses)
|
|
|
998
|
|
|
|
1,260
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
Fees and commissions, net
|
|
|
-
|
|
|
|
1
|
|
|
(Loss) gain on financial instruments, net
|
|
|
(41
|
)
|
|
|
17
|
|
|
Other income, net
|
|
|
-
|
|
|
|
1
|
|
|
Total other income, net
|
|
|
(41
|
)
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
Depreciation of equipment and leasehold improvements
|
|
|
(899
|
)
|
|
|
-
|
|
|
Other expenses
|
|
|
(351
|
)
|
|
|
(1,766
|
)
|
|
Total operating expenses
|
|
|
(1,250
|
)
|
|
|
(1,766
|
)
|
|
Net income from related parties
|
|
|
(293
|
)
|
|
|
(487
|
)
|
(1) As
of September 30, 2019, the financial costs associated with the lease liability arising from the contract where the Bank is a lessee
with related parties are included in the composition.
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
20.
|
Related party transactions (continued)
|
The total compensation paid
to directors and the executives of Bladex as representatives of the Bank amounted to:
|
|
|
Three months ended September 30
|
|
|
|
|
2019
|
|
|
2018
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Compensation costs to directors
|
|
|
192
|
|
|
|
214
|
|
|
Compensation costs to executives
|
|
|
475
|
|
|
|
472
|
|
|
|
|
Nine months ended September 30
|
|
|
|
|
2019
|
|
|
2018
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Compensation costs to directors
|
|
|
437
|
|
|
|
425
|
|
|
Compensation costs to executives
|
|
|
2,772
|
|
|
|
3,960
|
|
Compensation costs to directors
and executives, include annual cash retainers and the cost of granted restricted stock and restricted stock units.
Bladex is not engaged in any
litigation that is significant to the Bank’s business or, to the best of the knowledge of Bank’s management, that is
likely to have an adverse effect on its business, consolidated financial position or its consolidated financial performance.
|
|
22.
|
Applicable laws and regulations
|
Liquidity index
The Rule No. 2-2018 issued by
the Superintendence of Banks of Panama (SBP) establishes that every general license or international license bank must guarantee,
with a higher level of confidence, that it is in the position to face its intraday liquidity obligations in a period when liquidity
pressure may affect the lending market. For that purpose, the Superintendence of Banks of Panama has established a short-term liquidity
coverage ratio known as “Liquidity Coverage Ratio or LCR”. This ratio is measured through the quotient of two amounts,
the first one corresponds to the high-quality liquid assets and the second one corresponds to the net cash outflows in 30 days.
As of September 30, 2019 and
December 31, 2018, the minimum LCR to be reported to the SBP was 25% for both periods. The Bank´s LCR as of September 30,
2019 and December 31, 2018 was 99.88% and 238%, respectively.
The Rule No. 4-2008 issued by
the Superintendence of Banks of Panama (SBP) establishes that every general license or international license bank must maintain,
always, a minimum balance of liquid assets equivalent to 30% of the gross total of its deposits in the Republic of Panama or overseas
up to 186 days, counted from the reporting date. The formula is based on the following parameters:
|
Liquid assets
|
x 100 = X% (Liquidity ratio)
|
|
Liabilities (Deposits Received)
|
As of September 30, 2019, and
December 31, 2018, the percentage of the liquidity index reported by the Bank to the regulator was 97.84% and 124.39%, respectively.
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
22.
|
Applicable laws and regulations (continued)
|
Capital adequacy
The Banking Law in the Republic
of Panama and the Rules No. 01-2015 and 03-2016 require that the general license banks maintain a total capital adequacy index
that shall not be lower, at any time, than 8% of total assets and off-balance sheet irrevocable contingency transactions, weighted
according to their risks; and ordinary primary capital that shall not be less than 4.5% of its assets and off-balance sheet transactions
that represent an irrevocable contingency, weighted based on their risks; and a primary capital that shall not be less than 6%
of its assets and off-balance sheet transactions that represent an irrevocable contingency, weighted based on their risks.
The primary objectives of the
Bank’s capital management policy are to ensure that the Bank complies with capital requirements imposed by local regulator
and maintains strong credit ratings and healthy capital ratios to support its business and to maximize shareholder value.
The Bank manages its capital
structure and adjusts it according to changes in economic conditions and the risk characteristics of its activities. To maintain
or adjust the capital structure, the Bank may adjust the amount of dividend payment to shareholders, return capital to shareholders
or issue capital securities. No changes have been made to the objectives, policies and processes from the previous years. However,
they are under constant review by the Board.
|
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
|
Tier 1 capital
|
|
|
1,019,287
|
|
|
|
995,743
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk weighted assets
|
|
|
5,374,276
|
|
|
|
5,830,875
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital ratio
|
|
|
18.97
|
%
|
|
|
17.08
|
%
|
Leverage ratio
Article
17 of the Rule No. 1-2015 establishes the leverage ratio of a regulated entity by means of the quotient between the ordinary primary
capital and the total exposure for non-risk-weighted assets inside and outside the statement of financial position established
by the Superintendence of Banks of Panama (SBP). For the determination of the exposure of off-balance-sheet
operations, the criteria established for credit and counterparty credit risk positions will be used. The exposure of the derivatives
will be the fair value at which it is recorded in the entity's assets.
The leverage
ratio cannot be lower, at any time, than 3%. The Bank will inform to SBP as often as the compliance with the leverage ratio is
determined.
|
|
|
September 30,
2019
|
|
|
December 31,
2018
|
|
|
Ordinary capital
|
|
|
883,268
|
|
|
|
859,725
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-risk-weighted assets
|
|
|
6,782,545
|
|
|
|
7,779,919
|
|
|
|
|
|
|
|
|
|
|
|
|
Leverage ratio
|
|
|
13.13
|
%
|
|
|
11.05
|
%
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
22.
|
Applicable laws and regulations (continued)
|
Specific credit provisions
Rule No. 4-2013, modified by
Rule No. 8-2014, states that the specific provisions are originated from the objective and concrete evidence of impairment. These
provisions must be established for credit facilities classified according to the risk categories denominated as: special mention,
substandard, doubtful, or unrecoverable, both for individual credit facilities as for a group of such facilities. In the case of
a group, it corresponds to circumstances that indicate the existence of deterioration in credit quality, although individual identification
is still not possible.
Banks must calculate and maintain
at all times the amount of the specific provisions determined by the methodology specified in this Rule, which takes into account
the balance owed of each credit facility classified in any of the categories subject to provision, mentioned in the paragraph above;
the present value of each guarantee available in order to mitigate risk, as established by type of collateral; and a weighting
table that applies to the net exposure balance subject to loss of such credit facilities.
Article 34 of this Rule establishes
that all credits must be classified in the following five (5) categories, according to their default risk and loan conditions,
and establishes a minimum reserve for each classification: normal 0%, special mention 20%, substandard 50%, doubtful 80%, and unrecoverable
100%.
If there is an excess in the
specific provision, calculated in accordance with this Rule, compared to the provision calculated in accordance with IFRS, this
excess will be accounted for as a regulatory credit reserve in equity and will increase or decrease with appropriations from/to
retained earnings. The balance of the regulatory credit reserve will not be considered as capital funds for calculating certain
ratios or prudential indicators mentioned in the Rule.
Based on the classification
of risks, collateral and in compliance with SBP Rule No. 4-2013, the Bank classified the loan portfolio as follows:
|
|
|
September
30, 2019
|
|
|
Loans
|
|
Normal
|
|
|
Special
Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
|
Unrecoverable
|
|
|
Total
|
|
|
Corporations
|
|
|
2,269,855
|
|
|
|
14,665
|
|
|
|
-
|
|
|
|
-
|
|
|
|
61,845
|
|
|
|
2,346,364
|
|
|
Banks:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private
|
|
|
2,520,867
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,520,867
|
|
|
State-owned
|
|
|
633,905
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
633,905
|
|
|
|
|
|
3,154,772
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,154,772
|
|
|
Sovereign
|
|
|
53,123
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
53,123
|
|
|
Total
|
|
|
5,477,750
|
|
|
|
14,665
|
|
|
|
-
|
|
|
|
-
|
|
|
|
61,845
|
|
|
|
5,554,259
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
for loan losses IFRS (*):
|
|
|
44,608
|
|
|
|
2,419
|
|
|
|
-
|
|
|
|
-
|
|
|
|
54,398
|
|
|
|
101,425
|
|
|
Total
|
|
|
44,608
|
|
|
|
2,419
|
|
|
|
-
|
|
|
|
-
|
|
|
|
54,398
|
|
|
|
101,425
|
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
22.
|
Applicable laws and regulations (continued)
|
|
|
|
December 31, 2018
|
|
|
Loans
|
|
Normal
|
|
|
Special Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
|
Unrecoverable
|
|
|
Total
|
|
|
Corporations
|
|
|
2,571,906
|
|
|
|
-
|
|
|
|
-
|
|
|
|
64,701
|
|
|
|
-
|
|
|
|
2,636,607
|
|
|
Banks:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private
|
|
|
2,458,691
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,458,691
|
|
|
State-owned
|
|
|
624,100
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
624,100
|
|
|
|
|
|
3,082,791
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,082,791
|
|
|
Sovereign
|
|
|
59,026
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
59,026
|
|
|
Total
|
|
|
5,713,723
|
|
|
|
-
|
|
|
|
-
|
|
|
|
64,701
|
|
|
|
-
|
|
|
|
5,778,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses IFRS (*):
|
|
|
51,346
|
|
|
|
-
|
|
|
|
-
|
|
|
|
49,439
|
|
|
|
-
|
|
|
|
100,785
|
|
|
Total
|
|
|
51,346
|
|
|
|
-
|
|
|
|
-
|
|
|
|
49,439
|
|
|
|
-
|
|
|
|
100,785
|
|
As of September 30, 2019, and December 31, 2018,
the total restructured loans amounted to $8.2million and $9.0, respectively.
(*) As of September 30, 2019 and December
31, 2018, there is no excess in the specific provision calculated in accordance with Agreement No. 8-2014 of the SBP, over the
provision calculated in accordance with IFRS.
Specific credit provisions (continued)
For statutory purposes only, non-accruing loans are
presented by category as follows:
|
|
|
September 30, 2019
|
|
|
Non-accruing loans
|
|
Normal
|
|
|
Special Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
|
Unrecoverable
|
|
|
Total
|
|
|
Impaired loans
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
61,845
|
|
|
|
61,845
|
|
|
Total
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
61,845
|
|
|
|
61,845
|
|
|
|
|
December 31, 2018
|
|
|
Non-accruing loans
|
|
Normal
|
|
|
Special Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
|
Unrecoverable
|
|
|
Total
|
|
|
Impaired loans
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
64,701
|
|
|
|
-
|
|
|
|
64,701
|
|
|
Total
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
64,701
|
|
|
|
-
|
|
|
|
64,701
|
|
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
22.
|
Applicable laws and regulations (continued)
|
Specific
provisions
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
Non-accruing loans:
|
|
|
|
|
|
|
|
|
|
Private corporations
|
|
|
61,845
|
|
|
|
64,701
|
|
|
Total non-accruing loans
|
|
|
61,845
|
|
|
|
64,701
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest that would be reversed if the loans had been classified as non-accruing loans
|
|
|
1,204
|
|
|
|
1,056
|
|
|
Income from collected interest on non-accruing loans
|
|
|
626
|
|
|
|
2,879
|
|
Credit risk coverage - dynamic provision
The Superintendence of Banks of Panama by means of
Rule No. 4-2013, establishes the compulsory constitution of a dynamic provision in addition to the specific credit provision as
part of the total provisions for the credit risk coverage.
The dynamic provision is an
equity item associated to the regulatory capital, but does not replace or offset the capital adequacy requirements established
by the Superintendence of Banks of Panama.
Methodology for the constitution of the regulatory
credit reserve
The Superintendence of Banks
of Panama by means of the General Resolution of Board of Directors SBP-GJD-0003-2013 of July 9, 2013, establishes the accounting
methodology for differences that arise between the application of the International Financial Reporting Standards (IFRS) and the
application of prudential regulations issued by the SBP; as well as the additional disclosures required to be included in the notes
to the consolidated financial statements.
The parameters established in this methodology are
the following:
|
|
1.
|
The calculations of accounting balances in accordance with IFRS and the prudential standards issued
by the Superintendence of Banks of Panama will be carried out and the respective figures will be compared.
|
|
|
2.
|
When the calculation made in accordance with IFRS results in a greater reserve or provision for
the bank compared to the one resulting from the use of the prudential standards issued by the SBP, the Bank will account the IFRS
figures.
|
|
|
3.
|
When the impact of the use of prudential standards results
in a greater reserve or provision for the Bank, the effect of the application of IFRS will be recognized in profit or loss, and
the difference between IFRS calculation compared to the prudential standards calculation will be appropriated from retained earnings
as a regulatory credit reserve. If the bank does not have sufficient retained earnings, the difference will be presented as an
accumulated deficit account.
|
|
|
4.
|
The regulatory credit reserve mentioned in paragraph 3 of this Rule may not be reversed against the retained earnings as long
as there are differences between IFRS and the originated prudential regulations.
|
Considering that the Bank presents
its consolidated financial statements under IFRS, specifically for its expected credit reserves under IFRS 9, the line "Regulatory
credit reserve" established by the Superintendence of Banks of Panama has been used to present the difference between the
application of the accounting standard used and the prudential regulations of the Superintendence of Banks of Panama to comply
with the requirements of Rule No. 4-2013.
Banco Latinoamericano de Comercio
Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands
of U.S. dollars, unless otherwise indicated)
|
|
22.
|
Applicable laws and regulations (continued)
|
As of September 30, 2019 and
December 31, 2018, the total amount of the dynamic provision and the regulatory credit reserve calculated according to the guidelines
of Rule No. 4-2013 of the Superintendence of Banks of Panama is $136.0 million for both periods,
appropriated from retained earnings for purposes of compliance with local regulatory requirements. This appropriation is restricted
from dividend distribution in order to comply with local regulations. The provision and reserve are detailed as follows:
|
|
|
September 30,
2019
|
|
|
December 31,
2019
|
|
|
Dynamic provision
|
|
|
136,019
|
|
|
|
136,019
|
|
|
Regulatory credit reserve
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
136,019
|
|
|
|
136,019
|
|
Capital reserve
In addition to capital reserves
required by regulations, the Bank maintains a capital reserve of $95.2 million, which was voluntarily established. Pursuant to
Article No. 69 of the Banking Law, reduction of capital reserves requires prior approval of SBP.
Bladex announced a quarterly
cash dividend of $0.385 US dollar cents per share corresponding to the third quarter of 2019. The cash dividend was approved by
the Board of Directors at its meeting held on October 7, 2019 and it is payable on November 19, 2019 to the Bank’s stockholders
as of October 29, 2019 record date.