BLX Banco Latinoamericano de Comercio Exterior SA

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.

BLADEX ANNOUNCES PROFIT FOR THE THIRD QUARTER OF $15.4 MILLION, OR $0.39 PER SHARE, PRESERVING
ITS SOUND CREDIT QUALITY AND RESUMING PORTFOLIO GROWTH

PANAMA CITY, REPUBLIC OF PANAMA, October 27, 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 third quarter (“3Q20”) and nine months (“9M20”) ended September 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”).

"n.m." means not meaningful.

BUSINESS HIGHLIGHTS

CEO’s Comments

Mr. Jorge Salas, Bladex’s Chief Executive Officer said: “Our third quarter results are, once again, a good reflection of our conservative approach and the resilience of our business model. The strong credit quality of Bladex’s commercial portfolio, coupled with its short-term nature, resulted in the timely collection of almost 100% of all loans at maturity. Having said that, we remain prudently cautious in the face of the great deal of uncertainty that still lies ahead in the months to come.

Bladex resumed portfolio growth and, by working closely with its clients, the Bank was able to disburse over $2.2 billion, more than twice the volume disbursed in the previous quarter. This resulted in a $172 million growth, equivalent to a 3% increase of its commercial portfolio to $5.1 billion, while maintaining sound asset quality and portfolio diversification.

On the liability side, the Bank’s deposit base increased by $169 million, or 6% quarter-on-quarter, with a relevant participation from our Class A shareholders, that represented 51% of total deposits by the end of September. During this last quarter, Bladex also successfully placed a new global syndication and its third issuance in the 144A/RegS market for USD $400 million, which was four times oversubscribed. At the same time, the Bank gradually reduced its liquidity position, mostly consisting of cash and due from banks, which stood at $1.5 billion at the end of 3Q20, a still robust level given the prevailing market uncertainty and deep economic impact of Covid-19.

With a gradual but positive trend in its levels of profitability, a strong capitalization, a resilient asset portfolio, robust levels of liquidity and a solid funding base, the Bank enjoys a strong financial position to face a challenging credit cycle in the Region. I am very proud of the way our team has come together to navigate the storm so far. There is no doubt that opportunities will keep arising as the economies re-open throughout the Region and Bladex will continue to support its clients during this uncertain time.”

RESULTS BY BUSINESS SEGMENT

The Bank’s activities are managed and executed through two business segments, Commercial and Treasury. Information related to each reportable segment is set out below. Business segment results are based on the Bank’s managerial accounting process, which assigns assets, liabilities, revenue and expense items to each business segment on a systemic basis.

COMMERCIAL BUSINESS SEGMENT

The Commercial Business Segment encompasses the Bank’s core business of financial intermediation and fee generation activities developed to cater 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, as well as through loan structuring and syndication activities; (iii) gain on sale of loans generated through loan intermediation activities, such as sales and distribution in the primary market; (iv) gain (loss) on sale of financial instruments measured at FVTPL; (v) reversal (provision) for credit losses, (vi) impairment on non-financial assets; and (vii) direct and allocated operating expenses.

During 3Q20, the Bank continued to collect almost all scheduled credit maturities (close to 100% during the 3Q20 and since the onset of Covid-19), on account of the high quality of its borrower base and the short-term nature of its Commercial Portfolio. Meanwhile, 3Q20 loan origination more than doubled from the previous quarter (+120% QoQ), still under tighter credit underwriting standards, and resulted in a 3% Commercial Portfolio growth, reaching $5.1 billion as of September 30, 2020, at wider credit spreads (+14 bps over Libor vs the prior quarter), while the size of the Commercial Portfolio still trails behind pre-Covid levels (-18% YoY). On an average basis, Commercial Portfolio balances were $5.0 billion for the 3Q20 (-5% QoQ; -16% YoY) and $5.5 billion for the first 9M20 (-9% YoY).

As of September 30, 2020, 73% of the Commercial Portfolio was scheduled to mature within a year, and 55% of its short-term origination represented trade finance transactions, compared to 71% and 52%, respectively, a quarter ago, and 76% and 53%, respectively, a year ago.

The following graphs illustrate the geographic distribution of the Bank’s Commercial Portfolio, highlighting the portfolio´s risk diversification by country and across industry segments:

As of September 30, 2020, 59% of the portfolio remained geographically distributed in investment grade countries, up 1 pt. from the previous quarter and 7 pts. from a year ago, as the Bank weighted its portfolio towards lower-risk countries, taking advantage of good risk/return opportunities. On a country-risk basis, Brazil represented the largest country-risk exposure at 17% of the total Commercial Portfolio, of which 84% were with financial institutions. Other relevant country-risk exposures were to investment grade countries such as Colombia at 14%, Mexico at 12%, Chile at 10%, and top-rated countries outside of Latin America (which relates to transactions carried out in Latin America) at 9% of the total portfolio. The Bank also continued adjusting its exposure in higher-risk countries such as Argentina and Ecuador, now each representing 3% of total Commercial Portfolio, both down 19% and 9% from a quarter ago, and down 44% and 58% from a year ago, respectively.

The Commercial Portfolio by industries remained well-diversified and focused on high quality borrowers, as the Bank’s traditional client base of financial institutions represented 53% of the total Commercial Portfolio, while sovereign and state-owned corporations represented 14% of the total portfolio at the end of 3Q20, and the remainder with top tier corporates across the Region. Across corporate sectors, all industries except for Electric Power at 6% of the portfolio, represented 5% or less of the total Commercial Portfolio at the end of 3Q20. In addition, the Bank continued reducing exposure to higher risk sectors, such as the airline industry, which has been decreased by $99 million or 67% since March 31, 2020, now representing less than 1% of total portfolio.

Refer to Exhibit IX for additional information related to the Bank’s Commercial Portfolio distribution by country, and Exhibit XI for the Bank’s distribution of loan disbursements by country.

The Commercial Business Segment’s result was $16.3 million for the 3Q20 (-1% QoQ; -29% YoY) and $53.6 million for the first 9M20 (-22% YoY). Profit for the segment remained quarterly stable, as the 20% QoQ increase in total revenues, mainly from higher fees from the Bank’s letters of credit business (+28% QoQ), was offset by the credit provision variation for losses ($1.4 million provision vs. $2.7 million reversal in 2Q20). The YoY Profit decrease was mainly attributable to lower core income generation from Net Interest Income and commission income, as the Bank prudently decided to reduce loan balances and maintain higher liquidity levels given the prevailing market uncertainty and deep economic impact of Covid-19.

TREASURY BUSINESS SEGMENT

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, as well as highly liquid corporate debt securities rated above ‘A-‘, and financial instruments related to the investment management activities, consisting of securities at fair value through other comprehensive income (“FVOCI”) and securities at amortized cost (the “Investment Portfolio”). 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 fair value through profit or loss (“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.

Liquidity balances totaled $1,465 million at the end of 3Q20, down from $1,959 million at the end of 2Q20, as the Bank gradually reduced its liquidity position and resumed portfolio growth, and up from $963 million at the end of 3Q19, still maintaining a robust level given the prevailing market uncertainty and deep economic impact of Covid-19. Deposits placed with the Federal Reserve Bank of New York represented 82% of total liquidity balances at the end of 3Q20. As of the end of 3Q20, 2Q20, and 3Q19, liquidity balances to total assets represented 23%, 30% and 14%, respectively, while the liquidity balances to total deposits ratio was 48%, 68% and 34%, respectively.

The Investment Portfolio balances amounted to $234 million as of September 30, 2020, of which $107 million were corporate debt securities classified as high quality liquid assets (“HQLA”) in accordance with the specifications of the Basel Committee; up from $96 million as of June 30, 2020, and $85 million as of September 30, 2019. The Investment Portfolio mostly consisted of readily-quoted Latin American and Multilateral securities, out of which 54% represented sovereign or state-owned risk at the end of the 3Q20, compared to 80% a quarter ago and 71% a year ago (refer to Exhibit X for a per-country risk distribution of the Investment Portfolio).

On the funding side, deposit balances increased to $3.1 billion at the end of 3Q20, up 6% QoQ and 7% YoY compared to $2.9 billion a quarter and year ago. The continued growth in the Bank’s deposit base denotes the growth of its new Yankee CD program which complements the short-term funding structure, and the steady support from the Bank’s Class A shareholders (i.e.: central banks and their designees), which represented 51% of total deposits at the end of 3Q20, compared to 53% and 62% of total deposits a quarter and year ago, respectively. As of September 30, 2020, total deposits represented 60% of total funding sources, up from 52% a quarter and year ago, respectively. Consequently, short- and medium-term borrowings and debt totaled $2.1 billion at the end of 3Q20 (-21% QoQ and YoY). Weighted average funding costs improved to 1.26% in 3Q20 (-31 bps QoQ; -183 bps YoY), and 1.75% in the first 9M20 (-149 bps YoY), on a higher average deposit base and in line with the Bank’s strategy to maintain a solid and diversified funding base to support Commercial Portfolio growth.

The Treasury Business Segment’s results were a $0.9 million loss for the 3Q20 and a $5.8 million loss for the first 9M20. The quarterly improvements were mainly associated to an increase in NII on improved liquidity performance, an increased bond portfolio, and decreased funding costs. On a year-to-date basis, loss for the segment increased 10% YoY mainly on provisions for credit losses during the period, while total revenues increased 5% YoY, as higher NII offset the losses in other financial instruments related to the Bank’s results on its hedging positions and investment securities.

NII and NIM were $22.6 million and 1.42% for the 3Q20, and $70.1 million and 1.43% for the first 9M20, respectively. The QoQ increase was mainly related to widening rate differential between loans and liabilities. On a YoY comparison, NII and NIM were still pressured by higher average cash position levels (27% and 23% of average interest-earning assets in 3Q20 and 9M20, respectively) and lower average loan balances, as the Bank prudently decided since the onset of Covid-19 to reduce loan balances and maintained increased liquidity levels.

FEES AND COMMISSIONS

Fees and Commissions, net, includes the fee income associated with letters of credit and the fee income derived from loan structuring and syndication activities, together with loan intermediation and distribution activities in the primary market, and other commissions, mostly from other contingent credits, such as guarantees and credit commitments, net of fee expenses.

Fees and Commissions income totaled $2.6 million for 3Q20 and $7.6 million for the first 9M20. The 35% QoQ increase was mainly driven by higher fees from the Bank’s letters of credit business (+28% QoQ), performing at pre-Covid levels. The YoY reduction in fees and commissions were mostly related to a general slowdown in the loan structuring and syndication business which has started to pick up in recent months.

"n.m." means not meaningful.

The total allowance for credit losses decreased to $44.9 million, representing a coverage ratio to the Credit Portfolio of 84 bps as of September 30, 2020, compared to $47.8 million, or 95 bps, a quarter ago and compared to $104.4 million, or 166 bps, a year ago. The quarterly decrease was mostly related to the Bank’s sale of a Stage 2 watchlist loan, which resulted in a $4.4 million write-off against previously constituted reserves in Stage 2, coupled with the Bank’s improved mix of its Credit Portfolio exposure by Stages.

Asset quality remained sound with no new credit impaired transactions during the quarter, resulting in zero non-performing loans as of September 30, 2020, the same level from the previous quarter, and compared to $61.8 million, or 1.11% of non-performing loans to total Loan Portfolio balances from a year ago.

The Bank’s 3Q20 and 9M20 operating expenses totaled $8.3 million (+1% QoQ; -7% YoY) and $27.2 million (-8% YoY), respectively. The YoY expense reduction was primarily related to lower personnel expenses, mostly due to a lower performance-based variable compensation provision.

3Q20 and 9M20 Efficiency Ratio stood at 33% and 37%, respectively. The quarterly improvement compared to 42% in the 2Q20 was driven by higher total revenues (+27% QoQ) with stable operating expenses (+1% QoQ). The YoY increases in Efficiency Ratios were attributed to lower income generation in the current context, partially offset by the Bank’s reductions in operating expenses.

The Bank’s equity consists entirely of issued and fully paid ordinary common stock, with 39.7 million common shares outstanding as of September 30, 2020. At the same date, the Bank’s ratio of total assets to total equity stood at 6.2 times, and the Bank’s Tier 1 Basel III Capital Ratio strengthened to 26.5%, resulting from lower risk-weighted assets on a better mix of the Bank’s portfolio risk profile, while the equity base remained stable at over $1 billion.

RECENT EVENTS

Notes:

Footnotes:

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, October 27, 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: 23850585.

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

^(*) "n.m." means not meaningful.