BLX Banco Latinoamericano de Comercio Exterior SA

Outside of the United States and Europe, there are plenty of intriguing value bank stocks. Banco Latinoamericano de Comercio Exterior, S.A. (BLX) is one of those, as it doubled its net income in 2011. But because of continued global banking fears, this Zacks #1 Rank (Strong Buy) trades with a low forward P/E of just 8.9.

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.

Bladex Beat By 34% in Q4

On Feb 23, Bladex reported its fourth quarter and full year 2011 results and surprised on the Zacks Consensus by 17 cents. Earnings were 67 cents compared to the consensus of just 50 cents.

Net income in the fourth quarter increased by 60% from a year ago due to growth in the Commercial Division as well as the Treasury Division and Asset Management Unit.

The Commercial Portfolio rose 20% to $5.4 billion from a year ago.

ROE Continues to Rise

Bladex has ample capitalization and has been increasing its Return on Equity (ROE) levels even as the European and Chinese economies slow. ROE is a key indicator of strength in a bank.

For the fourth quarter, ROE was 13.1%, up from 8.9% in the fourth quarter of 2010.

In 2011, ROE was 11.4%, compared to just 6.2% in 2010.

"While Latin America is neither immune nor indifferent to events affecting European Union financial institutions, Bladex has effectively positioned its business in one of the sweeter and more resilient spots of the global economy, Latin America's growing trade flows," said Jaime Rivera, CEO.

2012 Zacks Consensus Estimate Rises

The analysts liked what they heard from the fourth quarter report as the Zacks Consensus Estimate for 2012 rose to $2.25 from $2.19 in the last 30 days.

That is essentially flat growth, however, compared with 2011 as the bank also made $2.25 in 2011.

Shares Near Multi-Year High

Investors are finally discovering this hidden banking gem. Shares have surged to a new 2-year high.

Yet, there is still plenty of value in the stock.

In addition to a P/E of just 8.9, which is well under the 15x cut-off I use for value, Bladex also has a price-to-book ratio of 0.7.

A P/B ratio under 3.0 usually indicates value.

Juicy Dividend

Bladex also has been rewarding shareholders by raising its quarterly dividend. It recently went to 25 cents from 20 cents. The dividend is currently yielding a not-too-shabby 5%.

This is the third time in the last 2 years that the bank has raised the dividend.

Value investors looking for yield shouldn't totally rule out the banks, especially those outside of the United States and Europe. Bladex is a way to tap Latin America's strong growth.

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.

 
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