Banco Latinoamericano - Value
December 21 2011 - 7:00PM
Zacks
It is too risky to buy the banks right now?
Banco
Latinoamericano de Comercio Exterior, S.A. (BLX) is a specialty
bank that has been bucking the trend as it has grown its portfolio
and its deposit balance. But because of global banking fears, this
Zacks #1 Rank (strong buy) trades with a low forward P/E of just
7.8.
Banco Latinoamericano (aka Bladex) was created by
the Central Banks of Latin America and the Caribbean as a
supranational bank to support trade finance in the region.
Based in Panama, its shareholders include 23
Central Banks and state-owned entities in the region as well as
Latin American and international commercial banks.
Third Quarter Net Income Rose 9%
On Oct 20, Bladex reported its third quarter
results and met the Zacks Consensus of 44 cents. It has surprised 2
out of the last 4 quarters with a "meet" on the other two
quarters.
Net income rose 9% to $16.3 million from the third
quarter of 2010. It was boosted by the Commercial Division which
rose 27% and which partially offset the Asset Management division
which posted a loss in the quarter due the volatile markets.
The Commercial Portfolio rose 34% to $5.6 billion
as average portfolio balances grew 11%.
As of Sep 30, Bladex's deposit balances also rose
34% to $2.5 billion, a new high and a 20% increase over the
previous quarter.
The bank's Tier 1 capital ratio was 16.9% as of the
end of the third quarter. That compares to 20.6% as of the end of
the third quarter of 2010 and 18.1% after the second quarter of
2011. The decline is linked to the continued deployment of capital
through growth.
Outlook Still Looks Solid
Bladex has ample capitalization and has been
increasing its ROE levels even as the world economy slows.
For the first 9 months of 2011, the ROE averaged
10.8% compared to just 5.3% in the first 9 months of 2010. ROE is a
key indicator of strength in a bank.
Zacks Consensus Estimates Rise
2011 is on its way to being a stellar year. The
2011 Zacks Consensus Estimate has risen 3 cents to $2.06 in the
last 60 days.
That is earnings growth of 79% as the bank made
only $1.15 a year ago.
The analysts are a bit more muted about 2012. They
expect earnings to grow just 6.3% to $2.19 per share.
Bladex Is a Value Stock
Interestingly, shares haven't retreated very much
in 2011. They weren't hit in the summer sell-off like most other
stocks.
![](http://www.zacks.com/images/upload_dir/1324496567.jpg)
Yet, Bladex still has value.
In addition to a forward P/E of just 7.8, which is
under its peers who average 9.8, Bladex also has a price-to-book
ratio of only 0.6.
A P/B under 3.0 usually indicates value.
Shareholders are also rewarded with a pretty juicy
dividend currently yielding 5%.
Bladex is in an interesting position among Latin
American banks because it has positioned itself in a very
specialized niche of trade finance. With Latin America and the
Caribbean rich in commodities, energy and food, global trade out of
the region is sure to rise.
Even with the chaos in the global financial sector,
Bladex is a bank that a value or income investor might want to take
a second look at.
Tracey Ryniec is the Value Stock Strategist for
Zacks.com. She is also the Editor of the Turnaround Trader and
Insider Trader services. You can follow her on twitter at
traceyryniec.
BANCO LATINOAME (BLX): Free Stock Analysis Report
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