PANAMA CITY, July 28, 2020 /PRNewswire/ -- Banco
Latinoamericano de Comercio Exterior, S.A. (NYSE: BLX,
"Bladex", or "the Bank"), a Panama-based multinational bank originally
established by the central banks of 23 Latin-American and
Caribbean countries to promote
foreign trade and economic integration in the region, today
announced its results for the second quarter ("2Q20") and six
months ("6M20") ended June 30,
2020.
The consolidated financial information in this document has been
prepared in accordance with International Financial Reporting
Standards ("IFRS") as issued by the International Accounting
Standards Board ("IASB").
FINANCIAL SNAPSHOT
(US$ million, except
percentages and per share amounts)
|
6M20
|
6M19
|
2Q20
|
1Q20
|
2Q19
|
Key Income
Statement Highlights
|
|
|
|
|
|
Net Interest Income
("NII")
|
$47.5
|
$56.0
|
$21.7
|
$25.8
|
$27.9
|
Fees and commissions,
net
|
$5.0
|
$7.5
|
$1.9
|
$3.1
|
$5.1
|
(Loss) gain on
financial instruments, net
|
($4.3)
|
$0.8
|
($3.9)
|
($0.4)
|
$0.1
|
Total
revenues
|
$48.7
|
$65.7
|
$19.9
|
$28.8
|
$33.6
|
Reversal (provision)
for credit losses
|
$2.7
|
($1.8)
|
$2.6
|
$0.1
|
($0.8)
|
Operating
expenses
|
($18.8)
|
($20.4)
|
($8.3)
|
($10.5)
|
($10.6)
|
Profit for the
period
|
$32.4
|
$43.5
|
$14.1
|
$18.3
|
$22.3
|
Profitability
Ratios
|
|
|
|
|
|
Earnings per Share
("EPS") (1)
|
$0.82
|
$1.10
|
$0.36
|
$0.46
|
$0.56
|
Return on Average
Equity ("ROAE")(2)
|
6.4%
|
8.8%
|
5.5%
|
7.2%
|
9.0%
|
Return on Average
Assets ("ROAA")
|
0.97%
|
1.37%
|
0.83%
|
1.12%
|
1.43%
|
Net Interest Margin
("NIM")(3)
|
1.43%
|
1.77%
|
1.28%
|
1.59%
|
1.81%
|
Net Interest Spread
("NIS")(4)
|
1.09%
|
1.19%
|
1.01%
|
1.17%
|
1.22%
|
Efficiency
Ratio(5)
|
38.7%
|
31.1%
|
41.5%
|
36.7%
|
31.4%
|
Assets, Capital,
Liquidity & Credit Quality
|
|
|
|
|
|
Credit
Portfolio(6)
|
$5,011
|
$6,297
|
$5,011
|
$5,911
|
$6,297
|
Commercial
Portfolio(7)
|
$4,915
|
$6,209
|
$4,915
|
$5,832
|
$6,209
|
Investment
Portfolio
|
$96
|
$88
|
$96
|
$79
|
$88
|
Total
assets
|
$6,627
|
$6,576
|
$6,627
|
$6,823
|
$6,576
|
Total
equity
|
$1,022
|
$1,003
|
$1,022
|
$1,018
|
$1,003
|
Market
capitalization(8)
|
$456
|
$825
|
$456
|
$408
|
$825
|
Tier 1 Basel III
Capital Ratio (9)
|
24.8%
|
20.4%
|
24.8%
|
21.8%
|
20.4%
|
Total assets / Total
equity (times)
|
6.5
|
6.6
|
6.5
|
6.7
|
6.6
|
Liquid Assets / Total
Assets (10)
|
29.6%
|
12.8%
|
29.6%
|
19.0%
|
12.8%
|
Credit-impaired loans
to
Loan Portfolio(11)
|
0.00%
|
1.16%
|
0.00%
|
1.16%
|
1.16%
|
Total allowance for
losses to Credit Portfolio(12)
|
0.95%
|
1.69%
|
0.95%
|
1.73%
|
1.69%
|
Total allowance for
losses to credit-impaired loans (times)(12)
|
-
|
1.6
|
-
|
1.7
|
1.6
|
BUSINESS HIGHLIGHTS
- During 2Q20, the Bank collected 99% of all scheduled credit
maturities totaling close to $2
billion, coupled with credit prepayments for $222 million, on account of the high quality of
its borrower base and the short-term nature of its Commercial
Portfolio.
- The Bank was able to gain a deep understanding of the impacts
of Covid-19 on sectors and clients by country, having been in close
contact with most of its client base. It has reassessed the risk
profile of its entire portfolio under the current context.
- By design, under tighter credit underwriting standards,
selective credit disbursements amounting to $1 billion, mostly placed during the second half
of 2Q20 – at wider credit spreads – resulted in a reduction in
Commercial Portfolio balances, totaling $4.9
billion at June 30, 2020, down
16% QoQ and 21% YoY.
- The portfolio continued to be well-diversified and focused on
high quality exposures, with 58% in investment grade countries, 52%
with financial institutions and 17% with sovereign and state-owned
corporations. In addition, the Bank was able to reduce exposure to
higher risk sectors now representing 11.1% of the total, from 12.5%
in the previous quarter. Specifically, sugar and airline sectors
were down by a total of $138 million,
to only 1% each, of the total portfolio.
- Given the prevailing market uncertainty and deep economic
impact of Covid-19, the Bank aimed and was able to maintain a
strong liquidity position throughout 2Q20, as a result of its
continued and ample access to diversified funding sources. These
include its central bank shareholders as well as correspondent
banks and capital markets investors throughout the globe. The rapid
collection of loan maturities also proved to be an effective
liquidity buffer. Liquidity levels reached $2.0 billion at June 30,
2020 (30% of total assets and 68% of total deposits), of
which 91% was placed with the Federal Reserve Bank of New York.
- As a result of the Bank's decision to reduce loan balances and
maintain increased liquidity levels, its profitability was
pressured on lower core income generation. Profit for 2Q20 and 6M20
totaled $14.1 million (-23% QoQ; -37%
YoY) and $32.4 million (-26% YoY),
respectively.
- During 2Q20, the Bank recorded credit provision reversals
totaling $2.6 million, mostly related
to the sale of its single remaining credit-impaired loan (or NPL),
bringing NPL balances to zero at June 20,
2020. At the same date, the Bank's total allowance for
credit losses represented nearly 1% of the total Credit
Portfolio.
- Credit provision reversals were offset by a $3.9 million loss on financial instruments,
mostly related to the unrealized loss of a debt instrument measured
at fair value through profit or loss, recorded as part of a loan
restructuring back in 2018.
- Operating expenses were down $2.3
million, or 22%, on lower personnel expenses, mostly due to
decreased performance-based variable compensation provision.
- The Bank's Tier 1 Basel III Capital Ratio strengthened to 24.8%
at the end of 2Q20, resulting from lower risk-weighted assets on
decreased Commercial Portfolio balances, while the equity base
remained stable at over $1
billion.
CEO's Comments
Mr. Jorge Salas, Bladex's Chief
Executive Officer said:
"Beyond Bladex's financial strength on its historically solid
capital levels, our business model allows for a unique possibility
to adapt to rapidly changing market conditions in a very agile
manner. Catering exclusively to corporate clients, most of which
are industry leaders with robust corporate governance practices and
solid financials, significantly reduces the credit risk in our
portfolio.
Moreover, the short-term nature of our portfolio – having more
than 70% maturing within the next year – becomes an effective
liquidity buffer, especially relevant in the current context; when
combined with our regional foot-print, it allows the Bank to
swiftly relocate the portfolio in resilient sectors and countries
across Latin America.
Since the onset of the COVID-19 crisis, we have collected over
$2 billion, representing 99% of total
scheduled maturities, a clear demonstration of the credit quality
of our portfolio. In turn, after re-assessing the risk of our
portfolio by industry under the COVID-19 and contacting almost
every single client, we tightened our underwriting standards and
selectively disbursed around $1
billion in new loans, at shorter tenors and wider
risk-adjusted credit spreads in defensive sectors and clients, with
a focus in lower risk countries.
On the funding side, our deposits increased on account of the
continuous support of our central bank shareholders, we continued
to have ample access to bilateral funding sources, and we
successfully tapped the debt capital markets with an approximate
$230 million USD equivalent issuance
in local currency in Mexico. We
have now a stronger funding structure, with increased tenors while
maintaining ample diversification.
As a result, by design, we have been able to maintain a solid
liquidity position throughout the quarter, in view of current
uncertainty.
The high quality of our client base and the levers embedded in
Bladex's business model have allowed us to successfully navigate
this crisis up until now. Having said that, we are cognizant of the
significant challenges that lie ahead, with a 2020 GDP estimate for
the region close to negative 9.5%. We believe that our
40-year experience in the Region, including several negative credit
cycles, and our good understanding of the impacts and macroeconomic
dynamics in every country, play to our advantage. We are committed
to continue to support our clients, for whom we have been
long-standing allies."
RECENT EVENTS
- Quarterly dividend payment: The Bank's Board of
Directors (the "Board") approved a quarterly common dividend of
$0.25 per share corresponding to the
second quarter 2020. The cash dividend will be paid on August 25, 2020, to shareholders registered as of
August 10, 2020.
- Ratings updates: On June 18,
2020, Fitch Ratings downgraded the Bank's Long-Term Foreign
Currency Issuer Default Rating (IDR) to 'BBB' from 'BBB+', and
Short-Term IDR to 'F3' from 'F2'. The outlook on the Long-Term IDRs
remains Negative.
Furthermore, on May 27, 2020, Moody's
Investor Services reaffirmed all the Bank's ratings, including its
'Baa2/P-2' long and short-term foreign currency deposit ratings,
respectively. The outlook on the ratings was changed to
stable from negative.
Notes:
- Numbers and
percentages set forth in this earnings release have been rounded
and accordingly may not total exactly.
- QoQ and YoY refer
to quarter-on-quarter and year-on-year variations,
respectively.
Footnotes:
- Earnings per Share ("EPS") calculation is based on the average
number of shares outstanding during each period.
- ROAE refers to return on average stockholders' equity which is
calculated on the basis of unaudited daily average balances.
- NIM refers to net interest margin which constitutes to Net
Interest Income ("NII") divided by the average balance of
interest-earning assets.
- NIS refers to net interest spread which constitutes the average
yield earned on interest-earning assets, less the average yield
paid on interest-bearing liabilities.
- Efficiency Ratio refers to
consolidated operating expenses as a percentage of total
revenues.
- The Bank's "Credit Portfolio" includes gross loans (or the
"Loan Portfolio"), securities at FVOCI and at amortized cost, gross
of interest receivable and the allowance for expected credit
losses, loan commitments and financial guarantee contracts, such as
confirmed and stand-by letters of credit, and guarantees covering
commercial risk; and other assets consisting of customers'
liabilities under acceptances.
- The Bank's "Commercial Portfolio" includes gross loans (or the
"Loan Portfolio"), 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.
- Market capitalization corresponds to total outstanding common
shares multiplied by market close price at the end of each
corresponding period.
- Tier 1 Capital is calculated according to Basel III capital
adequacy guidelines and is equivalent to stockholders' equity
excluding certain effects such as the OCI effect of the financial
instruments at fair value through OCI. Tier 1 Capital ratio
is calculated as a percentage of risk-weighted assets.
Risk-weighted assets are estimated based on Basel III capital
adequacy guidelines.
- Liquid assets refer to total cash and due from banks,
consisting of cash and due from banks and interest-bearing deposits
in banks, excluding pledged deposits and margin calls.
Liquidity ratio refers to liquid assets as a percentage of total
assets.
- Credit-impaired loans are also commonly referred to as
Non-Performing Loans or NPLs. Loan Portfolio refers to gross
loans, excluding interest receivable, the allowance for loan
losses, and unearned interest and deferred fees.
- Total allowance for losses refers to allowance for loan losses
plus allowance for loan commitments and financial guarantee
contract losses and allowance for investment securities
losses.
SAFE HARBOR STATEMENT
This press release contains forward-looking statements of
expected future developments within the meaning of the Private
Securities Litigation Reform Act of 1995 and Section 21E of the
Securities Exchange Act of 1934. Forward-looking statements
can be identified by words such as: "anticipate", "intend", "plan",
"goal", "seek", "believe", "project", "estimate", "expect",
"strategy", "future", "likely", "may", "should", "will" and similar
references to future periods. The forward-looking statements
in this press release include the Bank's financial position, asset
quality and profitability, among others. These
forward-looking statements reflect the expectations of the Bank's
management and are based on currently available data; however,
actual performance and results are subject to future events and
uncertainties, which could materially impact the Bank's
expectations. Among the factors that can cause actual
performance and results to differ materially are as follows: the
coronavirus (COVID-19) pandemic and government actions intended to
limit its spread; the anticipated changes in the Bank's credit
portfolio; the continuation of the Bank's preferred creditor
status; the impact of increasing/decreasing interest rates and of
the macroeconomic environment in the Region on the Bank's financial
condition; the execution of the Bank's strategies and initiatives,
including its revenue diversification strategy; the adequacy of the
Bank's allowance for expected credit losses; the need for
additional allowance for expected credit losses; the Bank's ability
to achieve future growth, to reduce its liquidity levels and
increase its leverage; the Bank's ability to maintain its
investment-grade credit ratings; the availability and mix of future
sources of funding for the Bank's lending operations; potential
trading losses; the possibility of fraud; and the adequacy of the
Bank's sources of liquidity to replace deposit withdrawals. Factors
or events that could cause our actual results to differ may emerge
from time to time, and it is not possible for us to predict all of
them. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof.
We undertake no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as may be required by
law.
ABOUT BLADEX
Bladex, a multinational bank originally established by the
central banks of Latin-American and Caribbean countries, began operations in 1979
to promote foreign trade and economic integration in the Region.
The Bank, headquartered in Panama,
also has offices in Argentina,
Brazil, Colombia, Mexico, and the
United States of America, and a Representative License in
Peru, supporting the regional
expansion and servicing its customer base, which includes financial
institutions and corporations.
Bladex is listed on the NYSE in the
United States of America (NYSE: BLX), since 1992, and its
shareholders include: central banks and state-owned banks and
entities representing 23 Latin American countries; commercial banks
and financial institutions; and institutional and retail investors
through its public listing.
CONFERENCE CALL INFORMATION
There will be a conference call to discuss the Bank's quarterly
results on Tuesday, July 28, 2020 at
11:00 a.m. New York City time (Eastern Time). For
those interested in participating, please dial 1-877-271-1828 in
the United States or, if outside
the United States,
1-334-323-9871. Participants should use conference passcode
89194804#, and dial in five minutes before the call is set to
begin. There will also be a live audio webcast of the
conference at http://www.bladex.com. The webcast presentation
will be available for viewing and downloads on
http://www.bladex.com.
The conference call will become available for review on
Conference Replay one hour after its conclusion and will remain
available for 60 days. Please dial (877) 919-4059 or (334)
323-0140 and follow the instructions. The replay passcode is:
34627735.
For more information, please access http://www.bladex.com or
contact:
Mrs. Ana Graciela de Méndez
Chief Financial Officer
Tel: +507 210-8563
E-mail address: amendez@bladex.com
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SOURCE Banco Latinoamericano de Comercio Exterior, S.A.
(Bladex)