Business Park Torre V, Ave. La Rotonda,
Costa del Este
P.O. Box 0819-08730
Indicate by check mark whether the registrant
files or will file annual reports under cover of Form 20-F or Form 40-F.
Indicate by check mark if the registrant
is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant
is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
SIGNATURES
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.
Date: July 28, 2020
FOREIGN TRADE BANK OF LATIN AMERICA, INC.
(Registrant)
|
By:
|
/s/ Ana Graciela de Méndez
|
|
|
|
Name: Ana Graciela de Méndez
|
|
Title: CFO
|
BLADEX REPORTS A QUARTERLY
PROFIT OF $14.1 MILLION, OR $0.36 PER SHARE, WITH SOLID CREDIT COLLECTIONS AND AMPLE LIQUIDITY LEVELS
PANAMA CITY, REPUBLIC
OF PANAMA, July 28, 2020
Banco Latinoamericano de Comercio Exterior,
S.A. (NYSE: BLX, “Bladex”, or “the Bank”), a Panama-based multinational bank originally established
by the central banks of 23 Latin-American and Caribbean countries to promote foreign trade and economic integration in the region,
today announced its results for the second quarter (“2Q20”) and six months (“6M20”) ended June 30, 2020.
The consolidated financial information
in this document has been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued
by the International Accounting Standards Board (“IASB”).
FINANCIAL SNAPSHOT
(US$
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.
|
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:
|
1)
|
Earnings
per Share (“EPS”) calculation is based on the average number of shares outstanding
during each period.
|
|
2)
|
ROAE refers
to return on average stockholders’ equity which is calculated on the basis of unaudited
daily average balances.
|
|
3)
|
NIM refers
to net interest margin which constitutes to Net Interest Income (“NII”) divided
by the average balance of interest-earning assets.
|
|
4)
|
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.
|
|
5)
|
Efficiency
Ratio refers to consolidated operating expenses as a percentage of total revenues.
|
|
6)
|
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.
|
|
7)
|
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.
|
|
8)
|
Market capitalization
corresponds to total outstanding common shares multiplied by market close price at the
end of each corresponding period.
|
|
9)
|
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.
|
|
10)
|
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.
|
|
11)
|
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.
|
|
12)
|
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