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: November 13, 2020
|
|
|
FOREIGN TRADE BANK OF LATIN AMERICA, INC.
|
|
(Registrant)
|
|
|
|
|
By:
|
/s/ Ana Graciela de Méndez
|
|
|
|
|
|
|
Name:
|
Ana Graciela de Méndez
|
|
|
Title:
|
CFO
|
Banco
Latinoamericano de Comercio Exterior, S.A. and Subsidiaries
Unaudited condensed consolidated interim
financial statements
as of September 30, 2020, and for the three and nine months
ended September 30, 2020.
Banco Latinoamericano de Comercio Exterior,
S.A. and Subsidiaries
Banco Latinoamericano de Comercio Exterior, S.
A. and Subsidiaries
Unaudited condensed consolidated interim statements
of financial position
September 30, 2020 and December 31, 2019
(In thousands of US dollars)
|
|
Notes
|
|
|
September 30,
2020
(Unaudited)
|
|
|
December 31,
2019
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks
|
|
|
7,8
|
|
|
|
1,401,669
|
|
|
|
1,178,170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities and other financial assets, net
|
|
|
5,9
|
|
|
|
238,572
|
|
|
|
88,794
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
|
|
|
|
|
4,566,255
|
|
|
|
5,892,997
|
|
Interest receivable
|
|
|
|
|
|
|
30,339
|
|
|
|
41,757
|
|
Allowance for loans losses
|
|
|
|
|
|
|
(42,492
|
)
|
|
|
(99,307
|
)
|
Unearned interest and deferred fees
|
|
|
|
|
|
|
(7,176
|
)
|
|
|
(12,114
|
)
|
Loans, net
|
|
|
5,7,10
|
|
|
|
4,546,926
|
|
|
|
5,823,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customers' liabilities under acceptances
|
|
|
5,7
|
|
|
|
89,576
|
|
|
|
115,682
|
|
Derivative financial instruments - assets
|
|
|
5,7,13
|
|
|
|
6,943
|
|
|
|
11,157
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment and leasehold improvements, net
|
|
|
|
|
|
|
16,620
|
|
|
|
18,752
|
|
Intangibles, net
|
|
|
|
|
|
|
864
|
|
|
|
1,427
|
|
Investment properties
|
|
|
|
|
|
|
3,285
|
|
|
|
3,494
|
|
Other assets
|
|
|
14
|
|
|
|
6,739
|
|
|
|
8,857
|
|
Total assets
|
|
|
|
|
|
|
6,311,194
|
|
|
|
7,249,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits
|
|
|
|
|
|
|
361,230
|
|
|
|
85,786
|
|
Time deposits
|
|
|
|
|
|
|
2,693,965
|
|
|
|
2,802,550
|
|
|
|
|
7,15
|
|
|
|
3,055,195
|
|
|
|
2,888,336
|
|
Interest payable
|
|
|
|
|
|
|
3,431
|
|
|
|
5,219
|
|
Total deposits
|
|
|
|
|
|
|
3,058,626
|
|
|
|
2,893,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities sold under repurchase agreements
|
|
|
7,16
|
|
|
|
10,663
|
|
|
|
40,530
|
|
Borrowings and debt, net
|
|
|
7,17
|
|
|
|
2,066,943
|
|
|
|
3,138,310
|
|
Interest payable
|
|
|
|
|
|
|
9,649
|
|
|
|
10,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customers' liabilities under acceptances
|
|
|
5,7
|
|
|
|
89,576
|
|
|
|
115,682
|
|
Derivative financial instruments - liabilities
|
|
|
5,7,13
|
|
|
|
33,315
|
|
|
|
14,675
|
|
Allowance for loan commitments and financial guarantees contracts losses
|
|
|
5
|
|
|
|
2,088
|
|
|
|
3,044
|
|
Other liabilities
|
|
|
18
|
|
|
|
14,627
|
|
|
|
17,149
|
|
Total liabilities
|
|
|
|
|
|
|
5,285,487
|
|
|
|
6,233,499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
|
|
279,980
|
|
|
|
279,980
|
|
Treasury stock
|
|
|
|
|
|
|
(57,866
|
)
|
|
|
(59,669
|
)
|
Additional paid-in capital in excess of value assigned to common stock
|
|
|
|
|
|
|
119,850
|
|
|
|
120,362
|
|
Capital reserves
|
|
|
|
|
|
|
95,210
|
|
|
|
95,210
|
|
Regulatory reserves
|
|
|
24
|
|
|
|
136,019
|
|
|
|
136,019
|
|
Retained earnings
|
|
|
|
|
|
|
458,265
|
|
|
|
446,083
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
(5,751
|
)
|
|
|
(1,818
|
)
|
Total equity
|
|
|
|
|
|
|
1,025,707
|
|
|
|
1,016,167
|
|
Total liabilities and equity
|
|
|
|
|
|
|
6,311,194
|
|
|
|
7,249,666
|
|
The accompanying notes are an integral part of these unaudited
condensed consolidated interim financial statements.
Banco Latinoamericano de Comercio Exterior, S.
A. and Subsidiaries
Unaudited condensed consolidated interim statements
of profit or loss
For the three and nine months ended
September 30, 2020 and 2019
(In thousands of US dollars, except per share data
and number of shares)
|
|
|
|
|
For the three months
ended September 30,
|
|
|
For the nine months
ended September 30,
|
|
|
|
Notes
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Interest income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
|
|
|
|
897
|
|
|
|
3,757
|
|
|
|
4,272
|
|
|
|
13,295
|
|
Securities
|
|
|
|
|
|
|
911
|
|
|
|
763
|
|
|
|
2,228
|
|
|
|
2,494
|
|
Loans
|
|
|
|
|
|
|
37,886
|
|
|
|
60,994
|
|
|
|
136,690
|
|
|
|
193,809
|
|
Total interest income
|
|
|
21
|
|
|
|
39,694
|
|
|
|
65,514
|
|
|
|
143,190
|
|
|
|
209,598
|
|
Interest expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
|
|
|
|
(4,400
|
)
|
|
|
(16,692
|
)
|
|
|
|
|
|
|
(53,281
|
)
|
Borrowings and debt
|
|
|
|
|
|
|
(12,686
|
)
|
|
|
(22,164
|
)
|
|
|
(51,506
|
)
|
|
|
(73,708
|
)
|
Total interest expense
|
|
|
21
|
|
|
|
(17,086
|
)
|
|
|
(38,856
|
)
|
|
|
(73,059
|
)
|
|
|
(126,989
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
|
|
|
|
22,608
|
|
|
|
26,658
|
|
|
|
70,131
|
|
|
|
82,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees and commissions, net
|
|
|
19,21
|
|
|
|
2,611
|
|
|
|
2,815
|
|
|
|
7,624
|
|
|
|
10,293
|
|
(Loss) gain on financial instruments, net
|
|
|
12,21
|
|
|
|
(437
|
)
|
|
|
(169
|
)
|
|
|
(4,744
|
)
|
|
|
650
|
|
Other income, net
|
|
|
|
|
|
|
407
|
|
|
|
217
|
|
|
|
838
|
|
|
|
1,674
|
|
Total other income, net
|
|
|
21
|
|
|
|
2,581
|
|
|
|
2,863
|
|
|
|
3,718
|
|
|
|
12,617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
|
|
|
|
25,189
|
|
|
|
29,521
|
|
|
|
73,849
|
|
|
|
95,226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reversal (provision) for credit losses
|
|
|
5,6,7,21
|
|
|
|
(1,543
|
)
|
|
|
(612
|
)
|
|
|
1,153
|
|
|
|
(2,365
|
)
|
Reversal (impairment) on non-financial assets
|
|
|
|
|
|
|
140
|
|
|
|
500
|
|
|
|
-
|
|
|
|
500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and other employee expenses
|
|
|
|
|
|
|
(4,626
|
)
|
|
|
(5,651
|
)
|
|
|
(15,804
|
)
|
|
|
(17,791
|
)
|
Depreciation of equipment and leasehold improvements
|
|
|
|
|
|
|
(1,116
|
)
|
|
|
(612
|
)
|
|
|
(2,705
|
)
|
|
|
(2,120
|
)
|
Amortization of intangible assets
|
|
|
|
|
|
|
(185
|
)
|
|
|
(160
|
)
|
|
|
(562
|
)
|
|
|
(515
|
)
|
Other expenses
|
|
|
|
|
|
|
(2,415
|
)
|
|
|
(2,434
|
)
|
|
|
(8,079
|
)
|
|
|
(8,978
|
)
|
Total operating expenses
|
|
|
21
|
|
|
|
(8,342
|
)
|
|
|
(8,969
|
)
|
|
|
(27,150
|
)
|
|
|
(29,404
|
)
|
Profit for the period
|
|
|
|
|
|
|
15,444
|
|
|
|
20,440
|
|
|
|
47,852
|
|
|
|
63,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share (in US dollars)
|
|
|
19
|
|
|
|
0.39
|
|
|
|
0.52
|
|
|
|
1.21
|
|
|
|
1.62
|
|
Diluted earnings per share (in US dollars)
|
|
|
19
|
|
|
|
0.39
|
|
|
|
0.52
|
|
|
|
1.21
|
|
|
|
1.62
|
|
Weighted average basic shares (in thousands of shares)
|
|
|
19
|
|
|
|
39,672
|
|
|
|
39,602
|
|
|
|
39,645
|
|
|
|
39,566
|
|
Weighted average diluted shares (in thousands of shares)
|
|
|
19
|
|
|
|
39,672
|
|
|
|
39,602
|
|
|
|
39,645
|
|
|
|
39,566
|
|
The accompanying notes are an integral part of these
unaudited condensed consolidated interim financial statements.
Banco Latinoamericano de Comercio Exterior, S.
A. and Subsidiaries
Unaudited condensed consolidated interim statements
of comprehensive income
For the three and nine months ended September 30,
2020 and 2019
(In thousands of US dollars)
|
|
For the three months
ended September 30
|
|
|
For the nine months
ended September 30
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Profit for the period
|
|
|
15,444
|
|
|
|
20,440
|
|
|
|
47,852
|
|
|
|
63,957
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that will not be reclassified subsequently to profit or loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value on equity instrument at FVOCI, net of hedging
|
|
|
-
|
|
|
|
1,057
|
|
|
|
546
|
|
|
|
450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that are or may be reclassified subsequently to profit or loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value on debt financial instruments at FVOCI, net of hedging
|
|
|
(1,698
|
)
|
|
|
258
|
|
|
|
(3,080
|
)
|
|
|
(2,709
|
)
|
Reclassification of gains (losses) on financial instruments to the profit or loss
|
|
|
(261
|
)
|
|
|
(393
|
)
|
|
|
(606
|
)
|
|
|
247
|
|
Exchange difference in conversion of foreign currency operation
|
|
|
(122
|
)
|
|
|
(53
|
)
|
|
|
(793
|
)
|
|
|
(152
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
(2,081
|
)
|
|
|
869
|
|
|
|
(3,933
|
)
|
|
|
(2,164
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the period
|
|
|
13,363
|
|
|
|
21,309
|
|
|
|
43,919
|
|
|
|
61,793
|
|
The accompanying notes are an integral part of these unaudited
condensed consolidated interim financial statements.
Banco Latinoamericano de Comercio Exterior, S.
A. and Subsidiaries
Unaudited condensed consolidated interim statements
of changes in stockholders's equity
For the nine months ended September 30, 2020 and
2019
(In thousands of US dollars)
|
|
Common
stock
|
|
|
Treasury
stock
|
|
|
Additional
paid-in
capital in
excess
of value
assigned
to common
stock
|
|
|
Capital
reserves
|
|
|
Regulatory
reserves
|
|
|
Retained
earnings
|
|
|
Other
comprehensive
income
|
|
|
Total
equity
|
|
Balances at January 1, 2019, previously reported
|
|
|
279,980
|
|
|
|
(61,076
|
)
|
|
|
119,987
|
|
|
|
95,210
|
|
|
|
136,019
|
|
|
|
423,050
|
|
|
|
420
|
|
|
|
993,590
|
|
Effect for change in accounting policy
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,926
|
)
|
|
|
-
|
|
|
|
(1,926
|
)
|
Balances at January 1, 2019, adjusted
|
|
|
279,980
|
|
|
|
(61,076
|
)
|
|
|
119,987
|
|
|
|
95,210
|
|
|
|
136,019
|
|
|
|
421,124
|
|
|
|
420
|
|
|
|
991,664
|
|
Profit for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
63,957
|
|
|
|
-
|
|
|
|
63,957
|
|
Other comprehensive income (loss)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,164
|
)
|
|
|
(2,164
|
)
|
Issuance of restricted stock
|
|
|
-
|
|
|
|
1,259
|
|
|
|
(1,259
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Compensation cost - stock options and stock units plans
|
|
|
-
|
|
|
|
-
|
|
|
|
1,340
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,340
|
|
Exercised options and stock units vested
|
|
|
-
|
|
|
|
148
|
|
|
|
(148
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Dividends declared
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(45,696
|
)
|
|
|
-
|
|
|
|
(45,696
|
)
|
Balances at September 30, 2019
|
|
|
279,980
|
|
|
|
(59,669
|
)
|
|
|
119,920
|
|
|
|
95,210
|
|
|
|
136,019
|
|
|
|
439,385
|
|
|
|
(1,744
|
)
|
|
|
1,009,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at January 1, 2020
|
|
|
279,980
|
|
|
|
(59,669
|
)
|
|
|
120,362
|
|
|
|
95,210
|
|
|
|
136,019
|
|
|
|
446,083
|
|
|
|
(1,818
|
)
|
|
|
1,016,167
|
|
Profit for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
47,852
|
|
|
|
-
|
|
|
|
47,852
|
|
Other comprehensive income (loss)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,535
|
)
|
|
|
(4,535
|
)
|
Transfer of fair value on equity instrument at FVOCI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(602
|
)
|
|
|
602
|
|
|
|
-
|
|
Issuance of restricted stock
|
|
|
-
|
|
|
|
1,523
|
|
|
|
(1,523
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Compensation cost - stock options and stock units plans
|
|
|
-
|
|
|
|
-
|
|
|
|
1,291
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,291
|
|
Exercised options and stock units vested
|
|
|
-
|
|
|
|
280
|
|
|
|
(280
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Dividends declared
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(35,068
|
)
|
|
|
-
|
|
|
|
(35,068
|
)
|
Balances at September 30, 2020
|
|
|
279,980
|
|
|
|
(57,866
|
)
|
|
|
119,850
|
|
|
|
95,210
|
|
|
|
136,019
|
|
|
|
458,265
|
|
|
|
(5,751
|
)
|
|
|
1,025,707
|
|
The accompanying notes are an integral part of these
unaudited condensed consolidated interim financial statements.
Banco Latinoamericano de Comercio Exterior, S.
A. and Subsidiaries
Unaudited condensed consolidated interim statements
of cash flows
For the nine months ended September 30, 2020 and
2019
(In thousands of US dollars)
|
|
2020
|
|
|
2019
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
Profit for the period
|
|
|
47,852
|
|
|
|
63,957
|
|
Adjustments to reconcile profit for the year to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
Depreciation of equipment and leasehold improvements
|
|
|
2,705
|
|
|
|
2,120
|
|
Amortization of intangible assets
|
|
|
562
|
|
|
|
515
|
|
Loss for write-off of fixed assets
|
|
|
6
|
|
|
|
-
|
|
(Reversal) provision for credit losses
|
|
|
(1,153
|
)
|
|
|
2,365
|
|
Unrealized loss on financial instruments at fair value through profit or loss
|
|
|
2,986
|
|
|
|
-
|
|
Realized gain on financial instruments at fair value through profit or loss
|
|
|
(484
|
)
|
|
|
-
|
|
Gain net on sale of financial assets at fair value through OCI
|
|
|
-
|
|
|
|
(163
|
)
|
Amortization of premium and discount related to securities
|
|
|
(5,966
|
)
|
|
|
611
|
|
Compensation cost - share-based payment
|
|
|
1,291
|
|
|
|
1,340
|
|
Net changes in hedging position and foreign currency
|
|
|
4,240
|
|
|
|
(18,383
|
)
|
Interest income
|
|
|
(143,190
|
)
|
|
|
(209,598
|
)
|
Interest expense
|
|
|
73,059
|
|
|
|
126,989
|
|
Net decrease (increase) in operating assets:
|
|
|
|
|
|
|
|
|
Pledged deposits
|
|
|
(23,952
|
)
|
|
|
21,340
|
|
Loans
|
|
|
1,236,130
|
|
|
|
224,165
|
|
Other assets
|
|
|
2,602
|
|
|
|
7,292
|
|
Net increase (decrease) in operating liabilities:
|
|
|
|
|
|
|
|
|
Due to depositors
|
|
|
166,859
|
|
|
|
(119,352
|
)
|
Other liabilities
|
|
|
(2,587
|
)
|
|
|
962
|
|
Cash flows provided by operating activities
|
|
|
1,360,960
|
|
|
|
104,160
|
|
Interest received
|
|
|
152,643
|
|
|
|
211,683
|
|
Interest paid
|
|
|
(77,981
|
)
|
|
|
(132,504
|
)
|
Net cash provided by operating activities
|
|
|
1,435,622
|
|
|
|
183,339
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Acquisition of equipment and leasehold improvements
|
|
|
(601
|
)
|
|
|
(547
|
)
|
Acquisition of intangible assets
|
|
|
-
|
|
|
|
(356
|
)
|
Proceeds from the sale of securities at fair value through OCI
|
|
|
1,882
|
|
|
|
6,000
|
|
Proceeds from the redemption of securities at fair value through OCI
|
|
|
-
|
|
|
|
8,094
|
|
Proceeds from redemption of securities at amortized cost
|
|
|
44,577
|
|
|
|
23,151
|
|
Purchases of securities at fair value through OCI
|
|
|
(103,600
|
)
|
|
|
-
|
|
Purchases of securities at amortized cost
|
|
|
(89,182
|
)
|
|
|
(15,151
|
)
|
Net cash (used in) provided by investing activities
|
|
|
(146,924
|
)
|
|
|
21,191
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
(Decrease) increase in securities sold under repurchase agreements
|
|
|
(29,867
|
)
|
|
|
16,298
|
|
Decrease in short-term borrowings and debt
|
|
|
(1,162,760
|
)
|
|
|
(826,881
|
)
|
Proceeds from long-term borrowings and debt
|
|
|
386,096
|
|
|
|
245,460
|
|
Repayments of long-term borrowings and debt
|
|
|
(246,982
|
)
|
|
|
(337,596
|
)
|
Payments of leases liabilities
|
|
|
(820
|
)
|
|
|
(747
|
)
|
Dividends paid
|
|
|
(34,818
|
)
|
|
|
(43,892
|
)
|
Net cash used in financing activities
|
|
|
(1,089,151
|
)
|
|
|
(947,358
|
)
|
|
|
|
|
|
|
|
|
|
Increase (decrease) net in cash and cash equivalents
|
|
|
199,547
|
|
|
|
(742,828
|
)
|
Cash and cash equivalents at beginning of the period
|
|
|
1,159,718
|
|
|
|
1,706,192
|
|
Cash and cash equivalents at end of the period
|
|
|
1,359,265
|
|
|
|
963,364
|
|
The accompanying notes are an integral part of these
unaudited condensed consolidated interim financial statements.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
Banco Latinoamericano de Comercio
Exterior, S. A. (“Bladex Head Office” and together with its subsidiaries “Bladex” or the “Bank”),
headquartered in Panama City, Republic of Panama, is a specialized multinational bank established to support the financing of
foreign trade and economic integration in Latin America and the Caribbean (the “Region”). The Bank was established
pursuant to a May 1975 proposal presented to the Assembly of Governors of Central Banks in the Region, which recommended
the creation of a multinational organization to increase the foreign trade financing capacity of the Region. The Bank was organized
in 1977, incorporated in 1978 as a corporation pursuant is to the laws of the Republic of Panama, and initiated operations on
January 2, 1979. Under a contract law signed in 1978 between the Republic of Panama and Bladex, the Bank was granted certain
privileges by the Republic of Panama, including an exemption from payment of income taxes in Panama.
The Bank operates under a general
banking license issued by the National Banking Commission of Panama, predecessor of the Superintendence of Banks of Panama (the
“SBP”).
In the Republic of Panama,
banks are regulated by the SBP through Executive Decree No. 52 of April 30, 2008, which adopts the unique text of Law
Decree No. 9 of February 26, 1998, modified by Law Decree No. 2 of February 22, 2008. Banks are also regulated
by resolutions and agreements issued by this entity. The main aspects of this law and its regulations include: the authorization
of banking licenses, minimum capital and liquidity requirements, consolidated supervision, procedures for management of credit,
liquidity and market risks, measures to prevent money laundering, the financing of terrorism and related illicit activities, and
procedures for banking intervention and liquidation, among others.
Bladex Head Office’s
subsidiaries are the following:
|
-
|
Bladex
Holdings Inc. is a wholly owned subsidiary, incorporated under the laws of the State
of Delaware, United States of America (USA), on May 30, 2000. Bladex Holdings Inc.
has ownership in Bladex Representaçao Ltda.
|
|
-
|
Bladex
Representaçao Ltda. incorporated under the laws of Brazil on January 7, 2000,
acts as the Bank’s representative office in Brazil. Bladex Representaçao
Ltda. is 99.999% owned by Bladex Head Office and the remaining 0.001% is owned by Bladex
Holdings Inc.
|
|
-
|
Bladex
Development Corp. was incorporated under the laws of the Republic of Panama on June 5,
2014. Bladex Development Corp. is 100% owned by Bladex Head Office.
|
|
-
|
BLX
Soluciones, S.A. de C.V., SOFOM, E.N.R. (“BLX Soluciones”) was incorporated
under the laws of Mexico on June 13, 2014. BLX Soluciones is 99.9% owned by Bladex
Head Office, and Bladex Development Corp. owns the remaining 0.1%. The company specializes
in offering financial leasing and other financial products such as loans and factoring.
|
Bladex Head Office has an agency
in New York City, USA (the “New York Agency”), which began operations on March 27, 1989. The New York Agency
is principally engaged in financing transactions related to international trade, mostly the confirmation and financing of letters
of credit for customers in the Region. The New York Agency also has authorization to book transactions through an International
Banking Facility (“IBF”).
The Bank has representative
offices in Buenos Aires, Argentina; in Mexico City, Mexico; and in Bogota, Colombia, and has a representative license in Lima,
Peru.
These unaudited condensed consolidated
interim financial statements were authorized for issue by the Board of Directors on October 20, 2020.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
2.
|
Basis of preparation of the condensed consolidated
interim financial statements
|
|
2.1
|
Statement
of compliance
|
These condensed consolidated
interim financial statements of Banco Latinoamericano de Comercio Exterior, S. A. and its subsidiaries have been prepared in accordance
with International Accounting Standard 34 Interim Financial Reporting (IAS 34) issued by the International Accounting Standards
Board ("IASB"). As all the disclosures required by IFRS for annual period consolidated financial statements are not
included herein, these condensed consolidated interim financial statements should be read in conjunction with the audited consolidated
financial statements and the notes thereto as of and for the year ended December 31, 2019, contained in the Bank’s
annual audited consolidated financial statements. The condensed consolidated interim statements of profit or loss, other comprehensive
income, changes in equity and cash flows for the periods presented are not necessarily indicative of results expected for any
future period.
3.
|
Changes in significant accounting policies
|
|
3.1
|
New accounting policies
and amendments adopted
|
The Bank has initially adopted
Interest Rate Benchmark Reform (Amendments to IFRS 9, and IFRS 7) from January 1, 2020. This change in accounting policy
is also expected to be reflected in the Bank’s consolidated financial statements as at and for the year ending December 31,
2020. The Bank has applied the interest rate benchmark reform amendments to hedging relationships that existed at January 1,
2020 or were designated thereafter and that are directly affected by interest rate benchmark reform. These amendments also apply
to the gain or loss recognized in OCI that existed at January 1, 2020.
Managing interest rate benchmark reform and any
risks arising due to reform
A fundamental reform of major
interest rate benchmarks is being undertaken globally, including the replacement of interbank offered rates (IBORs) with alternative
nearly risk-free rates (referred to as ‘IBOR reform’). Due to the nature of its business, the Bank portfolio is predominantly
made up of short-term fixed rate assets and liabilities. However, the Bank has exposures to IBORs (USD Libor only) on its financial
instruments that will be replaced or reformed as part of these market-wide initiatives. There is uncertainty over the timing and
the methods of transition. The Bank anticipates that IBOR reform will impact its risk management and hedge accounting.
The Libor Transition Steering
Committee (LTSC) monitors and manages the transition to alternative rates. The committee evaluates the extent to which contracts
reference IBOR cash flows, whether such contracts will need to be amended as a result of IBOR reform and how to manage communication
about IBOR reform with counterparties. The committee reports to the Board of directors and collaborates with other business functions
as needed. It provides periodic reports to management of interest rate risk and risks arising from IBOR reform.
Derivatives held for risk management purposes
and hedge accounting
Derivatives
The Bank holds interest rate
swaps for risk management purposes, which are designated in cash flow hedging relationships. The interest rate swaps have floating
legs that are indexed to USD Libor. The Bank’s derivative instruments are governed by the International Swaps and Derivatives
Association (ISDA)’s Master Agreement.
ISDA is currently reviewing
its standardized contracts in the light of IBOR reform. When ISDA has completed its review, the Bank expects to negotiate the
inclusion of new fallback clauses with its derivative counterparties. No derivative instruments have been modified as at September 30,
2020.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
3.
|
Changes in significant accounting policies (continued)
|
|
3.1
|
New accounting policies
and amendments adopted (continued)
|
Hedge accounting
The Bank evaluated the extent
to which its cash flow hedging relationships are subject to uncertainty driven by IBOR reform as of September 30, 2020. The
Bank’s hedged items and hedging instruments continue to be indexed to IBOR benchmark rates, i.e. USD Libor. IBOR benchmark
rates are quoted each day and IBOR cash flows are exchanged with its counterparties as usual. However, the Bank’s cash flow
hedging relationships extend beyond the anticipated cessation date for USD LIBOR. The Bank expects that USD LIBOR will be discontinued
after the end of 2021. The preferred alternative reference rate is Secured Overnight Financing Rate (SOFR). However, there is
uncertainty as to when and how replacement may occur with respect to the relevant hedged item and hedging instrument. Such uncertainty
may impact the hedging relationship and its effectiveness assessment. The Bank applies the amendments to IFRS 9 issued in
September 2019 to those hedging relationships directly affected by IBOR reform.
Hedging relationships impacted
by IBOR reform may experience ineffectiveness attributable to market participants’ expectations of when the shift from the
existing IBOR benchmark rate to an alternative benchmark interest rate will occur. This transition may occur at different times
for the hedged item and hedging instrument, which may lead to hedge ineffectiveness. The Bank has measured its hedging instrument
indexed to USD LIBOR using available quoted market rates for LIBOR-based instruments of the same tenor and similar maturity and
has measured the cumulative change in present value of hedged cash flows on a similar basis
The Bank’s exposure to
USD LIBOR designated in a hedging relationship is $20 million nominal amount at September 30, 2020 attributable to the interest
rate swap hedging USD LIBOR cash flows on the same principal amount of the Bank’s USD-denominated bond issuances maturing
in 2023.
For the purpose of evaluating
whether there is an economic relationship between the hedged item(s) and the hedging instrument(s), the Bank assumes that
the benchmark interest rate is not altered as a result of IBOR reform.
The Bank will cease to apply
the amendments to its assessment of the economic relationship between the hedged item and the hedging instrument when the uncertainty
arising from IBOR reform is no longer present with respect to the timing and the amount of the interest rate benchmark-based cash
flows of the hedged item or hedging instrument, or when the hedging relationship is discontinued. For its highly probable assessment
of the hedged item, the Bank will no longer apply the amendments when the uncertainty arising from IBOR reform about the timing
and amount of the interest rate benchmark-based future cash flows of the hedged item is no longer present, or when the hedging
relationship is discontinued.
|
3.2
|
New accounting policies
and amendments not yet adopted
|
In May 2020, the IASB
(International Accounting Standards Board) published the document “Rental Lease concessions related to COVID-19", which
contains amendments to IFRS 16 Leases effective as of June 1, 2020, in order to provide relief to the lessee with respect
to the rental concessions granted as a result of the events of COVID-19, where in the existing event the lessee must re-measure
the responsibility of the lease using a revised discount rate.
At the reporting date, the
Bank has not modified nor received concessions in the lease agreements signed with third parties.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
4.
|
Significant accounting policies
|
|
4.1
|
Judgments, estimates
and significant accounting assumptions
|
|
A.
|
Estimates and assumptions
|
The key assumptions concerning
the future and other key sources of estimating uncertainty at the reporting date, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Bank based
its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances
and assumptions about future developments, however, may change due to market changes or circumstances beyond the control of the
Bank. Such changes are reflected in the assumptions when they occur.
The Bank’s management
has made an assessment of its ability to continue as a going concern and is satisfied that it has the resources to continue in
business for the foreseeable future. Therefore, the condensed consolidated financial statements continue to be prepared on a going
concern basis.
At inception of a contract,
the Bank assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the
right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract
conveys the right to control the use of an identified asset, the Bank assesses whether:
|
-
|
The
contract involves the use of an identified asset –this may be specified explicitly
or implicitly; and should be physically distinct or represent substantially all of the
capacity of a physically distinct asset.
|
|
-
|
The
Bank has the right to obtain substantially all of the economic benefits from use of the
asset throughout the period of use.
|
|
-
|
The
Bank has the right to direct the use of the asset. The Bank has this right when it has
the decision-making rights that are most relevant to changing how and for what purpose
the asset is used. In rare cases where the decision about how and for what purpose the
asset is used is predetermined, the Bank has the right to direct the use of the asset
if either:
|
|
-
|
The Bank has the right to operate
the asset; or
|
|
-
|
The Bank designed the asset in a
way that predetermines how and for what purpose it will be used.
|
At inception or on reassessment
of a contract that contains a lease component, the bank allocates the consideration in the contract to each lease component on
the basis of their relative stand-alone prices. However, for lease agreements of office spaces in buildings in which the Bank
is a lessee, it chose not to separate the components of the contract that do not correspond to the lease and to account for all
of them under a single lease component.
The Bank determines at the
beginning of the contract if an agreement is or contains a lease according to IFRS 16, the Bank assesses if a contract is or contains
a lease based on the definition of a lease.
The Bank recognizes right-of-use
assets and lease liabilities for most leases. These leases are presented in the consolidated statement of financial position.
Lease liabilities are measured at the present value of the lease payments, discounted at the Bank's internal funding cost rate.
The right-of-use assets are measured at their book value, by discounting total lease payments to present value using the Bank's
internal funding cost rate, for the weighted average term of the contract, adjusted for any prepayment, incremental cost, dismantling
cost and accumulated depreciation.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
4.
|
Significant accounting policies
|
The right-of-use asset is subsequently
depreciated using the straight-line method from the inception date until the end of the lease term. In addition, the right-of-use
asset is periodically reduced by impairment losses, if applicable, and is adjusted for certain new measurements of the lease liability.
The Bank presents its right of use assets in equipment and improvements to the leased property and the liability for lease in
obligations and debt, net in the consolidated statement of financial position.
Sub-leases of assets for rights
of use are classified as operating leases. The subleased portion is classified as investment property, which is subsequently measured
by applying the cost model. Leases receivable are recognized as income in the consolidated statement of income in the period in
which they are earned.
The Bank applied IFRS 15 to
revenue from contracts with customers to assign the consideration in the contract to each lease component and that is not a lease.
|
D.
|
Investment properties - Right of
use
|
Rights-of-use assets that the
Bank holds under sublease agreements for the purpose of obtaining lease income are classified as investment properties in the
consolidated statement of financial position. These assets are measured at initial recognition using the same criteria used to
recognize other rights-of-use assets. After initial recognition, the book value of these assets is amortized on a straight-line
basis over their life. The useful life of these investment properties is closely related to the principal lease agreement.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
This note presents information about the Bank’s
exposure to financial risks and the Bank’s management of capital.
|
i.
|
Credit quality analysis
|
The following tables set out
information about the credit quality of financial assets measured at amortized cost, and securities at FVOCI. Unless specifically
indicated, for financial assets the amounts in the table represent the outstanding balances. For loan commitments and financial
guarantee contracts, the amounts in the table represent the amounts committed or guaranteed, respectively.
The Bank’s Management
has not made any adjustment to the methodology and key inputs used to determine the PD and LGD parameters produced by the model.
Loans
September 30,
2020
|
|
|
PD Ranges
|
|
Stage
1
|
|
|
Stage
2
|
|
|
Stage
3
|
|
|
Total
|
|
Grades 1 - 4
|
|
0.03 - 0.74
|
|
|
2,347,105
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,347,105
|
|
Grades 5 - 6
|
|
0.75 - 3.95
|
|
|
1,716,933
|
|
|
|
169,931
|
|
|
|
-
|
|
|
|
1,886,864
|
|
Grades 7 - 8
|
|
3.96 - 30.67
|
|
|
190,118
|
|
|
|
142,168
|
|
|
|
-
|
|
|
|
332,286
|
|
Grades 9 - 10
|
|
30.68 - 100
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
4,254,156
|
|
|
|
312,099
|
|
|
|
-
|
|
|
|
4,566,255
|
|
Loss allowance
|
|
|
|
|
(18,618
|
)
|
|
|
(23,874
|
)
|
|
|
-
|
|
|
|
(42,492
|
)
|
Total
|
|
|
|
|
4,235,538
|
|
|
|
288,225
|
|
|
|
-
|
|
|
|
4,523,763
|
|
December 31,
2019
|
|
|
PD Ranges
|
|
Stage
1
|
|
|
Stage
2
|
|
|
Stage
3
|
|
|
Total
|
|
Grades 1 - 4
|
|
0.03 - 0.74
|
|
|
2,928,401
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,928,401
|
|
Grades 5 - 6
|
|
0.75 - 3.95
|
|
|
2,330,150
|
|
|
|
85,173
|
|
|
|
-
|
|
|
|
2,415,323
|
|
Grades 7 - 8
|
|
3.96 - 30.67
|
|
|
343,606
|
|
|
|
143,822
|
|
|
|
-
|
|
|
|
487,428
|
|
Grades 9 - 10
|
|
30.68 - 100
|
|
|
-
|
|
|
|
-
|
|
|
|
61,845
|
|
|
|
61,845
|
|
|
|
|
|
|
5,602,157
|
|
|
|
228,995
|
|
|
|
61,845
|
|
|
|
5,892,997
|
|
Loss allowance
|
|
|
|
|
(28,892
|
)
|
|
|
(15,842
|
)
|
|
|
(54,573
|
)
|
|
|
(99,307
|
)
|
Total
|
|
|
|
|
5,573,265
|
|
|
|
213,153
|
|
|
|
7,272
|
|
|
|
5,793,690
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
5.
|
Financial risk (continued)
|
|
A.
|
Credit risk (continued)
|
Loan commitments, financial
guarantees issued and customers’ liabilities under acceptances
September 30,
2020
|
|
|
12-month PD
Ranges
|
|
Stage
1
|
|
|
Stage
2
|
|
|
Stage
3
|
|
|
Total
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grades 1 - 4
|
|
0.03 - 0.74
|
|
|
196,997
|
|
|
|
-
|
|
|
|
-
|
|
|
|
196,997
|
|
Grades 5 - 6
|
|
0.75 - 3.95
|
|
|
166,168
|
|
|
|
28,345
|
|
|
|
-
|
|
|
|
194,513
|
|
Grades 7
- 8
|
|
3.96 - 30.67
|
|
|
39,254
|
|
|
|
-
|
|
|
|
-
|
|
|
|
39,254
|
|
|
|
|
|
|
402,419
|
|
|
|
28,345
|
|
|
|
-
|
|
|
|
430,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customers'
liabilities under acceptances
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grades 1 - 4
|
|
0.03 - 0.74
|
|
|
32,761
|
|
|
|
-
|
|
|
|
-
|
|
|
|
32,761
|
|
Grades 5 - 6
|
|
0.75 - 3.95
|
|
|
767
|
|
|
|
-
|
|
|
|
-
|
|
|
|
767
|
|
Grades 7
- 8
|
|
3.96 - 30.67
|
|
|
56,048
|
|
|
|
-
|
|
|
|
-
|
|
|
|
56,048
|
|
|
|
|
|
|
89,576
|
|
|
|
-
|
|
|
|
-
|
|
|
|
89,576
|
|
|
|
|
|
|
491,995
|
|
|
|
28,345
|
|
|
|
-
|
|
|
|
520,340
|
|
Loss
allowance
|
|
|
|
|
(1,789
|
)
|
|
|
(299
|
)
|
|
|
-
|
|
|
|
(2,088
|
)
|
Total
|
|
|
|
|
490,206
|
|
|
|
28,046
|
|
|
|
-
|
|
|
|
518,252
|
|
December 31,
2019
|
|
|
12-month PD
Ranges
|
|
Stage
1
|
|
|
Stage
2
|
|
|
Stage
3
|
|
|
Total
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grades 1 - 4
|
|
0.03 - 0.74
|
|
|
153,874
|
|
|
|
-
|
|
|
|
-
|
|
|
|
153,874
|
|
Grades 5 - 6
|
|
0.75 - 3.95
|
|
|
150,631
|
|
|
|
27,446
|
|
|
|
-
|
|
|
|
178,077
|
|
Grades 7 - 8
|
|
4.13 - 30.43
|
|
|
161,421
|
|
|
|
-
|
|
|
|
-
|
|
|
|
161,421
|
|
|
|
|
|
|
465,926
|
|
|
|
27,446
|
|
|
|
-
|
|
|
|
493,372
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customers' liabilities under acceptances
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grades 1 - 4
|
|
0.03 - 0.74
|
|
|
13,367
|
|
|
|
-
|
|
|
|
-
|
|
|
|
13,367
|
|
Grades 5 - 6
|
|
0.75 - 3.95
|
|
|
5,491
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,491
|
|
Grades 7 - 8
|
|
4.13 - 30.43
|
|
|
96,824
|
|
|
|
-
|
|
|
|
-
|
|
|
|
96,824
|
|
|
|
|
|
|
115,682
|
|
|
|
-
|
|
|
|
-
|
|
|
|
115,682
|
|
|
|
|
|
|
581,608
|
|
|
|
27,446
|
|
|
|
-
|
|
|
|
609,054
|
|
Loss allowance
|
|
|
|
|
(2,683
|
)
|
|
|
(361
|
)
|
|
|
-
|
|
|
|
(3,044
|
)
|
Total
|
|
|
|
|
578,925
|
|
|
|
27,085
|
|
|
|
-
|
|
|
|
606,010
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
5.
|
Financial risk (continued)
|
|
A.
|
Credit risk (continued)
|
Securities at amortized
cost
September 30,
2020
|
|
|
12-month PD
Ranges
|
|
Stage
1
|
|
|
Stage
2
|
|
|
Stage
3
|
|
|
Total
|
|
Grades 1 - 4
|
|
0.03 - 0.74
|
|
|
95,562
|
|
|
|
-
|
|
|
|
-
|
|
|
|
95,562
|
|
Grades 5 - 6
|
|
0.75 - 3.95
|
|
|
25,826
|
|
|
|
-
|
|
|
|
-
|
|
|
|
25,826
|
|
|
|
|
|
|
121,388
|
|
|
|
-
|
|
|
|
-
|
|
|
|
121,388
|
|
Loss allowance
|
|
|
|
|
(301
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(301
|
)
|
Total
|
|
|
|
|
121,087
|
|
|
|
-
|
|
|
|
-
|
|
|
|
121,087
|
|
December 31,
2019
|
|
|
12-month PD
Ranges
|
|
Stage
1
|
|
|
Stage
2
|
|
|
Stage
3
|
|
|
Total
|
|
Grades 1 - 4
|
|
0.03 - 0.74
|
|
|
73,047
|
|
|
|
-
|
|
|
|
-
|
|
|
|
73,047
|
|
Grades 5 - 6
|
|
0.75 - 3.95
|
|
|
-
|
|
|
|
1,500
|
|
|
|
-
|
|
|
|
1,500
|
|
|
|
|
|
|
73,047
|
|
|
|
1,500
|
|
|
|
-
|
|
|
|
74,547
|
|
Loss allowance
|
|
|
|
|
(103
|
)
|
|
|
(10
|
)
|
|
|
-
|
|
|
|
(113
|
)
|
Total
|
|
|
|
|
72,944
|
|
|
|
1,490
|
|
|
|
-
|
|
|
|
74,434
|
|
Securities at fair value
through other comprehensive income (FVOCI)
September 30,
2020
|
|
|
12-month PD
Ranges
|
|
Stage
1
|
|
|
Stage
2
|
|
|
Stage
3
|
|
|
Total
|
|
Grades 1 - 4
|
|
0.03 - 0.74
|
|
|
112,424
|
|
|
|
-
|
|
|
|
-
|
|
|
|
112,424
|
|
|
|
|
|
|
112,424
|
|
|
|
-
|
|
|
|
-
|
|
|
|
112,424
|
|
Loss allowance
|
|
|
|
|
(15
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(15
|
)
|
Total
|
|
|
|
|
112,409
|
|
|
|
-
|
|
|
|
-
|
|
|
|
112,409
|
|
December 31,
2019
|
|
|
12-month PD
Ranges
|
|
Stage
1
|
|
|
Stage
2
|
|
|
Stage
3
|
|
|
Total
|
|
Grades 1 - 4
|
|
0.03 - 0.74
|
|
|
5,094
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,094
|
|
|
|
|
|
|
5,094
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,094
|
|
Loss allowance
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
|
|
|
5,094
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,094
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
5.
|
Financial risk (continued)
|
|
A.
|
Credit risk (continued)
|
The following table presents information of the
current and past due balances of loans in stages 1, 2 and 3:
|
|
September 30,
2020
|
|
|
|
|
|
|
Stage
1
|
|
|
Stage
2
|
|
|
Stage
3
|
|
|
Total
|
|
Current
|
|
|
4,254,155
|
|
|
|
312,100
|
|
|
|
-
|
|
|
|
4,566,255
|
|
|
|
December 31,
2019
|
|
|
|
|
|
|
Stage
1
|
|
|
Stage
2
|
|
|
Stage
3
|
|
|
Total
|
|
Current
|
|
|
5,602,157
|
|
|
|
228,995
|
|
|
|
47,169
|
|
|
|
5,878,321
|
|
Past due
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90-120 days
|
|
|
-
|
|
|
|
-
|
|
|
|
3,724
|
|
|
|
3,724
|
|
151-180 days
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
More than
180 days
|
|
|
-
|
|
|
|
-
|
|
|
|
10,952
|
|
|
|
10,952
|
|
Total past due
|
|
|
-
|
|
|
|
-
|
|
|
|
14,676
|
|
|
|
14,676
|
|
Total
|
|
|
5,602,157
|
|
|
|
228,995
|
|
|
|
61,845
|
|
|
|
5,892,997
|
|
As of September 30, 2020,
and December 31, 2019, other financial assets were no past due or impaired balances.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
|
5.
|
Financial risk (continued)
|
|
A.
|
Credit risk (continued)
|
The following table presents an analysis of counterparty
credit exposures arising from derivative transactions. The Bank's derivative fair values and generally secured by cash.
|
|
September 30, 2020
|
|
|
|
Notional value
USD
|
|
|
Derivative
financial
instrument - fair
value asset
|
|
|
Derivative
financial
instrument - fair
value liabilities
|
|
Interest rate swaps
|
|
|
146,333
|
|
|
|
1,531
|
|
|
|
(2,159
|
)
|
Cross-currency swaps
|
|
|
587,893
|
|
|
|
4,918
|
|
|
|
(30,241
|
)
|
Foreign exchange forwards
|
|
|
68,317
|
|
|
|
494
|
|
|
|
(915
|
)
|
Total
|
|
|
802,543
|
|
|
|
6,943
|
|
|
|
(33,315
|
)
|
|
|
December 31,
2019
|
|
|
|
Notional value
USD
|
|
|
Derivative
financial
instrument - fair
value asset
|
|
|
Derivative
financial
instrument - fair
value liabilities
|
|
Interest rate swaps
|
|
|
521,333
|
|
|
|
407
|
|
|
|
(1,903
|
)
|
Cross-currency swaps
|
|
|
369,869
|
|
|
|
10,125
|
|
|
|
(10,197
|
)
|
Foreign exchange forwards
|
|
|
74,471
|
|
|
|
625
|
|
|
|
(2,575
|
)
|
Total
|
|
|
965,673
|
|
|
|
11,157
|
|
|
|
(14,675
|
)
|
|
ii.
|
Collateral and other credit enhancements
|
The amount and type of collateral
required depends on an assessment of the credit risk of the counterparty. Guidelines are in place covering the acceptability and
valuation of each type of collateral.
Derivatives and repurchase
agreements
In the ordinary course of business,
the Bank enters into derivative financial instrument transactions and securities sold under repurchase agreements under industry
standards agreements. Depending on the collateral requirements stated in the contracts, the Bank and counterparties can receive
or deliver collateral based on the fair value of the financial instruments transacted between parties. Collateral typically consists
of pledged cash deposits and securities. The master netting agreements include clauses that, in the event of default, provide for
close-out netting, which allows all positions with the defaulting counterparty to be terminated and net settled with a single payment
amount.
The International Swaps and
Derivatives Association master agreement (“ISDA”) and similar master netting arrangements do not meet the criteria
for offsetting in the consolidated statement of financial position. This is because they create for the parties to the agreement
a right of set-off of recognized amounts that is enforceable only following an event of default, insolvency or bankruptcy of the
Bank or the counterparties or following other predetermined events.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
5.
|
Financial risk (continued)
|
|
A.
|
Credit risk (continued)
|
Such arrangements provide for
single net settlement of all financial instruments covered by the agreements in the event of default on any one contract. Master
netting arrangements do not normally result in an offset of balance–sheet assets and liabilities unless certain conditions
for offsetting are met.
Although master netting arrangements
may significantly reduce credit risk, it should be noted that:
|
-
|
Credit risk is eliminated only to the extent that amounts due to the same counterparty will be
settled after the assets are realized.
|
|
-
|
The extent to which overall credit risk is reduced may change substantially within a short period
because the exposure is affected by each transaction subject to the arrangement.
|
Loans
The main types of collateral
obtained are, as follows:
|
-
|
For commercial lending, liens on real estate property, inventory and trade receivables.
|
The Bank also obtains guarantees
from parent companies for loans to their subsidiaries. Management monitors the market value of collateral and will request additional
collateral in accordance with the underlying agreement. It is the Bank’s policy to dispose of repossessed property in an
orderly fashion. The proceeds are used to reduce or repay the outstanding claim. In general, the Bank does not occupy repossessed
property for business use.
The Bank holds guarantees and
other financial credit enhancements against certain exposures in the loan portfolio. As of September 30, 2020, and December 31,
2019, the coverage ratio to the carrying amount of the loan portfolio was 12% and 12% respectively.
|
iii.
|
Implementation of forward-looking information
|
The Bank incorporates information
of the economic environments on a forward-looking view, when assessing whether the credit risk of a financial instrument has significantly
increased, since initial recognition through customer and country rating models which include projections of the inputs under analysis.
Supplementary, for the expected
credit loss measurement the results of the “alert model” can be considered, which are analyzed through a severity
indicator to total risk resulting from the estimates and assumptions of several macroeconomics factors. These estimates and assumptions
are supported by a base scenario associated to a probability of occurrence of 95%. Other scenarios represent optimistic and pessimistic
results. The implementation and interpretation of the outcomes of the alert are based on the expert judgement of management, based
on suggestions of areas such as Credit Risk, Economic Studies and Loan Recovery of the Bank.
The external information could
include economic data and projections published by governmental committees, monetary agencies (e.g., Federal Reserve Bank and from
countries where the Bank operates), supranational organizations (International Monetary Fund, The World Bank, World Trade
Organization), private sector, academic projections, credit rating agencies, among other.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
|
5.
|
Financial risk (continued)
|
|
A.
|
Credit risk (continued)
|
Principal macroeconomies variables
of the country rating model with forward-looking scenarios are:
Variables
|
Description
|
|
|
GDP Growth (Var. %)
|
% Variation in the growth of the Gross Domestic Product (GDP)
|
|
|
ComEx Growth (Var. %)
|
% Variation in foreign trade growth (Exp. + Imp.)
|
The model uses, as main inputs,
the following macroeconomic variables: the percentage variation of the gross domestic product of Latin America and the percentage
of the foreign trade index growth. The main movements and changes in the variables are analyzed, in general and in particular for
each country in the region. This historical and projected information over a period of five years allows Management a complementary
means to estimate the macroeconomic effects in the Bank's portfolio.
The table below lists the macroeconomic
assumptions by country used in the base, optimistic and pessimistic scenarios over the five-year forecasted average available for
each reporting period.
|
|
|
|
Variable
|
|
|
|
|
|
GDP Growth (Var.%)
|
|
|
ComEx Growth Index (Var.%)
|
|
Country
|
|
Scenario
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
|
|
Central
|
|
|
0.8
|
%
|
|
|
2.1
|
%
|
|
|
3.5
|
%
|
|
|
4.0
|
%
|
Brazil
|
|
Upside
|
|
|
1.8
|
%
|
|
|
3.1
|
%
|
|
|
7.0
|
%
|
|
|
7.5
|
%
|
|
|
Downside
|
|
|
-0.6
|
%
|
|
|
0.7
|
%
|
|
|
-0.5
|
%
|
|
|
0.0
|
%
|
|
|
Central
|
|
|
1.6
|
%
|
|
|
3.4
|
%
|
|
|
3.0
|
%
|
|
|
5.5
|
%
|
Colombia
|
|
Upside
|
|
|
2.7
|
%
|
|
|
4.5
|
%
|
|
|
6.0
|
%
|
|
|
8.5
|
%
|
|
|
Downside
|
|
|
0.3
|
%
|
|
|
2.1
|
%
|
|
|
-0.5
|
%
|
|
|
2.0
|
%
|
|
|
Central
|
|
|
-0.2
|
%
|
|
|
1.3
|
%
|
|
|
1.8
|
%
|
|
|
2.5
|
%
|
Mexico
|
|
Upside
|
|
|
0.8
|
%
|
|
|
2.3
|
%
|
|
|
5.8
|
%
|
|
|
6.5
|
%
|
|
|
Downside
|
|
|
-1.4
|
%
|
|
|
0.1
|
%
|
|
|
-2.7
|
%
|
|
|
-2.0
|
%
|
|
|
Central
|
|
|
1.7
|
%
|
|
|
2.2
|
%
|
|
|
4.9
|
%
|
|
|
2.7
|
%
|
Chile
|
|
Upside
|
|
|
2.8
|
%
|
|
|
3.3
|
%
|
|
|
8.4
|
%
|
|
|
6.2
|
%
|
|
|
Downside
|
|
|
0.5
|
%
|
|
|
1.0
|
%
|
|
|
0.9
|
%
|
|
|
-1.3
|
%
|
|
|
Central
|
|
|
1.8
|
%
|
|
|
3.4
|
%
|
|
|
3.9
|
%
|
|
|
5.4
|
%
|
Guatemala
|
|
Upside
|
|
|
2.8
|
%
|
|
|
4.4
|
%
|
|
|
6.9
|
%
|
|
|
8.4
|
%
|
|
|
Downside
|
|
|
0.6
|
%
|
|
|
2.2
|
%
|
|
|
0.4
|
%
|
|
|
1.9
|
%
|
|
|
Central
|
|
|
1.6
|
%
|
|
|
2.8
|
%
|
|
|
4.9
|
%
|
|
|
5.7
|
%
|
Costa Rica
|
|
Upside
|
|
|
2.6
|
%
|
|
|
3.8
|
%
|
|
|
8.4
|
%
|
|
|
9.2
|
%
|
|
|
Downside
|
|
|
0.3
|
%
|
|
|
1.5
|
%
|
|
|
0.9
|
%
|
|
|
1.7
|
%
|
|
|
Central
|
|
|
2.2
|
%
|
|
|
4.3
|
%
|
|
|
2.3
|
%
|
|
|
3.8
|
%
|
Panama
|
|
Upside
|
|
|
3.7
|
%
|
|
|
5.8
|
%
|
|
|
5.3
|
%
|
|
|
6.8
|
%
|
|
|
Downside
|
|
|
0.8
|
%
|
|
|
2.9
|
%
|
|
|
-1.2
|
%
|
|
|
0.3
|
%
|
|
|
Central
|
|
|
2.9
|
%
|
|
|
4.5
|
%
|
|
|
4.2
|
%
|
|
|
5.7
|
%
|
Dominican
|
|
Upside
|
|
|
4.1
|
%
|
|
|
5.7
|
%
|
|
|
7.7
|
%
|
|
|
9.2
|
%
|
Republic
|
|
Downside
|
|
|
1.6
|
%
|
|
|
3.2
|
%
|
|
|
0.2
|
%
|
|
|
1.7
|
%
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
|
5.
|
Financial risk (continued)
|
|
A.
|
Credit risk (continued)
|
The following tables show reconciliations
from the opening to the closing balance of the loss allowance by class of financial instrument.
Loans
|
|
Stage 1
|
|
|
Stage 2
|
|
|
Stage 3
|
|
|
Total
|
|
Allowance for expected credit losses as of December 31, 2019
|
|
|
28,892
|
|
|
|
15,842
|
|
|
|
54,573
|
|
|
|
99,307
|
|
Transfer to lifetime expected credit losses
|
|
|
(903
|
)
|
|
|
903
|
|
|
|
-
|
|
|
|
-
|
|
Net effect of changes in allowance for expected credit losses
|
|
|
120
|
|
|
|
12,660
|
|
|
|
(2,584
|
)
|
|
|
10,196
|
|
Financial instruments that have been derecognized during the period
|
|
|
(20,642
|
)
|
|
|
(1,105
|
)
|
|
|
-
|
|
|
|
(21,747
|
)
|
New financial assets originated or purchased
|
|
|
11,151
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,151
|
|
Write-offs
|
|
|
-
|
|
|
|
(4,426
|
)
|
|
|
(52,106
|
)
|
|
|
(56,532
|
)
|
Recoveries
|
|
|
-
|
|
|
|
-
|
|
|
|
117
|
|
|
|
117
|
|
Allowance for expected credit losses as of September 30, 2020
|
|
|
18,618
|
|
|
|
23,874
|
|
|
|
-
|
|
|
|
42,492
|
|
|
|
Stage 1
|
|
|
Stage 2
|
|
|
Stage 3
|
|
|
Total
|
|
Allowance for expected credit losses as of December 31, 2018
|
|
|
34,957
|
|
|
|
16,389
|
|
|
|
49,439
|
|
|
|
100,785
|
|
Transfer to lifetime expected credit losses
|
|
|
(2,488
|
)
|
|
|
2,488
|
|
|
|
-
|
|
|
|
-
|
|
Net effect of changes in allowance for expected credit losses
|
|
|
(2,154
|
)
|
|
|
5,881
|
|
|
|
7,987
|
|
|
|
11,714
|
|
Financial instruments that have been derecognized during the year
|
|
|
(27,118
|
)
|
|
|
(8,916
|
)
|
|
|
(500
|
)
|
|
|
(36,534
|
)
|
New financial assets originated or purchased
|
|
|
25,695
|
|
|
|
-
|
|
|
|
-
|
|
|
|
25,695
|
|
Write-offs
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,405
|
)
|
|
|
(2,405
|
)
|
Recoveries
|
|
|
-
|
|
|
|
-
|
|
|
|
52
|
|
|
|
52
|
|
Allowance for expected credit losses as of December 31, 2019
|
|
|
28,892
|
|
|
|
15,842
|
|
|
|
54,573
|
|
|
|
99,307
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
|
5.
|
Financial risk (continued)
|
|
A.
|
Credit risk (continued)
|
Loan commitments, financial
guarantee contracts and customers’ liabilities under acceptances
The allowance for expected credit
losses on loan commitments and financial guarantee contracts reflects the Bank’s management estimate expected credit losses
of customers’ liabilities under acceptances and items such as: confirmed letters of credit, stand-by letters of credit, guarantees,
and credit commitments.
|
|
Stage 1
|
|
|
Stage 2
|
|
|
Stage 3
|
|
|
Total
|
|
Allowance for expected credit losses as of December 31, 2019
|
|
|
2,683
|
|
|
|
361
|
|
|
|
-
|
|
|
|
3,044
|
|
Transfer to lifetime expected credit losses
|
|
|
(79
|
)
|
|
|
79
|
|
|
|
-
|
|
|
|
-
|
|
Net effect of changes in reserve for expected credit loss
|
|
|
11
|
|
|
|
(120
|
)
|
|
|
-
|
|
|
|
(109
|
)
|
Financial instruments that have been derecognized during the period
|
|
|
(1,776
|
)
|
|
|
(21
|
)
|
|
|
-
|
|
|
|
(1,797
|
)
|
New instruments originated or purchased
|
|
|
950
|
|
|
|
-
|
|
|
|
-
|
|
|
|
950
|
|
Allowance for expected credit losses as of September 30, 2020
|
|
|
1,789
|
|
|
|
299
|
|
|
|
-
|
|
|
|
2,088
|
|
|
|
Stage 1
|
|
|
Stage 2
|
|
|
Stage 3
|
|
|
Total
|
|
Allowance for expected credit losses as of December 31, 2018
|
|
|
3,089
|
|
|
|
200
|
|
|
|
-
|
|
|
|
3,289
|
|
Net effect of changes in reserve for expected credit loss
|
|
|
(17
|
)
|
|
|
170
|
|
|
|
-
|
|
|
|
153
|
|
Financial instruments that have been derecognized during the year
|
|
|
(2,497
|
)
|
|
|
(9
|
)
|
|
|
-
|
|
|
|
(2,506
|
)
|
New instruments originated or purchased
|
|
|
2,108
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,108
|
|
Allowance for expected credit losses as of December 31, 2019
|
|
|
2,683
|
|
|
|
361
|
|
|
|
-
|
|
|
|
3,044
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
|
5.
|
Financial risk (continued)
|
|
A.
|
Credit risk (continued)
|
Securities at amortized cost
|
|
Stage 1
|
|
|
Stage 2
|
|
|
Stage 3
|
|
|
Total
|
|
Allowance for expected credit losses as of December 31, 2019
|
|
|
103
|
|
|
|
10
|
|
|
|
-
|
|
|
|
113
|
|
Net effect of changes in allowance for expected credit losses
|
|
|
22
|
|
|
|
-
|
|
|
|
-
|
|
|
|
22
|
|
Financial instruments that have been derecognized during the period
|
|
|
(66
|
)
|
|
|
(10
|
)
|
|
|
-
|
|
|
|
(76
|
)
|
New financial assets originated or purchased
|
|
|
242
|
|
|
|
-
|
|
|
|
-
|
|
|
|
242
|
|
Allowance for expected credit losses as of September 30, 2020
|
|
|
301
|
|
|
|
-
|
|
|
|
-
|
|
|
|
301
|
|
|
|
Stage 1
|
|
|
Stage 2
|
|
|
Stage 3
|
|
|
Total
|
|
Allowance for expected credit losses as of December 31, 2018
|
|
|
113
|
|
|
|
27
|
|
|
|
-
|
|
|
|
140
|
|
Net effect of changes in allowance for expected credit losses
|
|
|
(1
|
)
|
|
|
(17
|
)
|
|
|
-
|
|
|
|
(18
|
)
|
Financial instruments that have been derecognized during the year
|
|
|
(46
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(46
|
)
|
New financial assets originated or purchased
|
|
|
37
|
|
|
|
-
|
|
|
|
-
|
|
|
|
37
|
|
Allowance for expected credit losses as of December 31, 2019
|
|
|
103
|
|
|
|
10
|
|
|
|
-
|
|
|
|
113
|
|
Securities at fair value
through other comprehensive income (FVOCI)
|
|
Stage 1
|
|
|
Stage 2
|
|
|
Stage 3
|
|
|
Total
|
|
Allowance for expected credit losses as of December 31, 2018
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Financial instruments that have been derecognized during the year
|
|
|
15
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15
|
|
Allowance for expected credit losses as of December 31, 2019
|
|
|
15
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
|
5.
|
Financial risk (continued)
|
|
A.
|
Credit risk (continued)
|
Securities at fair value
through other comprehensive income (FVOCI)
|
|
Stage 1
|
|
|
Stage 2
|
|
|
Stage 3
|
|
|
Total
|
|
Allowance for expected credit losses as of December 31, 2018
|
|
|
33
|
|
|
|
140
|
|
|
|
-
|
|
|
|
173
|
|
Financial instruments that have been derecognized during the year
|
|
|
(33
|
)
|
|
|
(140
|
)
|
|
|
-
|
|
|
|
(173
|
)
|
Allowance for expected credit losses as of December 31, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
The following table provides
a reconciliation between:
|
-
|
Amounts shown in the previous tables reconciling opening and closing balances of loss allowance
per class of financial instrument; and
|
|
-
|
The ‘reversal (provision) for credit losses’ line item in the condensed consolidated
interim statement of profit or loss and other comprehensive income.
|
|
|
|
|
|
Loan commitments
|
|
|
Securities
|
|
|
|
|
September 30, 2020
|
|
Loans
|
|
|
and financial
guarantee contracts
|
|
|
At amortized cost
|
|
|
FVOCI
|
|
|
Total
|
|
Net effect of changes in allowance for expected credit losses
|
|
|
10,196
|
|
|
|
(109
|
)
|
|
|
22
|
|
|
|
-
|
|
|
|
10,109
|
|
Financial instruments that have been derecognized during the year
|
|
|
(21,747
|
)
|
|
|
(1,797
|
)
|
|
|
(76
|
)
|
|
|
-
|
|
|
|
(23,620
|
)
|
New financial assets originated or purchased
|
|
|
11,151
|
|
|
|
950
|
|
|
|
242
|
|
|
|
15
|
|
|
|
12,358
|
|
Total
|
|
|
(400
|
)
|
|
|
(956
|
)
|
|
|
188
|
|
|
|
15
|
|
|
|
(1,153
|
)
|
|
|
|
|
|
Loan commitments
|
|
|
Securities
|
|
|
|
|
September 30, 2019
|
|
Loans
|
|
|
and financial
guarantee contracts
|
|
|
At amortized cost
|
|
|
FVOCI
|
|
|
Total
|
|
Net effect of changes in allowance for expected credit losses
|
|
|
11,366
|
|
|
|
(24
|
)
|
|
|
(8
|
)
|
|
|
2
|
|
|
|
11,336
|
|
Financial instruments that have been derecognized during the year
|
|
|
(31,715
|
)
|
|
|
(2,496
|
)
|
|
|
(34
|
)
|
|
|
(33
|
)
|
|
|
(34,278
|
)
|
New financial assets originated or purchased
|
|
|
23,366
|
|
|
|
1,906
|
|
|
|
35
|
|
|
|
-
|
|
|
|
25,307
|
|
Total
|
|
|
3,017
|
|
|
|
(614
|
)
|
|
|
(7
|
)
|
|
|
(31
|
)
|
|
|
2,365
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
|
5.
|
Financial risk (continued)
|
|
A.
|
Credit risk (continued)
|
|
v.
|
Credit-impaired financial assets
|
Credit-impaired loans and advances are graded 8 to
10 in the Bank’s internal credit risk grading system.
The following table sets out a reconciliation of
changes in the net carrying amount of credit-impaired loans.
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Credit-impaired loans and advances at beginning of period
|
|
|
54,573
|
|
|
|
49,439
|
|
Change in expected credit losses allowance
|
|
|
(2,859
|
)
|
|
|
7,164
|
|
Recoveries of amounts previously written off
|
|
|
117
|
|
|
|
52
|
|
Interest income
|
|
|
275
|
|
|
|
323
|
|
Write-offs
|
|
|
(52,106
|
)
|
|
|
(2,405
|
)
|
Credit-impaired loans and advances at end of period
|
|
|
-
|
|
|
|
54,573
|
|
During the period ended September 30,
2020, the sale of the outstanding credit-impaired loan in Stage 3, classified at amortized cost, was made at $11.6 million. This
sale resulted in a write off against the credit loss allowance of $ 52.1 million.
|
vi.
|
Concentrations of credit risk
|
The Bank monitors concentrations of credit risk by
sector, industry and by country. An analysis of concentrations of credit risk from loans, loan commitments, financial guarantees
and investment securities is as follows.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
5.
|
Financial risk (continued)
|
|
A.
|
Credit risk (continued)
|
Concentration by sector and industry
|
|
|
|
|
|
|
|
Loan commitments and
|
|
|
Securities
|
|
|
|
Loans
|
|
|
financial
guarantee contracts
|
|
|
At
amortized cost
|
|
|
FVOCI
|
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Carrying amount
- principal
|
|
|
4,566,255
|
|
|
|
5,892,997
|
|
|
|
89,576
|
|
|
|
115,682
|
|
|
|
121,388
|
|
|
|
74,547
|
|
|
|
112,424
|
|
|
|
5,094
|
|
Amount committed/guaranteed
|
|
|
-
|
|
|
|
-
|
|
|
|
430,764
|
|
|
|
493,372
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Concentration by
sector
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private
|
|
|
1,413,682
|
|
|
|
1,782,808
|
|
|
|
264,100
|
|
|
|
213,161
|
|
|
|
30,553
|
|
|
|
2,998
|
|
|
|
40,488
|
|
|
|
-
|
|
State-owned
|
|
|
632,828
|
|
|
|
780,491
|
|
|
|
63,352
|
|
|
|
69,822
|
|
|
|
30,115
|
|
|
|
23,792
|
|
|
|
-
|
|
|
|
-
|
|
Financial institutions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private
|
|
|
2,056,018
|
|
|
|
2,692,787
|
|
|
|
65,824
|
|
|
|
75,130
|
|
|
|
22,380
|
|
|
|
19,276
|
|
|
|
15,122
|
|
|
|
-
|
|
State-owned
|
|
|
422,409
|
|
|
|
589,690
|
|
|
|
127,064
|
|
|
|
250,941
|
|
|
|
18,084
|
|
|
|
-
|
|
|
|
51,689
|
|
|
|
-
|
|
Sovereign
|
|
|
41,318
|
|
|
|
47,221
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,256
|
|
|
|
28,481
|
|
|
|
5,125
|
|
|
|
5,094
|
|
Total
|
|
|
4,566,255
|
|
|
|
5,892,997
|
|
|
|
520,340
|
|
|
|
609,054
|
|
|
|
121,388
|
|
|
|
74,547
|
|
|
|
112,424
|
|
|
|
5,094
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Concentration by
industry
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial institutions
|
|
|
2,478,427
|
|
|
|
3,282,477
|
|
|
|
192,888
|
|
|
|
326,071
|
|
|
|
40,464
|
|
|
|
19,276
|
|
|
|
66,811
|
|
|
|
-
|
|
Industrial
|
|
|
811,254
|
|
|
|
925,375
|
|
|
|
142,372
|
|
|
|
143,560
|
|
|
|
39,671
|
|
|
|
21,658
|
|
|
|
40,488
|
|
|
|
-
|
|
Oil and petroleum derived
products
|
|
|
432,099
|
|
|
|
561,068
|
|
|
|
81,571
|
|
|
|
71,571
|
|
|
|
20,997
|
|
|
|
5,132
|
|
|
|
-
|
|
|
|
-
|
|
Agricultural
|
|
|
307,409
|
|
|
|
327,288
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Services
|
|
|
290,051
|
|
|
|
370,753
|
|
|
|
73,064
|
|
|
|
20,497
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Mining
|
|
|
82,369
|
|
|
|
162,364
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Sovereign
|
|
|
41,318
|
|
|
|
47,221
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,256
|
|
|
|
28,481
|
|
|
|
5,125
|
|
|
|
5,094
|
|
Other
|
|
|
123,328
|
|
|
|
216,451
|
|
|
|
30,445
|
|
|
|
47,355
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
|
4,566,255
|
|
|
|
5,892,997
|
|
|
|
520,340
|
|
|
|
609,054
|
|
|
|
121,388
|
|
|
|
74,547
|
|
|
|
112,424
|
|
|
|
5,094
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
5.
|
Financial risk (continued)
|
|
A.
|
Credit risk (continued)
|
Risk rating and concentration by country
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
Loans
|
|
|
Loan commitments and financial guarantee contracts
|
|
|
At amortized cost
|
|
|
FVOCI
|
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Carrying amount - principal
|
|
|
4,566,255
|
|
|
|
5,892,997
|
|
|
|
89,576
|
|
|
|
115,682
|
|
|
|
121,388
|
|
|
|
74,547
|
|
|
|
112,424
|
|
|
|
5,094
|
|
Amount committed/guaranteed
|
|
|
-
|
|
|
|
-
|
|
|
|
430,764
|
|
|
|
493,372
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rating
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4
|
|
|
2,347,105
|
|
|
|
2,928,401
|
|
|
|
229,758
|
|
|
|
167,241
|
|
|
|
95,562
|
|
|
|
73,047
|
|
|
|
112,424
|
|
|
|
5,094
|
|
5-6
|
|
|
1,886,864
|
|
|
|
2,415,323
|
|
|
|
195,280
|
|
|
|
183,568
|
|
|
|
25,826
|
|
|
|
1,500
|
|
|
|
-
|
|
|
|
-
|
|
7-8
|
|
|
332,286
|
|
|
|
487,428
|
|
|
|
95,302
|
|
|
|
258,245
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
10
|
|
|
-
|
|
|
|
61,845
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
|
4,566,255
|
|
|
|
5,892,997
|
|
|
|
520,340
|
|
|
|
609,054
|
|
|
|
121,388
|
|
|
|
74,547
|
|
|
|
112,424
|
|
|
|
5,094
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Concentration by country
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Argentina
|
|
|
145,767
|
|
|
|
226,481
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Belgium
|
|
|
12,723
|
|
|
|
13,742
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Bolivia
|
|
|
5,000
|
|
|
|
7,000
|
|
|
|
2,850
|
|
|
|
400
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Brazil
|
|
|
838,288
|
|
|
|
1,015,316
|
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
25,825
|
|
|
|
1,500
|
|
|
|
-
|
|
|
|
-
|
|
Canada
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
657
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Chile
|
|
|
504,226
|
|
|
|
683,132
|
|
|
|
-
|
|
|
|
8
|
|
|
|
1,033
|
|
|
|
-
|
|
|
|
5,125
|
|
|
|
5,094
|
|
Colombia
|
|
|
652,106
|
|
|
|
906,092
|
|
|
|
50,333
|
|
|
|
50,610
|
|
|
|
30,099
|
|
|
|
15,338
|
|
|
|
-
|
|
|
|
-
|
|
Costa Rica
|
|
|
144,723
|
|
|
|
220,380
|
|
|
|
32,893
|
|
|
|
59,161
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Dominican Republic
|
|
|
177,746
|
|
|
|
289,853
|
|
|
|
16,500
|
|
|
|
16,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Ecuador
|
|
|
70,158
|
|
|
|
174,267
|
|
|
|
103,850
|
|
|
|
252,391
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
El Salvador
|
|
|
45,000
|
|
|
|
54,233
|
|
|
|
1,061
|
|
|
|
5,555
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
France
|
|
|
112,370
|
|
|
|
152,530
|
|
|
|
68,890
|
|
|
|
47,906
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Germany
|
|
|
31,951
|
|
|
|
34,613
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Guatemala
|
|
|
275,650
|
|
|
|
278,557
|
|
|
|
43,845
|
|
|
|
44,200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Honduras
|
|
|
61,790
|
|
|
|
128,937
|
|
|
|
345
|
|
|
|
300
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Hong Kong
|
|
|
1,500
|
|
|
|
10,400
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Jamaica
|
|
|
28,622
|
|
|
|
38,312
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Luxembourg
|
|
|
50,000
|
|
|
|
59,813
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Mexico
|
|
|
574,620
|
|
|
|
754,465
|
|
|
|
20,055
|
|
|
|
27,377
|
|
|
|
44,042
|
|
|
|
21,505
|
|
|
|
-
|
|
|
|
-
|
|
Panama
|
|
|
278,639
|
|
|
|
268,356
|
|
|
|
53,113
|
|
|
|
25,304
|
|
|
|
8,299
|
|
|
|
36,204
|
|
|
|
-
|
|
|
|
-
|
|
Paraguay
|
|
|
96,296
|
|
|
|
127,970
|
|
|
|
11,870
|
|
|
|
10,652
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Peru
|
|
|
123,773
|
|
|
|
150,301
|
|
|
|
12,245
|
|
|
|
8,033
|
|
|
|
12,090
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Singapore
|
|
|
93,000
|
|
|
|
90,955
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Switzerland
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Trinidad and Tobago
|
|
|
176,898
|
|
|
|
181,676
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
United States of America
|
|
|
55,000
|
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50,780
|
|
|
|
-
|
|
United Kingdom
|
|
|
10,409
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Uruguay
|
|
|
-
|
|
|
|
619
|
|
|
|
27,490
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Multinational
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
56,519
|
|
|
|
-
|
|
Total
|
|
|
4,566,255
|
|
|
|
5,892,997
|
|
|
|
520,340
|
|
|
|
609,054
|
|
|
|
121,388
|
|
|
|
74,547
|
|
|
|
112,424
|
|
|
|
5,094
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
5.
|
Financial risk (continued)
|
|
A.
|
Credit risk (continued)
|
|
vii.
|
Offsetting financial assets and liabilities
|
The following tables include
financial assets and liabilities that are offset in the condensed consolidated interim financial statement or subject to an enforceable
master netting arrangement:
|
a)
|
Derivative financial instruments – assets
|
September 30, 2020
|
|
|
|
|
|
|
|
|
Gross amounts
|
|
|
Net amount of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
offset in the
|
|
|
assets presented
|
|
Gross amounts not offset in the
|
|
|
|
|
|
|
|
|
|
consolidated
|
|
|
in the
|
|
consolidated statement of
|
|
|
|
|
|
|
Gross
|
|
|
statement of
|
|
|
consolidated
|
|
financial position
|
|
|
|
|
|
|
amounts of
|
|
|
financial
|
|
|
statement of
|
|
Financial
|
|
|
Cash collateral
|
|
|
|
|
Description
|
|
assets
|
|
|
position
|
|
|
financial position
|
|
instruments
|
|
|
received
|
|
|
Net Amount
|
|
Derivative financial instruments used for hedging
|
|
|
6,943
|
|
|
|
-
|
|
|
6,943
|
|
|
-
|
|
|
|
(2,766
|
)
|
|
|
4,177
|
|
Total
|
|
|
6,943
|
|
|
|
-
|
|
|
6,943
|
|
|
-
|
|
|
|
(2,766
|
)
|
|
|
4,177
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
Gross amounts
|
|
|
Net amount of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
offset in the
|
|
|
assets presented
|
|
Gross amounts not offset in the
|
|
|
|
|
|
|
|
|
|
consolidated
|
|
|
in the
|
|
consolidated statement of
|
|
|
|
|
|
|
Gross
|
|
|
statement of
|
|
|
consolidated
|
|
financial position
|
|
|
|
|
|
|
amounts of
|
|
|
financial
|
|
|
statement of
|
|
Financial
|
|
|
Cash collateral
|
|
|
|
|
Description
|
|
assets
|
|
|
position
|
|
|
financial position
|
|
instruments
|
|
|
received
|
|
|
Net Amount
|
|
Derivative financial instruments used for hedging
|
|
|
11,157
|
|
|
|
-
|
|
|
11,157
|
|
|
-
|
|
|
|
(9,350
|
)
|
|
|
1,807
|
|
Total
|
|
|
11,157
|
|
|
|
-
|
|
|
11,157
|
|
|
-
|
|
|
|
(9,350
|
)
|
|
|
1,807
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited
condensed consolidated interim financial statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
5.
|
Financial risk (continued)
|
|
A.
|
Credit risk (continued)
|
|
b)
|
Securities sold under repurchase and derivative financial instruments – liabilities
|
September 30, 2020
|
|
|
|
|
|
|
|
|
Net amount of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross amounts
|
|
|
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
offset in the
|
|
|
presented
|
|
|
Gross amounts not offset in the
|
|
|
|
|
|
|
|
|
|
consolidated
|
|
|
in the
|
|
|
consolidated statement of
|
|
|
|
|
|
|
Gross
|
|
|
statement of
|
|
|
consolidated
|
|
|
financial position
|
|
|
|
|
|
|
amounts of
|
|
|
financial
|
|
|
statement of
|
|
|
Financial
|
|
|
Cash collateral
|
|
|
Net
|
|
Description
|
|
liabilities
|
|
|
position
|
|
|
financial position
|
|
|
instruments
|
|
|
pledged
|
|
|
Amount
|
|
Securities sold under repurchase agreements
|
|
|
(10,663
|
)
|
|
|
-
|
|
|
|
(10,663
|
)
|
|
|
12,040
|
|
|
|
18
|
|
|
|
1,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments used for hedging
|
|
|
(33,315
|
)
|
|
|
-
|
|
|
|
(33,315
|
)
|
|
|
-
|
|
|
|
24,476
|
|
|
|
(8,839
|
)
|
Total
|
|
|
(43,978
|
)
|
|
|
-
|
|
|
|
(43,978
|
)
|
|
|
12,040
|
|
|
|
24,494
|
|
|
|
(7,444
|
)
|
December 31, 2019
|
|
|
|
|
|
|
|
|
Net amount of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross amounts
|
|
|
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
offset in the
|
|
|
presented
|
|
|
Gross amounts not offset in the
|
|
|
|
|
|
|
|
|
|
consolidated
|
|
|
in the
|
|
|
consolidated statement of
|
|
|
|
|
|
|
Gross
|
|
|
statement of
|
|
|
consolidated
|
|
|
financial position
|
|
|
|
|
|
|
amounts of
|
|
|
financial
|
|
|
statement of
|
|
|
Financial
|
|
|
Cash collateral
|
|
|
Net
|
|
Description
|
|
liabilities
|
|
|
position
|
|
|
financial position
|
|
|
instruments
|
|
|
pledged
|
|
|
Amount
|
|
Securities sold under repurchase agreements
|
|
|
(40,530
|
)
|
|
|
-
|
|
|
|
(40,530
|
)
|
|
|
41,937
|
|
|
|
320
|
|
|
|
1,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments used for hedging
|
|
|
(14,675
|
)
|
|
|
-
|
|
|
|
(14,675
|
)
|
|
|
-
|
|
|
|
14,632
|
|
|
|
(43
|
)
|
Total
|
|
|
(55,205
|
)
|
|
|
-
|
|
|
|
(55,205
|
)
|
|
|
41,937
|
|
|
|
14,952
|
|
|
|
1,683
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
5.
|
Financial risk (continued)
|
|
i.
|
Exposure to liquidity risk
|
The key measure used by the
Bank for managing liquidity risk is the ratio of net liquid assets to deposits from customers and short-term funding. For this
purpose, ‘net liquid assets’ includes cash and cash equivalents which consist of deposits from banks and customers,
as well as corporate debt securities rated A- or above.
The following table details
the Bank's liquidity ratios, described in the previous paragraph, for the period ended on September 30, 2020 and for the year
ended December 31, 2019, respectively:
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
At the end of the period
|
|
|
166.69
|
%
|
|
|
52.48
|
%
|
Period average
|
|
|
115.84
|
%
|
|
|
37.82
|
%
|
Maximum of the period
|
|
|
234.38
|
%
|
|
|
53.38
|
%
|
Minimum of the period
|
|
|
53.26
|
%
|
|
|
23.23
|
%
|
The following table include
the Bank’s liquid assets by geographical location:
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
(in millions of USD dollars)
|
|
Cash
and due from banks
|
|
|
Securities
FVOCI
|
|
|
Total
|
|
|
Cash
and due from banks
|
|
United State of America
|
|
|
1,261
|
|
|
|
51
|
|
|
|
1,312
|
|
|
|
1,132
|
|
Other O.E.C.D countries
|
|
|
25
|
|
|
|
-
|
|
|
|
25
|
|
|
|
4
|
|
Latin America
|
|
|
21
|
|
|
|
-
|
|
|
|
21
|
|
|
|
4
|
|
Other countries
|
|
|
50
|
|
|
|
-
|
|
|
|
50
|
|
|
|
20
|
|
Multinational
|
|
|
-
|
|
|
|
57
|
|
|
|
57
|
|
|
|
-
|
|
Total
|
|
|
1,357
|
|
|
|
108
|
|
|
|
1,465
|
|
|
|
1,160
|
|
The following table includes
the Bank’s demand deposits from customers and its ratio to total deposits from customers:
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
(in millions of USD dollars)
|
|
|
|
|
|
|
|
|
Demand liabilities and "overnight"
|
|
|
835
|
|
|
|
86
|
|
% Demand liabilities and "overnight" of total deposits
|
|
|
27.32
|
%
|
|
|
2.97
|
%
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
5.
|
Financial risk (continued)
|
|
B.
|
Liquidity risk (continued)
|
The liquidity requirements resulting
from the Bank’s demand deposits from customers is satisfied by the Bank’s liquid assets as follows:
(in millions of USD dollars)
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Total liquid assets
|
|
|
1,465
|
|
|
|
1,160
|
|
% Total assets of total liabilities
|
|
|
47.95
|
%
|
|
|
40.15
|
%
|
% Total liquid assets in the U.S. Federal
|
|
|
|
|
|
|
|
|
Reserve
|
|
|
96.84
|
%
|
|
|
97.37
|
%
|
The remaining liquid assets
were composed of short-term deposits in other banks.
Even though the average term
of the Bank's assets exceeds the average term of its liabilities, the associated liquidity risk is diminished by the short-term
nature of a significant portion of the loan portfolio, since the Bank is primarily engaged in financing foreign trade.
The following table includes
the carrying amount for the Bank’s loans and securities short-term portfolio with maturity within one year based on their
original contractual term together with its average remaining term:
(in millions of USD dollars)
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Loan portfolio and investment portfolio less than/equal to 1 year according to its original term
|
|
|
2,625
|
|
|
|
3,485
|
|
Average term (days)
|
|
|
285
|
|
|
|
189
|
|
The following table includes
the carrying amount for the Bank’s loans and securities medium term portfolio with maturity based over one year based on
their original contractual term together with its average remaining term:
(in millions of USD dollars)
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Loan portfolio and investment portfolio less than/equal to 1 year according to its original term
|
|
|
2,179
|
|
|
|
2,497
|
|
Average term (days)
|
|
|
1,301
|
|
|
|
1,185
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
5.
|
Financial risk (continued)
|
|
B.
|
Liquidity risk (continued)
|
|
ii.
|
Maturity analysis for financial liabilities and financial assets
|
The following table details
the future undiscounted cash flows of assets and liabilities grouped by their remaining maturity with respect to the contractual
maturity:
|
|
September 30, 2020
|
|
Description
|
|
Up to 3 months
|
|
|
3 to 6 months
|
|
|
6 months to 1 year
|
|
|
1 to 5 years
|
|
|
More than 5 years
|
|
|
Gross Inflow (outflow)
|
|
|
Carrying amount
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks
|
|
|
1,404,682
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,404,682
|
|
|
|
1,401,669
|
|
Securities and other financial assets, net
|
|
|
4,271
|
|
|
|
9,691
|
|
|
|
30,731
|
|
|
|
197,455
|
|
|
|
-
|
|
|
|
242,148
|
|
|
|
238,572
|
|
Loans, net
|
|
|
1,264,997
|
|
|
|
1,082,164
|
|
|
|
913,404
|
|
|
|
1,326,738
|
|
|
|
113,170
|
|
|
|
4,700,473
|
|
|
|
4,546,926
|
|
Derivative financial instruments - assets
|
|
|
5,362
|
|
|
|
36
|
|
|
|
333
|
|
|
|
1,212
|
|
|
|
-
|
|
|
|
6,943
|
|
|
|
6,943
|
|
Total
|
|
|
2,679,312
|
|
|
|
1,091,891
|
|
|
|
944,468
|
|
|
|
1,525,405
|
|
|
|
113,170
|
|
|
|
6,354,246
|
|
|
|
6,194,110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
(2,741,230
|
)
|
|
|
(144,003
|
)
|
|
|
(135,213
|
)
|
|
|
(45,573
|
)
|
|
|
-
|
|
|
|
(3,066,019
|
)
|
|
|
(3,058,626
|
)
|
Securities sold under repurchase agreements
|
|
|
-
|
|
|
|
-
|
|
|
|
(10,734
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(10,734
|
)
|
|
|
(10,663
|
)
|
Borrowings and debt, net
|
|
|
(120,378
|
)
|
|
|
(46,520
|
)
|
|
|
(508,105
|
)
|
|
|
(1,090,756
|
)
|
|
|
(447,110
|
)
|
|
|
(2,212,869
|
)
|
|
|
(2,066,943
|
)
|
Derivative financial instruments - liabilities
|
|
|
(4,282
|
)
|
|
|
(169
|
)
|
|
|
-
|
|
|
|
(34,734
|
)
|
|
|
-
|
|
|
|
(39,185
|
)
|
|
|
(33,315
|
)
|
Total
|
|
|
(2,865,890
|
)
|
|
|
(190,692
|
)
|
|
|
(654,052
|
)
|
|
|
(1,171,063
|
)
|
|
|
(447,110
|
)
|
|
|
(5,328,807
|
)
|
|
|
(5,169,547
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Confirmed lettes of credit
|
|
|
42,778
|
|
|
|
41,602
|
|
|
|
1,005
|
|
|
|
-
|
|
|
|
-
|
|
|
|
85,385
|
|
|
|
85,385
|
|
Stand-by letters of credit and guaranteed
|
|
|
11,766
|
|
|
|
39,695
|
|
|
|
132,112
|
|
|
|
19,901
|
|
|
|
-
|
|
|
|
203,474
|
|
|
|
203,474
|
|
Credit commitments
|
|
|
21,250
|
|
|
|
-
|
|
|
|
-
|
|
|
|
120,655
|
|
|
|
-
|
|
|
|
141,905
|
|
|
|
141,905
|
|
Total
|
|
|
75,794
|
|
|
|
81,297
|
|
|
|
133,117
|
|
|
|
140,556
|
|
|
|
-
|
|
|
|
430,764
|
|
|
|
430,764
|
|
Net position
|
|
|
(262,372
|
)
|
|
|
819,902
|
|
|
|
157,299
|
|
|
|
213,786
|
|
|
|
(333,940
|
)
|
|
|
594,675
|
|
|
|
593,799
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
5.
|
Financial risk (continued)
|
|
B.
|
Liquidity risk (continued)
|
|
December 31, 2019
|
|
Description
|
|
Up to 3 months
|
|
|
3 to 6 months
|
|
|
6 months to 1 year
|
|
|
1 to 5 years
|
|
|
More than 5 years
|
|
|
Gross Inflow (outflow)
|
|
|
Carrying amount
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks
|
|
|
1,178,288
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,178,288
|
|
|
|
1,178,170
|
|
Securities and other financial assets, net
|
|
|
16,684
|
|
|
|
6,457
|
|
|
|
7,293
|
|
|
|
54,544
|
|
|
|
6,492
|
|
|
|
91,470
|
|
|
|
88,794
|
|
Loans, net
|
|
|
1,960,381
|
|
|
|
967,594
|
|
|
|
1,207,469
|
|
|
|
1,822,519
|
|
|
|
150,742
|
|
|
|
6,108,705
|
|
|
|
5,823,333
|
|
Derivative financial instruments - assets
|
|
|
-
|
|
|
|
625
|
|
|
|
-
|
|
|
|
10,532
|
|
|
|
-
|
|
|
|
11,157
|
|
|
|
11,157
|
|
Total
|
|
|
3,155,353
|
|
|
|
974,676
|
|
|
|
1,214,762
|
|
|
|
1,887,595
|
|
|
|
157,234
|
|
|
|
7,389,620
|
|
|
|
7,101,454
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
(2,574,180
|
)
|
|
|
(198,786
|
)
|
|
|
(122,680
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,895,646
|
)
|
|
|
(2,893,555
|
)
|
Securities sold under repurchase agreements
|
|
|
(40,691
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(40,691
|
)
|
|
|
(40,530
|
)
|
Borrowings and debt, net
|
|
|
(1,407,612
|
)
|
|
|
(451,736
|
)
|
|
|
(230,776
|
)
|
|
|
(1,147,699
|
)
|
|
|
(13,422
|
)
|
|
|
(3,251,245
|
)
|
|
|
(3,148,864
|
)
|
Derivative financial instruments - liabilities
|
|
|
(2,425
|
)
|
|
|
(775
|
)
|
|
|
(1,711
|
)
|
|
|
(12,014
|
)
|
|
|
-
|
|
|
|
(16,925
|
)
|
|
|
(14,675
|
)
|
Total
|
|
|
(4,024,908
|
)
|
|
|
(651,297
|
)
|
|
|
(355,167
|
)
|
|
|
(1,159,713
|
)
|
|
|
(13,422
|
)
|
|
|
(6,204,507
|
)
|
|
|
(6,097,624
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Confirmed lettes of credit
|
|
|
84,235
|
|
|
|
77,493
|
|
|
|
7,592
|
|
|
|
-
|
|
|
|
-
|
|
|
|
169,320
|
|
|
|
169,320
|
|
Stand-by letters of credit and guaranteed
|
|
|
35,906
|
|
|
|
95,440
|
|
|
|
114,078
|
|
|
|
10,057
|
|
|
|
-
|
|
|
|
255,481
|
|
|
|
255,481
|
|
Credit commitments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
68,571
|
|
|
|
-
|
|
|
|
68,571
|
|
|
|
68,571
|
|
Total
|
|
|
120,141
|
|
|
|
172,933
|
|
|
|
121,670
|
|
|
|
78,628
|
|
|
|
-
|
|
|
|
493,372
|
|
|
|
493,372
|
|
Net position
|
|
|
(989,696
|
)
|
|
|
150,446
|
|
|
|
737,925
|
|
|
|
649,254
|
|
|
|
143,812
|
|
|
|
691,741
|
|
|
|
510,458
|
|
The amounts in the table above have been compiled
as follows:
Type of financial instrument
|
Basis on which amounts are compiled
|
Financial assets and liabilities
|
Undiscounted cash flows, which include estimated interest payments.
|
|
|
Issued financial guarantee contracts, and loan commitments
|
Earliest possible contractual maturity. For issued financial guarantee contracts, the maximum amount of the guarantee is allocated to the earliest period in which the guarantee could be called.
|
|
|
Derivative financial liabilities and financial assets
|
Contractual undiscounted cash flows. The amounts shown are the gross nominal inflows and outflows for derivatives that have simultaneous gross and the net amounts for derivatives that are net settled.
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
5.
|
Financial risk (continued)
|
|
B.
|
Liquidity risk (continued)
|
As part of the management of
liquidity risk arising from financial liabilities, the Bank holds liquid assets comprising cash and cash equivalents.
The following table sets out
the components of the Banks’s liquidity reserves:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
Amount
|
|
|
Fair Value
|
|
|
Amount
|
|
|
Fair Value
|
|
Balance with Central Banks
|
|
|
1,207,063
|
|
|
|
1,207,063
|
|
|
|
1,129,016
|
|
|
|
1,129,016
|
|
Cash and balances with other bank
|
|
|
150,202
|
|
|
|
150,202
|
|
|
|
49,154
|
|
|
|
49,154
|
|
Total Liquidity reserves
|
|
|
1,357,265
|
|
|
|
1,357,265
|
|
|
|
1,178,170
|
|
|
|
1,178,170
|
|
|
iv.
|
Financial assets available to support future funding
|
The following table sets out the Bank’s financial
assets available to support future funding:
September 30, 2020
|
|
|
Guaranteed
|
|
|
Available as collateral
|
|
Cash and due from banks
|
|
|
44,404
|
|
|
|
1,357,265
|
|
Notional of investment securities
|
|
|
10,950
|
|
|
|
215,832
|
|
Loan portfolio
|
|
|
-
|
|
|
|
4,566,255
|
|
Total assets
|
|
|
55,354
|
|
|
|
6,139,352
|
|
December 31, 2019
|
|
|
Guaranteed
|
|
|
Available as collateral
|
|
Cash and due from banks
|
|
|
18,452
|
|
|
|
1,159,718
|
|
Notional of investment securities
|
|
|
40,531
|
|
|
|
38,045
|
|
Loan portfolio
|
|
|
-
|
|
|
|
5,823,333
|
|
Total assets
|
|
|
58,983
|
|
|
|
7,021,096
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
5.
|
Financial risk (continued)
|
The Bank manages market risk by considering the consolidated
financial situation of the Bank.
The following is a summary of
the Bank’s interest rate gap position for the financial assets and liabilities based on their next repricing date:
|
|
September 30, 2020
|
|
Description
|
|
Up to 3 months
|
|
|
3 to 6 months
|
|
|
6 months to 1 year
|
|
|
1 to 5 years
|
|
|
More than 5 years
|
|
|
Non interest rate risk
|
|
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits and time deposits
|
|
|
1,401,669
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,401,669
|
|
Securities and other financial assets
|
|
|
3,000
|
|
|
|
9,587
|
|
|
|
30,166
|
|
|
|
194,559
|
|
|
|
-
|
|
|
|
-
|
|
|
|
237,312
|
|
Loans
|
|
|
1,576,916
|
|
|
|
1,794,086
|
|
|
|
899,750
|
|
|
|
287,488
|
|
|
|
8,015
|
|
|
|
-
|
|
|
|
4,566,255
|
|
Total assets
|
|
|
2,981,585
|
|
|
|
1,803,673
|
|
|
|
929,916
|
|
|
|
482,047
|
|
|
|
8,015
|
|
|
|
-
|
|
|
|
6,205,236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits and time deposits
|
|
|
(2,732,413
|
)
|
|
|
(143,626
|
)
|
|
|
(133,986
|
)
|
|
|
(45,000
|
)
|
|
|
-
|
|
|
|
(170
|
)
|
|
|
(3,055,195
|
)
|
Securities sold repurchase agreements
|
|
|
-
|
|
|
|
-
|
|
|
|
(10,663
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(10,663
|
)
|
Borrowings and debt
|
|
|
(998,412
|
)
|
|
|
(248,365
|
)
|
|
|
(61,384
|
)
|
|
|
(358,782
|
)
|
|
|
(400,000
|
)
|
|
|
-
|
|
|
|
(2,066,943
|
)
|
Total liabilities
|
|
|
(3,730,825
|
)
|
|
|
(391,991
|
)
|
|
|
(206,033
|
)
|
|
|
(403,782
|
)
|
|
|
(400,000
|
)
|
|
|
(170
|
)
|
|
|
(5,132,801
|
)
|
Net effect of derivative financial instruments held for interest risk management
|
|
|
(9,644
|
)
|
|
|
(205
|
)
|
|
|
(333
|
)
|
|
|
(36,722
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(46,904
|
)
|
Total interest rate sensitivity
|
|
|
(758,884
|
)
|
|
|
1,411,477
|
|
|
|
723,550
|
|
|
|
41,543
|
|
|
|
(391,985
|
)
|
|
|
(170
|
)
|
|
|
1,025,531
|
|
|
|
December 31, 2019
|
|
Description
|
|
Up to 3 months
|
|
|
3 to 6 months
|
|
|
6 months to 1 year
|
|
|
1 to 5 years
|
|
|
More than 5 years
|
|
|
Non interest rate risk
|
|
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits and time deposits
|
|
|
1,170,092
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,170,092
|
|
Securities and other financial assets
|
|
|
14,935
|
|
|
|
6,351
|
|
|
|
5,055
|
|
|
|
53,300
|
|
|
|
-
|
|
|
|
-
|
|
|
|
79,641
|
|
Loans
|
|
|
4,031,432
|
|
|
|
1,096,355
|
|
|
|
548,028
|
|
|
|
208,443
|
|
|
|
8,739
|
|
|
|
-
|
|
|
|
5,892,997
|
|
Total assets
|
|
|
5,216,459
|
|
|
|
1,102,706
|
|
|
|
553,083
|
|
|
|
261,743
|
|
|
|
8,739
|
|
|
|
-
|
|
|
|
7,142,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits and time deposits
|
|
|
(2,570,324
|
)
|
|
|
(197,300
|
)
|
|
|
(120,419
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(293
|
)
|
|
|
(2,888,336
|
)
|
Securities sold repurchase agreements
|
|
|
(40,530
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(40,530
|
)
|
Borrowings and debt
|
|
|
(2,534,382
|
)
|
|
|
(401,432
|
)
|
|
|
(25,261
|
)
|
|
|
(157,321
|
)
|
|
|
-
|
|
|
|
(19,914
|
)
|
|
|
(3,138,310
|
)
|
Total liabilities
|
|
|
(5,145,236
|
)
|
|
|
(598,732
|
)
|
|
|
(145,680
|
)
|
|
|
(157,321
|
)
|
|
|
-
|
|
|
|
(20,207
|
)
|
|
|
(6,067,176
|
)
|
Net effect of derivative financial instruments held for interest risk management
|
|
|
(2,425
|
)
|
|
|
(150
|
)
|
|
|
(1,711
|
)
|
|
|
(1,482
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,768
|
)
|
Total interest rate sensitivity
|
|
|
68,798
|
|
|
|
503,824
|
|
|
|
405,692
|
|
|
|
102,940
|
|
|
|
8,739
|
|
|
|
(20,207
|
)
|
|
|
1,069,786
|
|
Management of interest rate
risk is complemented by monitoring the sensitivity of the Bank’s financial assets and liabilities to various standard interest
rate scenarios. Standard scenarios that are considered on a monthly basis include a 50bps, 100bps and 200bps, respectively, parallel
fall or rise in all yield curves which are assessed accordingly to market conditions.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
5.
|
Financial risk (continued)
|
|
C.
|
Market risk (continued)
|
|
ii.
|
Interest rate risk (continued)
|
The following is an analysis
of the Bank’s sensitivity to the most likely increase or decrease in market interest rates at the reporting date, assuming
no asymmetrical movements in yield curves and a constant financial position:
|
|
Change in
interest rate
|
|
Effect on
profit or loss
|
|
|
Effect on
Equity
|
|
September 30, 2020
|
|
+50 bps
|
|
|
(175
|
)
|
|
|
8,583
|
|
|
|
-50 bps
|
|
|
(2,571
|
)
|
|
|
(6,879
|
)
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
+50 bps
|
|
|
3,064
|
|
|
|
7,461
|
|
|
|
-50 bps
|
|
|
(3,064
|
)
|
|
|
(7,461
|
)
|
Interest rate movements affect
reported equity in the following ways:
|
-
|
Retained earnings: increases or decreases in net interest income and in fair values of derivatives
reported in profit or loss;
|
|
-
|
Fair value reserve: increases or decreases in fair values of financial assets at FVOCI reported
directly in equity; and
|
|
-
|
Hedging reserve: increases or decreases in fair values of hedging instruments designated in qualifying
cash flow hedge relationships.
|
This sensitivity provides a
consideration of changes in interest rates, considering last period interest rate volatility.
|
iii.
|
Foreign exchange risk
|
The following table presents
the maximum exposure amount in foreign currency of the Bank’s carrying amount of total assets and liabilities, excluding
derivative financial assets and liabilities which are included in other assets and liabilities based on their fair value.
|
|
September 30, 2020
|
|
|
|
Brazilian
Real
|
|
|
European
Euro
|
|
|
Japanese
Yen
|
|
|
Colombian
Peso
|
|
|
Mexican
Peso
|
|
|
Other
Currencies
(1)
|
|
|
Total
|
|
Exchance rate
|
|
|
5.62
|
|
|
|
1.17
|
|
|
|
105.48
|
|
|
|
3,828.40
|
|
|
|
22.11
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks
|
|
|
73
|
|
|
|
7
|
|
|
|
1
|
|
|
|
16
|
|
|
|
1,228
|
|
|
|
49
|
|
|
|
1,374
|
|
Loans
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
142,577
|
|
|
|
-
|
|
|
|
142,577
|
|
Total Assets
|
|
|
73
|
|
|
|
7
|
|
|
|
1
|
|
|
|
16
|
|
|
|
143,805
|
|
|
|
49
|
|
|
|
143,951
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings and debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(143,526
|
)
|
|
|
-
|
|
|
|
(143,526
|
)
|
Total liabilities
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(143,526
|
)
|
|
|
-
|
|
|
|
(143,526
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net currency position
|
|
|
73
|
|
|
|
7
|
|
|
|
|
|
|
|
16
|
|
|
|
279
|
|
|
|
49
|
|
|
|
425
|
|
(1) It includes other currencies
such as: Argentine pesos, Australian dollar, Swiss franc, Sterling pound, Peruvian soles, and Chinese Renminbi.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
|
5.
|
Financial risk (continued)
|
|
C.
|
Market risk (continued)
|
|
iii.
|
Foreign exchange risk (continued)
|
|
|
December 31, 2019
|
|
|
|
Brazilian
Real
|
|
|
European
Euro
|
|
|
Japanese
Yen
|
|
|
Colombian
Peso
|
|
|
Mexican
Peso
|
|
|
Other
Currencies
(1)
|
|
|
Total
|
|
Exchance rate
|
|
|
4.02
|
|
|
|
1.12
|
|
|
|
108.67
|
|
|
|
3,287.50
|
|
|
|
18.88
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks
|
|
|
274
|
|
|
|
17
|
|
|
|
4
|
|
|
|
34
|
|
|
|
4,243
|
|
|
|
58
|
|
|
|
4,630
|
|
Loans
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
473,729
|
|
|
|
-
|
|
|
|
473,729
|
|
Total Assets
|
|
|
274
|
|
|
|
17
|
|
|
|
4
|
|
|
|
34
|
|
|
|
477,972
|
|
|
|
58
|
|
|
|
478,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings and debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(478,038
|
)
|
|
|
-
|
|
|
|
(478,038
|
)
|
Total liabilities
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(478,038
|
)
|
|
|
-
|
|
|
|
(478,038
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net currency position
|
|
|
274
|
|
|
|
17
|
|
|
|
4
|
|
|
|
34
|
|
|
|
(66
|
)
|
|
|
58
|
|
|
|
321
|
|
(1) It
includes other currencies such as: Argentine pesos, Australian dollar, Swiss franc, Sterling pound, Peruvian soles, and Chinese
Renminbi.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
|
6.
|
Financial risk management - Impacts and actions implemented in the context of COVID-19
|
The COVID-19 pandemic and the
measures implemented globally to prevent its spread could negatively impact the Bank’s business in a number of ways. These
impacts may include, among others, reduced business volumes, restricted access to funding sources, insufficient liquidity, delayed
or defaulted payments from the Bank’s customers or from the Bank´s financial counterparties, increased levels of indebtedness
or the unavailability of sufficient financing for the Bank’s borrowers, and other factors which are beyond the Bank’s
control.
In this context, and in order
to mitigate these risks, the Bank has implemented a series of measures and actions described below.
Following the COVID-19 pandemic
and its potential impact on the availability of resources, the Bank activated its Liquidity Contingency Plan, based on internally
designed market triggers, in order to ensure a robust position given the situation caused by the pandemic. This led the Bank to
adjust the scenario of its internal liquidity coverage ratio "LCR" from a regular level of 1 to a level of 3, which implies
more restrictive assumptions for inflows and outflows of cash, with a downward adjustment of the percentages of funding sources
renewals and of loan portfolio collections. Other additional elements included in the Liquidity Contingency Plan are, among others,
the collection of all loan maturities and the case-by-case approval of all new credit disbursements by the Credit Committee, establishing
at least biweekly meetings.
Following the execution of the
previously described Liquidity Contingency Plan, the Bank achieved a significant increase in its cash position in a short period
of time, managing to continuously maintain a robust level of liquidity, exceeding regulatory requirements.
The Bank’s capacity to
maintain these strong liquidity levels, even in the current context, is attributable to historically diversified and stable funding
sources, including deposits from central banks in Latin America and the Caribbean, who are also the Bank’s Class A shareholders.
In addition, the Bank has maintained a fluid access to a significant base of correspondent banks and investors from debt capital
markets across the globe, which have maintained and even increased their availability of funding to the Bank in the last few months.
Furthermore, the Bank has been able to collect on the majority of scheduled maturities of its loan portfolio and has then disbursed
new transactions on a selective basis, prioritizing prudent risk management over loan growth, with a focus on adequate levels of
risk / return.
The Bank intends to maintain
this additional level of liquidity as long as the current environment of volatility and uncertainty remains, therefore it will
continue to give preference to maintaining a resilient and robust liquidity position over the growth of its balance sheet and /
or its profitability.
The Bank determines the appropriate
level of allowances for expected credit losses based on a forward-looking process that estimates the probable loss inherent in
its Credit Portfolio, which is the result of a statistical analysis supported by the Bank’s historical portfolio performance,
external sources, and the judgment of the Bank’s management. This level of allowance reflects assumptions and estimates made
in the context of changing political and economic conditions in the region, including but not limited to the impact of recent ongoing
turmoil related to COVID-19.
The Bank has a Business Model
mainly focused on financial institutions and large corporations, a portion of which represents “quasi-sovereign” risks,
with an average short-term duration, allowing an agile adjustment of exposure in adverse scenarios.
Actions implemented due to
the COVID-19 pandemic
In late March 2020, due
to the context, Bladex elaborated a heat map including each country and industry in which it maintains exposure. This allowed
the Bank to identify customers with higher levels of risk depending on the country, industry and financial position.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
6.
|
Financial risk management - Impacts and actions implemented in the context of COVID-19 (continued)
|
|
ii.
|
Credit risk (continued)
|
Four main variables were used
to assign the level of customer risk:
Financial Institutions
|
Corporations
|
|
|
a. COVID-19 business impact
|
a. COVID-19 business impact
|
b. Portfolio quality and coverage levels
|
a. Foreign currency exchange risk
|
b. Solvency level
|
i. Commodity risk
|
ii. Liquidity position
|
d. Liquidity position
|
The Bank’s Management
holds conference and video calls frequently with its customers, focusing on those operating in higher risk industries. Any relevant
information is presented to the Credit Committee.
Since the beginning of the crisis,
in mid-March 2020, the loan portfolio has been reduced, as a result of the Bank’s strategy to prioritize liquidity and
to adjust the portfolio’s credit risk. Under the Liquidity Contingency Plan, all operations are approved on a case-by-case
basis by the Credit Committee with a meeting frequency of at least twice per week.
The permanent review of transactions
maturing in a 90-day horizon, has allowed the Bank to take quick actions to collect and to identify cases with a higher level of
risk. Moreover, the Bank is assessing on a periodic basis the adequacy of the allowances for credit losses.
The Bank's Management has not
made any material adjustments to the Market Risk valuation metrics and models.
Actions implemented due to
the COVID-19 pandemic
The Bank successfully implemented
its Business Continuity Plan, implicating among other things, that 100% of its staff is working remotely (Telecommuting).
This has increased the frequency
of risks associated with cybersecurity, among them:
|
·
|
Increased e-mail attack attempts.
|
|
·
|
Increased attack attempts due to the widespread use of remote connection protocols.
|
To counteract these risks, the
Bank's Management has reinforced the controls as follows:
|
·
|
Monitoring of main attack vectors was expanded: e-mail and end-user devices.
|
|
·
|
Awareness and training activities within the organization were reinforced.
|
|
·
|
Frequency of vulnerability scans has been intensified.
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
7.
|
Fair value of financial instruments
|
The Bank determines the fair
value of its financial instruments using the fair value hierarchy established in IFRS 13 - Fair Value Measurements and Disclosure,
which requires the Bank to maximize the use of observable inputs (those that reflect the assumptions that market participants would
use in pricing the asset or liability developed based on market information obtained from sources independent of the reporting
entity) and to minimize the use of unobservable inputs (those that reflect the reporting entity’s own assumptions about the
inputs that market participants would use in pricing the asset or liability developed based on the best information available in
the circumstances) when measuring fair value. Fair value is used on a recurring basis to measure assets and liabilities in which
fair value is the primary basis of accounting. Additionally, fair value is used on a non-recurring basis to assess assets and liabilities
for impairment or for disclosure purposes. Fair value is defined as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of
the asset or liability, the Bank uses some valuation techniques and assumptions when estimating fair value.
The Bank applied the following
fair value hierarchy:
Level 1 – Assets or liabilities
for which an identical instrument is traded in an active market, such as publicly-traded instruments or futures contracts.
Level 2 – Assets or liabilities
valued based on observable market data for similar instruments, quoted prices in markets that are not active; or other observable
inputs that can be corroborated by observable market data for substantially the full term of the asset or liability.
Level 3 – Assets or liabilities
for which significant valuation inputs are not readily observable in the market; instruments measured based on the best available
information, which might include some internally-developed data, and considers risk premiums that a market participant would require.
When determining the fair value
measurements for assets and liabilities that are required or permitted to be recorded at fair value, the Bank considers the principal
or most advantageous market in which it would transact and considers the inputs that market participants would use when pricing
the asset or liability. When possible, the Bank uses active markets and observable prices to value identical assets or liabilities.
When identical assets and liabilities
are not traded in active markets, the Bank uses observable market information for similar assets and liabilities. However, certain
assets and liabilities are not actively traded in observable markets and the Bank must use alternative valuation techniques to
determine the fair value measurement. The frequency of transactions, the size of the bid-ask spread, and the size of the investment
are factors considered in determining the liquidity of markets and the relevance of observed prices in those markets.
When there has been a significant
decrease in the valuation of the financial asset or liability, or in the level of activity for a financial asset or liability,
the Bank uses the present value technique which considers market information to determine a representative fair value in usual
market conditions.
A description of the valuation
methodologies used for assets and liabilities measured at fair value on a recurring basis, including the general classification
of such assets and liabilities under the fair value hierarchy is presented below:
Financial instruments at
FVTPL and FVOCI
Financial instruments at FVTPL
and FVOCI are carried at fair value, which is based upon quoted prices when available, or if quoted market prices are not available,
on discounted expected cash flows using market rates commensurate with the credit quality and maturity of the security.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
7.
|
Fair value of financial instruments (continued)
|
|
A.
|
Recurring valuation (continued)
|
Financial instruments at
FVTPL and FVOCI (continued)
When quoted prices are available
in an active market, financial instruments at FVTPL and financial instruments at FVOCI are classified in level 1 of the fair value
hierarchy. If quoted market prices are not available or they are available in markets that are not active, then fair values are
estimated based upon quoted prices for similar instruments, or where these are not available, by using internal valuation techniques,
principally discounted cash flows models. Such securities are classified within levels 2 and 3 of the fair value hierarchy.
Derivative financial instruments
and hedged items that qualify as a fair value hedging relationship
The valuation techniques and
inputs depend on the type of derivative and the nature of the underlying instrument. Exchange-traded derivatives that are valued
using quoted prices are classified within level 1 of the fair value hierarchy.
For those derivative contracts
without quoted market prices, fair value is based on internal valuation techniques using inputs that are readily observable and
that can be validated by information available in the market. The principal technique used to value these instruments is the discounted
cash flows model and the key inputs considered in this technique include interest rate yield curves and foreign exchange rates.
These derivatives are classified within level 2 of the fair value hierarchy.
The fair value adjustments applied
by the Bank to its derivative carrying values include credit valuation adjustments (“CVA”), which are applied to OTC
derivative instruments, in which the base valuation generally discounts expected cash flows using the Overnight Index Swap (“OIS”)
interest rate curves. Because not all counterparties have the same credit risk as that implied by the relevant OIS curve, a CVA
is necessary to incorporate the market view of both, counterparty credit risk and the Bank’s own credit risk, in the valuation.
Own-credit and counterparty
CVA is determined using a fair value curve consistent with the Bank’s or counterparty credit rating. The CVA is designed
to incorporate a market view of the credit risk inherent in the derivative portfolio. However, most of the Bank’s derivative
instruments are negotiated bilateral contracts and are not commonly transferred to third parties. Derivative instruments are normally
settled contractually, or if terminated early, are terminated at a value negotiated bilaterally between the counterparties. Therefore,
the CVA (both counterparty and own-credit) may not be realized upon a settlement or termination in the normal course of business.
In addition, all or a portion of the CVA may be reversed or otherwise adjusted in future periods in the event of changes in the
credit risk of the Bank or its counterparties or due to the anticipated termination of the transactions.
Financial instruments assets
and liabilities recognized and designated as hedged items that qualify as a fair value hedging relationship are measured at amortized
cost and adjusted for the effect of the risks covered in the hedging relationship.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
7.
|
Fair value of financial instruments (continued)
|
|
B.
|
Recurring valuation (continued)
|
Financial instruments measured
at fair value on a recurring basis by caption on the consolidated statement of financial position using the fair value hierarchy
are described below:
|
|
September 30, 2020
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities and other financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities at FVOCI - Corporate debt
|
|
|
-
|
|
|
|
107,299
|
|
|
|
-
|
|
|
|
107,299
|
|
Securities at FVOCI - Sovereign debt
|
|
|
-
|
|
|
|
5,125
|
|
|
|
-
|
|
|
|
5,125
|
|
Debt instrument at fair value through profit or loss
|
|
|
-
|
|
|
|
-
|
|
|
|
3,500
|
|
|
|
3,500
|
|
Total securities and other financial assets
|
|
|
-
|
|
|
|
112,424
|
|
|
|
3,500
|
|
|
|
115,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments - assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
-
|
|
|
|
1,531
|
|
|
|
-
|
|
|
|
1,531
|
|
Cross-currency swaps
|
|
|
-
|
|
|
|
4,918
|
|
|
|
-
|
|
|
|
4,918
|
|
Foreign exchange forwards
|
|
|
-
|
|
|
|
494
|
|
|
|
-
|
|
|
|
494
|
|
Total derivative financial instrument assets
|
|
|
-
|
|
|
|
6,943
|
|
|
|
-
|
|
|
|
6,943
|
|
Total assets at fair value
|
|
|
-
|
|
|
|
119,367
|
|
|
|
3,500
|
|
|
|
122,867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments - liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
-
|
|
|
|
2,159
|
|
|
|
-
|
|
|
|
2,159
|
|
Cross-currency swaps
|
|
|
-
|
|
|
|
30,241
|
|
|
|
-
|
|
|
|
30,241
|
|
Foreign exchange forwards
|
|
|
-
|
|
|
|
915
|
|
|
|
-
|
|
|
|
915
|
|
Total derivative financial instruments - liabilities
|
|
|
-
|
|
|
|
33,315
|
|
|
|
-
|
|
|
|
33,315
|
|
Total liabilities at fair value
|
|
|
-
|
|
|
|
33,315
|
|
|
|
-
|
|
|
|
33,315
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
7.
|
Fair value of financial instruments (continued)
|
|
A.
|
Recurring valuation (continued)
|
|
|
December 31, 2019
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities and other financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities at FVOCI - Sovereign debt
|
|
|
-
|
|
|
|
5,094
|
|
|
|
-
|
|
|
|
5,094
|
|
Equity instrument at FVOCI
|
|
|
-
|
|
|
|
1,889
|
|
|
|
-
|
|
|
|
1,889
|
|
Debt instrument at fair value through profit or loss
|
|
|
-
|
|
|
|
-
|
|
|
|
6,492
|
|
|
|
6,492
|
|
Total securities and other financial assets
|
|
|
-
|
|
|
|
6,983
|
|
|
|
6,492
|
|
|
|
13,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments - assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
-
|
|
|
|
407
|
|
|
|
-
|
|
|
|
407
|
|
Cross-currency swaps
|
|
|
-
|
|
|
|
10,125
|
|
|
|
-
|
|
|
|
10,125
|
|
Foreign exchange forwards
|
|
|
-
|
|
|
|
625
|
|
|
|
-
|
|
|
|
625
|
|
Total derivative financial instrument assets
|
|
|
-
|
|
|
|
11,157
|
|
|
|
-
|
|
|
|
11,157
|
|
Total assets at fair value
|
|
|
-
|
|
|
|
18,140
|
|
|
|
6,492
|
|
|
|
24,632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments - liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
-
|
|
|
|
1,903
|
|
|
|
-
|
|
|
|
1,903
|
|
Cross-currency swaps
|
|
|
-
|
|
|
|
10,197
|
|
|
|
-
|
|
|
|
10,197
|
|
Foreign exchange forwards
|
|
|
-
|
|
|
|
2,575
|
|
|
|
-
|
|
|
|
2,575
|
|
Total derivative financial instruments - liabilities
|
|
|
-
|
|
|
|
14,675
|
|
|
|
-
|
|
|
|
14,675
|
|
Total liabilities at fair value
|
|
|
-
|
|
|
|
14,675
|
|
|
|
-
|
|
|
|
14,675
|
|
Fair value calculations are
provided only for a limited portion of assets and liabilities. Due to the wide range of valuation techniques and the degree of
subjectivity used for estimates, comparisons of fair value information disclosed by the Bank with those of other companies may
not be meaningful for comparative analysis.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
7.
|
Fair value of financial instruments (continued)
|
|
B.
|
Non-recurring valuation
|
The following
methods and inputs were used by the Bank’s management in estimating the fair values of financial instruments whose fair value
is not measured on a recurring basis:
Financial instruments with
carrying value that approximates fair value
The carrying value of certain
financial assets, including cash and due from banks, interest-bearing deposits in banks, customers’ liabilities under acceptances
and certain financial liabilities including customer’s demand and time deposits, securities sold under repurchase agreements
and acceptances outstanding, due to their short-term nature, is considered to approximate their fair value. These instruments are
classified in Level 2.
Securities at amortized cost
The fair value has been estimated
upon current market quotations, where available. If quoted market prices are not available, fair value has been estimated based
upon quoted prices of similar instruments, or where these are not available, on discounted expected future cash flows using market
rates commensurate with the credit quality and maturity of the security. These securities are classified in Levels 2 and 3.
Loans
The fair value of the loan portfolio,
including impaired loans, is estimated by discounting expected future cash flows using the current rates at which loans would be
made to borrowers with similar credit ratings and for the same remaining maturities, considering the contractual terms in effect
as of September 30 of the relevant year. These assets are classified in Levels 2 and 3.
Transfer of financial assets
Gains or losses on sale of loans
depend in part on the carrying amount of the financial assets involved in the transfer, and their fair value at the date of transfer.
The fair value of these instruments is determined based upon quoted market prices when available or is based on the present value
of future expected cash flows using information related to credit losses, prepayment speeds, forward yield curves, and discounted
rates commensurate with the risk involved.
Short and long-term borrowings
and debt
The fair value of short and
long-term borrowings and debt is estimated using discounted contractual future cash flows based on the current incremental borrowing
rates for similar types of borrowing arrangements, considering the changes in the Bank’s credit margin. These liabilities
are classified in Level 2.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
7.
|
Fair value of financial instruments (continued)
|
|
B.
|
Non-recurring valuation (continued)
|
The following table provides
information on the carrying value and an estimated fair value of the Bank’s financial instruments that are not measured on
a recurring basis:
|
|
September 30, 2020
|
|
|
Carrying
|
|
|
Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
value
|
|
|
value
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and deposits on banks
|
|
|
1,401,669
|
|
|
|
1,401,669
|
|
|
|
-
|
|
|
|
1,401,669
|
|
|
|
-
|
|
Securities at amortized cost (1)
|
|
|
122,178
|
|
|
|
123,060
|
|
|
|
-
|
|
|
|
114,751
|
|
|
|
8,309
|
|
Loans, net (2)
|
|
|
4,546,926
|
|
|
|
4,548,211
|
|
|
|
-
|
|
|
|
4,548,211
|
|
|
|
-
|
|
Customers' liabilities under acceptances
|
|
|
89,576
|
|
|
|
89,576
|
|
|
|
-
|
|
|
|
89,576
|
|
|
|
-
|
|
Investment properties
|
|
|
3,285
|
|
|
|
3,285
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
3,055,195
|
|
|
|
3,055,195
|
|
|
|
-
|
|
|
|
3,055,195
|
|
|
|
-
|
|
Securities sold under repurchase agreements
|
|
|
10,663
|
|
|
|
10,663
|
|
|
|
-
|
|
|
|
10,663
|
|
|
|
-
|
|
Borrowings and debt, net (3)
|
|
|
2,047,871
|
|
|
|
2,042,560
|
|
|
|
-
|
|
|
|
2,042,560
|
|
|
|
-
|
|
Customers' liabilities under acceptances
|
|
|
89,576
|
|
|
|
89,576
|
|
|
|
-
|
|
|
|
89,576
|
|
|
|
-
|
|
|
|
December 31, 2019
|
|
|
|
Carrying
|
|
|
Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
value
|
|
|
value
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and deposits on banks
|
|
|
1,178,170
|
|
|
|
1,178,170
|
|
|
|
-
|
|
|
|
1,178,170
|
|
|
|
-
|
|
Securities at amortized cost (1)
|
|
|
75,271
|
|
|
|
75,724
|
|
|
|
-
|
|
|
|
56,914
|
|
|
|
18,810
|
|
Loans, net (2)
|
|
|
5,823,333
|
|
|
|
6,162,885
|
|
|
|
-
|
|
|
|
6,101,040
|
|
|
|
61,845
|
|
Customers' liabilities under acceptances
|
|
|
115,682
|
|
|
|
115,682
|
|
|
|
-
|
|
|
|
115,682
|
|
|
|
-
|
|
Investment properties
|
|
|
3,494
|
|
|
|
3,494
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
2,888,336
|
|
|
|
2,888,336
|
|
|
|
-
|
|
|
|
2,888,336
|
|
|
|
-
|
|
Securities sold under repurchase agreements
|
|
|
40,530
|
|
|
|
40,530
|
|
|
|
-
|
|
|
|
40,530
|
|
|
|
-
|
|
Borrowings and debt, net (3)
|
|
|
3,118,396
|
|
|
|
3,126,333
|
|
|
|
-
|
|
|
|
3,126,333
|
|
|
|
-
|
|
Customers' liabilities under acceptances
|
|
|
115,682
|
|
|
|
115,682
|
|
|
|
-
|
|
|
|
115,682
|
|
|
|
-
|
|
|
(1)
|
The carrying value of securities at amortized cost is
net of the accrued interest receivable of $1.0 million and the allowance for expected credit losses of $0.3 million as of September 30,
2020 and the accrued interest receivable of $0.8 million and the allowance for expected credit losses of $0.1 million as of December 31,
2019.
|
|
(2)
|
The carrying value of loans at amortized cost is net of the accrued interest receivable of $30.3
million, the allowance for expected credit losses of $42.4 million and unearned interest and deferred fees of $7.1 million for
September 30, 2020, and the accrued interest receivable of $41.7 million, the allowance for expected credit losses of $99.3
million and unearned interest and deferred fees of $12.1 million for December 31, 2019.
|
|
(3)
|
Borrowings and debt excludes the lease liabilities for an amount of $18.3 million and $19.0 million
as of September 30, 2020 and December 31, 2019, respectively.
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
7.
|
Fair value of financial instruments (continued)
|
The Bank has an established
control framework for the measurement of fair values, which is independent of front office management, to verify the valuation
of significant fair value measurements of derivative financial instruments, securities and other financial instrument. Specific
controls include:
|
-
|
Verification of observable pricing.
|
|
-
|
Validation of performance of valuation models.
|
|
-
|
A review and approval process for new models and changes to existing models.
|
|
-
|
Analysis and assessment of significant valuation fluctuations.
|
|
-
|
Review of significant unobservable inputs, valuation adjustments and changes to fair value measurement
of Level 3 instruments.
|
|
D.
|
Level 3 - Fair value measurement
|
The following table presents
the movement of a Level 3 financial instruments measured at fair value:
Carrying amount as of December 31, 2019
|
|
|
6,492
|
|
Unrealized loss
|
|
|
(2,992
|
)
|
Carrying amount as of September 30, 2020
|
|
|
3,500
|
|
Significant inputs used to
determine fair value for Level 3 financial instruments
The significant inputs used
in determining the fair value of instruments categorized as Level 3, using present value techniques, are as follows:
2020
|
|
2019
|
Unobservable inputs
|
|
Unobservable inputs
|
- Discount rate based on the return from CCC Corporate S&P Bond Index
|
|
- Discount rate for similar companies of the same business line adjusted due to the debt-equity structure of the issuer
|
|
|
|
- Probability of occurrence of the flows of each sale or conversion scenario
|
|
|
|
|
Observable inputs
|
|
|
- Average recovery factor for companies that reported default – Moody’s
|
|
|
|
Range
of estimates
|
|
Fair value measurement sensitivity to unobservable inputs – discount rate
|
|
|
2020
|
|
|
|
2019
|
|
A significant increase in volatility would result in a lower fair value
|
|
|
10.00% to 20.00%
|
|
|
|
12.97% to 27.50%
|
|
As
of September 30, 2020, the Management took into consideration that the discount rate based on the return from CCC Corporate
S&P Bond Index, which are similar to CCC corporate bonds mostly US/LATAM markets displayed in Bloomberg, allows a more reliable
measurement for the instrument.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
7.
|
Fair value of financial instruments (continued)
|
The effect of unobservable
inputs on fair value measurement
Although the Bank believes that
its estimates of fair value are appropriate, the use of different methodologies or assumptions could lead to different measurements
of fair value. For fair value measurements in Level 3, changing one or more of the assumptions used would have the following effects.
Debentures
at fair value through profit or loss
|
|
Effect on profit or loss
|
|
+ 100 bps to the observable and unobservable inputs
|
|
|
(95
|
)
|
- 100 bps to the unobservable and observable inputs
|
|
|
100
|
|
8.
|
Cash and due from banks
|
The following table presents
the details of interest-bearing deposits in banks and pledged deposits:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Cash and due from banks
|
|
|
22,570
|
|
|
|
8,078
|
|
Interest-bearing deposits in banks
|
|
|
1,379,099
|
|
|
|
1,170,092
|
|
Total
|
|
|
1,401,669
|
|
|
|
1,178,170
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
Pledged deposits
|
|
|
44,404
|
|
|
|
18,452
|
|
Total cash and cash equivalents
|
|
|
1,357,265
|
|
|
|
1,159,718
|
|
|
|
September 30, 2020
|
|
|
December 31, 2019
|
|
|
|
Amount
|
|
|
Interest
rate
range
|
|
|
Amount
|
|
|
Interest rate
range
|
|
Interest-bearing deposits in banks:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits (1)
|
|
|
1,272,099
|
|
|
|
0.03% to 3.00%
|
|
|
|
1,150,092
|
|
|
|
1.55% to 5.10%
|
|
Time deposits
|
|
|
107,000
|
|
|
|
-
|
|
|
|
20,000
|
|
|
|
-
|
|
Total
|
|
|
1,379,099
|
|
|
|
|
|
|
|
1,170,092
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pledged deposits
|
|
|
44,404
|
|
|
|
0.09
|
%
|
|
|
18,452
|
|
|
|
1.55
|
%
|
|
(1)
|
Interest-bearing demand deposits based on daily rates determined by banks. In addition, rates of
3.00% and 5.10% corresponds to a deposit placed in México.
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
8.
|
Cash and due from banks (continued)
|
The following table provides a breakdown of pledged
deposits by country risk:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Country:
|
|
|
|
|
|
|
|
|
United States of America(1)
|
|
|
11,955
|
|
|
|
5,645
|
|
Netherlands
|
|
|
11,224
|
|
|
|
-
|
|
Mexico
|
|
|
6,670
|
|
|
|
-
|
|
Switzerland
|
|
|
6,237
|
|
|
|
9,567
|
|
Spain
|
|
|
5,648
|
|
|
|
-
|
|
Japan
|
|
|
1,930
|
|
|
|
1,470
|
|
Canada
|
|
|
610
|
|
|
|
-
|
|
United Kingdom
|
|
|
130
|
|
|
|
-
|
|
France
|
|
|
-
|
|
|
|
1,770
|
|
Total
|
|
|
44,404
|
|
|
|
18,452
|
|
|
(1)
|
Includes pledged deposits of $7.0 million at September 30, 2020 and $3.5 million at December 31,
2019, with the New York State Banking Department under March 1994 legislation and deposits pledged to guarantee derivative
financial instrument transactions.
|
|
9.
|
Securities and other financial assets, net
|
All securities and other financial
assets are presented as follows:
|
|
|
|
|
At fair value
|
|
|
|
|
At September 30, 2020
|
|
|
|
|
|
With
changes in other comprehensive
income (loss)
|
|
|
|
|
|
|
|
|
|
Carrying amount
|
|
|
Amortized cost
|
|
|
|
Recyclable to
profit and loss
|
|
|
|
Non-recyclable to
profit and loss
|
|
|
|
With
changes in
profit or loss
|
|
|
|
Total securities and other
financial assets, net
|
|
Principal
|
|
|
121,388
|
|
|
|
112,424
|
|
|
|
-
|
|
|
|
3,500
|
|
|
|
237,312
|
|
Interest receivable
|
|
|
1,091
|
|
|
|
470
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,561
|
|
Reserves
|
|
|
(301
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(301
|
)
|
|
|
|
122,178
|
|
|
|
112,894
|
|
|
|
-
|
|
|
|
3,500
|
|
|
|
238,572
|
|
|
|
|
|
At fair value
|
|
|
|
|
At December 31, 2019
|
|
|
|
With changes in other comprehensive
income (loss)
|
|
|
|
|
|
|
Carrying amount
|
|
Amortized cost
|
|
|
Recyclable to
profit and loss
|
|
|
Non-recyclable
to
profit and loss
|
|
|
With
changes in
profit or loss
|
|
|
Total securities and other
financial assets, net
|
|
Principal
|
|
|
74,547
|
|
|
|
5,094
|
|
|
|
1,889
|
|
|
|
6,492
|
|
|
|
88,022
|
|
Interest receivable
|
|
|
837
|
|
|
|
48
|
|
|
|
-
|
|
|
|
-
|
|
|
|
885
|
|
Reserves
|
|
|
(113
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(113
|
)
|
|
|
|
75,271
|
|
|
|
5,142
|
|
|
|
1,889
|
|
|
|
6,492
|
|
|
|
88,794
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
9.
|
Securities and other financial assets, net (continued)
|
As of September 30, 2020,
and December 31, 2019, the Bank sold 261,164 and 767,301 shares, respectively, which were designated in their initial recognition
at fair value with changes in other comprehensive income due to market changes affecting the liquidity of the instrument.
The cumulative fair value of
the shares sold was $1.7 million and $4.8 million, respectively, and the cumulative loss recognized in OCI was $602 thousand and
$151 thousand, respectively, transferred to retained earnings.
Securities and other financial
assets by contractual maturity are shown in the following table:
|
|
|
|
|
At
fair value
|
|
|
|
|
At September 30, 2020
|
|
With
changes in other comprehensive
income
|
|
|
|
|
|
|
|
|
|
Amortized
cost
|
|
|
Recyclable
to
profit and loss
|
|
|
Non-recyclable
to
profit and loss
|
|
|
With
changes in
profit or loss
|
|
|
Total
securities and other
financial assets, net
|
|
Due within
1 year
|
|
|
37,628
|
|
|
|
10,191
|
|
|
|
-
|
|
|
|
-
|
|
|
|
47,819
|
|
After 1 year but within
5 years
|
|
|
83,760
|
|
|
|
102,232
|
|
|
|
-
|
|
|
|
-
|
|
|
|
185,992
|
|
After 5 years but within
10 years
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Non
maturity
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,500
|
|
|
|
3,500
|
|
Balance
- principal
|
|
|
121,388
|
|
|
|
112,424
|
|
|
|
-
|
|
|
|
3,500
|
|
|
|
237,312
|
|
|
|
|
|
|
At
fair value
|
|
|
|
|
At December 31, 2019
|
|
With
changes in other comprehensive
income
|
|
|
|
|
|
|
|
|
|
Amortized
cost
|
|
|
Recyclable
to
profit and loss
|
|
|
Non-recyclable
to
profit and loss
|
|
|
With
changes in
profit or loss
|
|
|
Total
securities and other
financial assets, net
|
|
Due within
1 year
|
|
|
28,295
|
|
|
|
-
|
|
|
|
1,889
|
|
|
|
-
|
|
|
|
30,184
|
|
After 1 year but within
5 years
|
|
|
46,252
|
|
|
|
5,094
|
|
|
|
-
|
|
|
|
-
|
|
|
|
51,346
|
|
After 5 years but within
10 years
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Non
maturity
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,492
|
|
|
|
6,492
|
|
Balance
- principal
|
|
|
74,547
|
|
|
|
5,094
|
|
|
|
1,889
|
|
|
|
6,492
|
|
|
|
88,022
|
|
The following table includes
the securities pledge to secure repurchase transactions accounted for as secured pledged:
|
|
September 30, 2020
|
|
|
December 31, 2019
|
|
|
|
Amortized
cost
|
|
|
Fair value
|
|
|
Total
|
|
|
Amortized
cost
|
|
|
Fair value
|
|
|
Total
|
|
Securities pledged to secure repurchase transactions
|
|
|
12,040
|
|
|
|
-
|
|
|
|
12,040
|
|
|
|
36,843
|
|
|
|
5,094
|
|
|
|
41,937
|
|
Securities sold under repurchase agreements
|
|
|
(10,663
|
)
|
|
|
-
|
|
|
|
(10,663
|
)
|
|
|
(35,647
|
)
|
|
|
(4,883
|
)
|
|
|
(40,530
|
)
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
9.
|
Securities and other financial assets, net (continued)
|
|
|
September 30, 2020
|
|
|
December 31, 2019
|
|
|
|
Amortized
cost
|
|
|
Fair value
|
|
|
Total
|
|
|
Amortized
cost
|
|
|
Fair value
|
|
|
Total
|
|
Securities pledged to secure repurchase transactions
|
|
|
12,040
|
|
|
|
-
|
|
|
|
12,040
|
|
|
|
36,843
|
|
|
|
5,094
|
|
|
|
41,937
|
|
Securities sold under repurchase agreements
|
|
|
(10,663
|
)
|
|
|
-
|
|
|
|
(10,663
|
)
|
|
|
(35,647
|
)
|
|
|
(4,883
|
)
|
|
|
(40,530
|
)
|
The following table presents
the realized gains or losses on sale of securities at fair value through other comprehensive income:
|
|
Nine months ended September 30th
|
|
|
|
2020
|
|
|
2019
|
|
Realized gain on sale of securities
|
|
|
-
|
|
|
|
163
|
|
Realized loss on sale of securities
|
|
|
-
|
|
|
|
-
|
|
Net gain on sale of securities at FVOCI
|
|
|
-
|
|
|
|
163
|
|
The fixed and floating interest rate distribution
of the loan portfolio is as follows:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Fixed interest rates
|
|
|
2,289,216
|
|
|
|
2,757,333
|
|
Floating interest rates
|
|
|
2,277,039
|
|
|
|
3,135,664
|
|
Total
|
|
|
4,566,255
|
|
|
|
5,892,997
|
|
As of September 30, 2020,
and December 31, 2019, 78% and 74% of the loan portfolio at fixed interest rates has remaining maturities of less than 180
days.
As
of September 30, 2020, the range of interest rates on loans fluctuates from 0.79% to 10.77%
(December 31, 2019 1.20% to 13.93%).
As
of September 30, 2020, and December 31, 2019, the Bank had credit transactions in the normal course of business with
10% and 11%, respectively, of its Class “A” and “B” stockholders. All transactions were made
based on arm’s-length terms and subject to prevailing commercial criteria and market rates and were subject to all of the
Bank’s Corporate Governance and control procedures. As of September 30, 2020, and
December 31, 2019, approximately 10% and 11%, respectively, of the outstanding loan portfolio was placed with the Bank’s
Class “A” and “B” stockholders and their related parties. As of September 30, 2020, the Bank
was not directly or indirectly owned or controlled by another corporation or any foreign government, and no Class “A”
or “B” shareholder was the owner of record of more than 3.5% of the total outstanding shares of the voting capital
stock of the Bank.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
Modified financial assets
The following table refers to
modified financial assets during the year, where modification does not result in de-recognition:
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Gross carrying amount before modification
|
|
|
14,164
|
|
|
|
-
|
|
Allowance loss before modification(1)
|
|
|
(1,830
|
)
|
|
|
-
|
|
Net amortized cost before modification
|
|
|
12,334
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Gross carrying amount after modification
|
|
|
14,164
|
|
|
|
-
|
|
Allowance loss after modification(2)
|
|
|
(1,950
|
)
|
|
|
-
|
|
Net amortized cost after modification
|
|
|
12,214
|
|
|
|
-
|
|
(1) Expected
credit loss for 12 months.
(2) Expected
credit loss within the life of the financial asset.
Recognition and derecognition
of financial assets
During the period ended September 30, 2020,
there was an $11.6 million sale of the Stage 3 impaired loan and a sale of a Stage 2 loan with a significant increase in credit
risk of $13.2 million, both classified at amortized cost. This resulted in a write-off against reserves of $56.1 million. These
sales were made based on compliance with the Bank's strategy to optimize credit risk of its loan portfolio.
11.
|
Loan commitments and financial guarantee contracts
|
In the normal course of business,
to meet the financing needs of its customers, the Bank is party to loan commitments and financial guarantee contracts. These instruments
involve, to varying degrees, elements of credit and market risk in excess of the amount recognized in the consolidated statement
of financial position. Credit risk represents the possibility of loss resulting from the failure of a customer to perform in accordance
with the terms of a contract.
The Bank’s outstanding
loan commitments and financial guarantee contracts are as follows:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Documentary letters of credit
|
|
|
85,385
|
|
|
|
169,320
|
|
Stand-by letters of credit and guarantees - commercial risk
|
|
|
203,474
|
|
|
|
255,481
|
|
Credit commitments
|
|
|
141,905
|
|
|
|
68,571
|
|
Total loans commitments and financial guarantee contracts
|
|
|
430,764
|
|
|
|
493,372
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
11.
|
Loan commitments and financial guarantee contracts (continued)
|
The remaining maturity profile
of the Bank’s outstanding loan commitments and financial guarantee contracts is as follows:
Maturities
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Up to 1 year
|
|
|
303,719
|
|
|
|
424,744
|
|
From 1 to 2 years
|
|
|
57,045
|
|
|
|
8,628
|
|
From 2 to 5 years
|
|
|
70,000
|
|
|
|
60,000
|
|
Total
|
|
|
430,764
|
|
|
|
493,372
|
|
12.
|
Gain (loss) on financial instruments, net
|
The following table sets forth
the details for the gain or loss on financial instrument recognized in the consolidated statements of profit or loss:
|
|
For the three months ended
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
Gain (loss) on derivative financial instruments and foreign currency exchange, net
|
|
|
(357
|
)
|
|
|
20
|
|
Unrealized gain (loss) on financial instruments at fair value through profit or loss
|
|
|
(159
|
)
|
|
|
1
|
|
Realized Loss (gain) on financial instruments at fair value through profit or loss
|
|
|
79
|
|
|
|
(211
|
)
|
|
|
|
(437
|
)
|
|
|
(190
|
)
|
|
|
For the nine months ended
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
Gain (loss) on derivative financial instruments and foreign currency exchange, net
|
|
|
(2,242
|
)
|
|
|
303
|
|
Unrealized gain on financial instruments at fair value through profit or loss
|
|
|
(2,986
|
)
|
|
|
(10
|
)
|
Realized Loss on financial instruments at fair value through profit or loss
|
|
|
484
|
|
|
|
173
|
|
Loss on sale of securities at fair value through OCI
|
|
|
-
|
|
|
|
163
|
|
|
|
|
(4,744
|
)
|
|
|
629
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
13.
|
Derivative financial instruments
|
The following table details
quantitative information on the notional amounts and carrying amounts of the derivative instruments used for hedging by type of
risk hedged and type of hedge:
|
|
September 30, 2020
|
|
|
|
Nominal
amount
|
|
|
Carrying amount of hedging
instruments
|
|
|
|
|
|
Asset (1)
|
|
|
Liability (2)
|
|
Interest rate risk
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value hedges
|
|
|
86,333
|
|
|
|
1,531
|
|
|
|
(300
|
)
|
Cash flow hedges
|
|
|
60,000
|
|
|
|
-
|
|
|
|
(1,859
|
)
|
Interest rate and foreign exchange risk
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value hedges
|
|
|
362,457
|
|
|
|
3,543
|
|
|
|
(27,178
|
)
|
Cash flow hedges
|
|
|
225,436
|
|
|
|
1,375
|
|
|
|
(3,063
|
)
|
Foreign exchange risk
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow hedges
|
|
|
68,317
|
|
|
|
494
|
|
|
|
(915
|
)
|
|
|
|
802,543
|
|
|
|
6,943
|
|
|
|
(33,315
|
)
|
|
|
December 31, 2019
|
|
|
|
Nominal
amount
|
|
|
Carrying amount of hedging
instruments
|
|
|
|
|
|
Asset (1)
|
|
|
Liability (2)
|
|
Interest rate risk
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value hedges
|
|
|
398,333
|
|
|
|
407
|
|
|
|
(805
|
)
|
Cash flow hedges
|
|
|
123,000
|
|
|
|
-
|
|
|
|
(1,098
|
)
|
Interest rate and foreign exchange risk
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value hedges
|
|
|
346,844
|
|
|
|
10,125
|
|
|
|
(8,527
|
)
|
Cash flow hedges
|
|
|
23,025
|
|
|
|
-
|
|
|
|
(1,670
|
)
|
Foreign exchange risk
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow hedges
|
|
|
72,391
|
|
|
|
625
|
|
|
|
(2,552
|
)
|
Net investment hedges
|
|
|
2,080
|
|
|
|
-
|
|
|
|
(23
|
)
|
|
|
|
965,673
|
|
|
|
11,157
|
|
|
|
(14,675
|
)
|
(1) Included
in the condensed consolidated interim statement of financial position under the line Derivative financial instruments - assets.
(2) Included
in the condensed consolidated interim statement of financial position under the line Derivative financial instruments - liabilities.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
13.
|
Derivative financial instruments (continued)
|
As part of the financial risk
management, the Bank uses the following hedging relationships:
For control purposes, derivative
instruments are recorded at their nominal amount in memoranda accounts. Interest rate swaps are made either in a single currency
or cross currency for a prescribed period to exchange a series of interest rate flows, which involve fixed for floating interest
payments, and vice versa. The Bank also engages in certain foreign exchange forward contracts to serve customers’ transaction
needs and to manage foreign currency risk. All such positions are hedged with an offsetting contract for the same currency.
The Bank manages and controls
the risks on these foreign exchange trades by establishing counterparty credit limits by customer and by adopting policies that
do not allow for open positions in the loan and investment portfolio. The Bank also uses foreign exchange forward contracts to
hedge the foreign exchange risk associated with the Bank’s equity investment in a non-U.S. dollar functional currency foreign
entity. Derivative and foreign exchange forward instruments negotiated by the Bank are executed mainly over-the-counter (OTC).
These contracts are executed between two counterparties that negotiate specific agreement terms, including notional amount, exercise
price and maturity.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
13.
|
Derivative financial instruments (continued)
|
This type of hedge is used to
mitigate the risk of changes in foreign exchange currency rates, as well as changes in interest rate risk. Within the derivative
financial instruments used by the Bank for fair value hedging are interest rate swap contracts whereby a series of interest rate
flows in a single currency are exchanged over a prescribed period and cross currency swaps contracts that generally involve the
exchange of both interest and principal amounts in two different currencies.
The Bank’s exposure to
interest rate risk is disclosed in Note 5(C)(i). Interest rate risk to which the Bank applies hedge accounting arises from fixed-rate
euro medium term notes and other long-term notes issuances (“Certificados Bursatiles”), fixed-rate loans and advances,
whose fair value fluctuates when benchmark interest rates change. The Bank hedges interest rate risk only to the extent of benchmark
interest rates because the changes in fair value of a fixed-rate note or loan are significantly influenced by changes in the benchmark
interest rate. Hedge accounting is applied where economic hedging relationships meet the hedge accounting criteria.
Before fair value hedge accounting
is applied by the Bank, the Bank determines whether an economic relationship between the hedged item and the hedging instrument
exists based on an assessment of the qualitative characteristics of these items and the hedged risk that is supported by quantitative
analysis. The Bank considers whether the critical terms of the hedged item and hedging instrument closely align when assessing
the presence of an economic relationship. The Bank assesses whether the fair value of the hedged item and the hedging instrument
respond similarly to similar risks. The Bank further supports this qualitative assessment by using regression analysis to assess
whether the hedging instrument is expected to be and has been highly effective in offsetting changes in the fair value of the hedged
item. The sources of ineffectiveness mainly come from forward rates, discount rates and cross currency basis (cost of the operation).
The following table details the notional amounts
and carrying amounts of derivative instruments used in fair value hedges by type of risk and hedged item, along with the changes
during the period used to determine and recognize the ineffectiveness of the hedge:
|
|
September 30, 2020
|
|
|
|
Nominal
amount
|
|
|
Carrying
amount of
hedging instruments
|
|
|
Changes in fair
value used to
calculate hedge
ineffectiveness (3)
|
|
|
Ineffectiveness
recognized in
profit or loss (3)
|
|
|
|
|
|
|
|
|
Asset (1)
|
|
|
|
Liability (2)
|
|
|
|
|
|
|
|
|
|
Interest rate risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
|
11,333
|
|
|
|
-
|
|
|
|
(199
|
)
|
|
|
12
|
|
|
|
2
|
|
Securities at FVOCI
|
|
|
5,000
|
|
|
|
-
|
|
|
|
(101
|
)
|
|
|
(54
|
)
|
|
|
(15
|
)
|
Borrowings and debt
|
|
|
70,000
|
|
|
|
1,531
|
|
|
|
-
|
|
|
|
324
|
|
|
|
(27
|
)
|
Interest rate and foreign exchange risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
|
5,418
|
|
|
|
1,046
|
|
|
|
-
|
|
|
|
758
|
|
|
|
(126
|
)
|
Borrowings and debt
|
|
|
357,039
|
|
|
|
2,497
|
|
|
|
(27,178
|
)
|
|
|
(25,581
|
)
|
|
|
(1,121
|
)
|
Total
|
|
|
448,790
|
|
|
|
5,074
|
|
|
|
(27,478
|
)
|
|
|
(24,541
|
)
|
|
|
(1,287
|
)
|
(1) Included
in the condensed consolidated interim statement of financial position under the line Derivative financial instruments - assets.
(2) Included
in the condensed consolidated interim statement of financial position under the line Derivative financial instruments - liabilities.
(3) Included
in the condensed consolidated interim statement of profit or loss is the line Loss on financial instruments, net.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
13.
|
Derivative financial instruments (continued)
|
|
A.
|
Fair value hedge (continued)
|
|
|
December 31, 2019
|
|
|
|
Nominal
amount
|
|
|
Carrying
amount of
hedging instruments
|
|
|
Changes in fair
value used to
calculate hedge
ineffectiveness (3)
|
|
|
Ineffectiveness
recognized in
profit or loss (3)
|
|
|
|
|
|
|
|
|
Asset (1)
|
|
|
|
Liability (2)
|
|
|
|
|
|
|
|
|
|
Interest rate risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
|
13,333
|
|
|
|
-
|
|
|
|
(166
|
)
|
|
|
(127
|
)
|
|
|
(9
|
)
|
Securities at FVOCI
|
|
|
5,000
|
|
|
|
-
|
|
|
|
(45
|
)
|
|
|
(97
|
)
|
|
|
(17
|
)
|
Borrowings and debt
|
|
|
380,000
|
|
|
|
407
|
|
|
|
(594
|
)
|
|
|
5,203
|
|
|
|
(65
|
)
|
Interest rate and foreign exchange risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
|
6,430
|
|
|
|
276
|
|
|
|
-
|
|
|
|
(482
|
)
|
|
|
(214
|
)
|
Borrowings and debt
|
|
|
340,414
|
|
|
|
9,849
|
|
|
|
(8,527
|
)
|
|
|
7,234
|
|
|
|
55
|
|
Total
|
|
|
745,177
|
|
|
|
10,532
|
|
|
|
(9,332
|
)
|
|
|
11,731
|
|
|
|
(250
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Included
in the condensed consolidated interim statement of financial position under the line Derivative financial instruments - assets.
(2) Included
in the condensed consolidated interim statement of financial position under the line Derivative financial instruments - liabilities.
(3) Included
in the condensed consolidated interim statement of profit or loss is the line Loss on financial instruments, net.
The following table details the notional amounts
and carrying amounts of the hedged items at fair value by type of risk and hedged item, along with the changes during the period
used to determine and recognize the ineffectiveness of the hedge:
|
|
September 30,
2020
|
|
|
|
Carrying
amount of
hedged items
|
|
|
Line in the consolidated
statement of financial
position that includes the
carrying amount of the
hedged items
|
|
Accumulated
amount of
fair value hedge
adjustments included in
the carrying amount of the
hedged items
|
|
|
Change
in fair value of
the hedged items used
to calculate hedge
ineffectiveness(1)
|
|
|
|
|
Asset
|
|
|
|
Liability
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
|
11,573
|
|
|
|
-
|
|
|
Loans, net
|
|
|
147
|
|
|
|
(10
|
)
|
Securities
at FVOCI
|
|
|
5,125
|
|
|
|
-
|
|
|
Securities and other financial assets, net
|
|
|
55
|
|
|
|
39
|
|
Borrowings
and debt
|
|
|
-
|
|
|
|
(71,636
|
)
|
|
Borrowings and debt, net
|
|
|
(417
|
)
|
|
|
(351
|
)
|
Interest rate and foreign exchange risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Loans
|
|
|
4,497
|
|
|
|
-
|
|
|
|
|
|
(1,379
|
)
|
|
|
(884
|
)
|
Borrowings
and debt
|
|
|
-
|
|
|
|
(332,942
|
)
|
|
Borrowings and debt, net
|
|
|
23,487
|
|
|
|
24,460
|
|
Total
|
|
|
21,195
|
|
|
|
(404,578
|
)
|
|
|
|
|
21,893
|
|
|
|
23,254
|
|
(1) Included in the condensed consolidated interim
statement of profit or loss is the line Loss on financial instruments, net.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
13.
|
Derivative financial instruments
(continued)
|
|
A.
|
Fair value hedge (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2019
|
|
|
|
Carrying
amount of hedged items
|
|
|
Line
in the consolidated
statement of financial
position that includes the
carrying amount of the
|
|
Accumulated
amount of
fair value hedge
adjustments included in
the carrying amount of the
|
|
|
Change
in fair value of
the hedged items used
to calculate hedge
|
|
|
|
|
Asset
|
|
|
|
Liability
|
|
|
hedged items
|
|
|
hedged
items
|
|
|
|
ineffectiveness(1)
|
|
Interest rate risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
|
13,583
|
|
|
|
-
|
|
|
Loans, net
|
|
|
158
|
|
|
|
118
|
|
Securities at FVOCI
|
|
|
5,142
|
|
|
|
-
|
|
|
Securities and other financial assets, net
|
|
|
94
|
|
|
|
80
|
|
Borrowings and debt
|
|
|
-
|
|
|
|
(381,587
|
)
|
|
Borrowings and debt, net
|
|
|
18
|
|
|
|
(5,268
|
)
|
Interest rate and foreign exchange risk
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
-
|
|
Loans
|
|
|
6,202
|
|
|
|
-
|
|
|
Loans, net
|
|
|
(495
|
)
|
|
|
268
|
|
Borrowings
and debt
|
|
|
-
|
|
|
|
(336,117
|
)
|
|
Borrowings and debt, net
|
|
|
(973
|
)
|
|
|
(7,179
|
)
|
Total
|
|
|
24,927
|
|
|
|
(717,704
|
)
|
|
|
|
|
(1,198
|
)
|
|
|
(11,981
|
)
|
(1) Included
in the condensed consolidated interim statement of profit or loss is the line Loss on financial instruments, net.
The following table details
the maturity of the notional amount for the derivative instruments used in fair value hedges:
|
|
September 30,
2020
|
|
Maturity
|
|
Interest
rate
swaps
|
|
|
Foreign
exchange and
interest
rate risks
|
|
|
Total
|
|
Fair value hedge
|
|
|
|
|
|
|
|
|
|
Less to 1 year
|
|
|
86,333
|
|
|
|
16,626
|
|
|
|
102,959
|
|
1 to 2 years
|
|
|
-
|
|
|
|
271,646
|
|
|
|
271,646
|
|
2 to 5 years
|
|
|
-
|
|
|
|
74,185
|
|
|
|
74,185
|
|
Total
|
|
|
86,333
|
|
|
|
362,457
|
|
|
|
448,790
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
13.
|
Derivative financial instruments (continued)
|
|
A.
|
Fair value hedge
(continued)
|
|
|
December 31,
2019
|
|
Maturity
|
|
Interest
rate
swaps
|
|
|
Foreign
exchange and
interest
rate risks
|
|
|
Total
|
|
Fair value hedge
|
|
|
|
|
|
|
|
|
|
Less to 1 year
|
|
|
350,000
|
|
|
|
-
|
|
|
|
350,000
|
|
1 to 2 years
|
|
|
48,333
|
|
|
|
-
|
|
|
|
48,333
|
|
2 to 5 years
|
|
|
-
|
|
|
|
346,844
|
|
|
|
346,844
|
|
Total
|
|
|
398,333
|
|
|
|
346,844
|
|
|
|
745,177
|
|
This type of hedge is used
to mitigate the risk of changes in foreign exchange currency rates, as well as changes in interest rate risk, that could include
variability in the future cash flows. Within the derivative financial instruments used by the Bank for a cash flow hedging are
interest rate swaps contracts whereby a series of interest rate flows in a single currency are exchanged over a prescribed period,
cross currency swaps contracts that generally involve the exchange of both interest and principal amounts in two different currencies,
and foreign exchange forward contracts, an agreement to purchase or sell foreign currency at a future date at agreed-upon terms.
The Bank’s exposure to
market risk is disclosed in Note 5 (C) (ii). The Bank determines the amount of the exposure to which it applies hedge accounting
by assessing the potential impact of changes in interest rates and foreign currency exchange rates on the future cash flows. This
assessment is performed using analytical techniques, such as cash flow sensitivity analysis. As noted above for fair value hedges,
by using derivative financial instruments to hedge exposures to changes in interest rates and foreign currency exchange rates,
the Bank exposes itself to credit risk of the counterparties to the derivatives, which is not offset by the hedged items. This
exposure is managed similarly to that off fair value hedges.
The Bank determines whether
an economic relationship exists between the cash flows of the hedged item and hedging instrument based on an assessment of the
qualitative characteristics of these items and the hedged risk that is supported by quantitative analysis. The Bank considers
whether the critical terms of the hedged item and hedging instrument closely align when assessing the presence of an economic
relationship. The Bank assesses whether the cash flows of the hedged item and the hedging instrument respond similarly to the
hedged risk, such as the benchmark interest rate or foreign currency. The Bank further supports this qualitative assessment by
using sensitivity analysis to assess whether the hedging instrument is expected to be and has been highly effective in offsetting
changes in the present value of the hedged item. The Bank assesses hedge effectiveness using the hypothetical derivative method,
which creates a derivative instrument to serve as a proxy for the hedged transaction. The terms of the hypothetical derivative
match the critical terms of the hedged item and it has a fair value of zero at inception. The sources of ineffectiveness arise
mainly because of the differences in discount rates (OIS - Overnight Index Swap).
The
maximum length of time over which the Bank has hedged its exposure to the variability in future cash flows on forecasted transactions
is 4.7 years.
The
Bank recognized the lifetime associated cost of the foreign exchange forward contracts into interest income, in profit or loss,
as an adjustment to the yield on hedged items creating an accumulated reserve in OCI, reclassified to profit or loss at their
maturity. The Bank estimates that approximately $562 thousand are expected to be reclassified into profit or loss during
the year ending September 30, 2021.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
13.
|
Derivative financial instruments (continued)
|
|
B.
|
Cash flow hedge (continued)
|
The Bank recognized the associated costs for the forward foreign exchange contracts, as an integral part interest income
(expense) of the underlying transaction, presented in the consolidated statement of profit or loss and as an accumulated reserve
in Other comprehensive income in the consolidated statement of Financial position, which at maturity of the transaction is reclassified
to profit or loss.
The following table details
the notional amounts and carrying amounts of derivative instruments used in cash flow hedges by type of risk and hedged item,
along with the changes during the period used to determine and recognize the ineffectiveness of the hedge:
|
|
September 30,
2020
|
|
|
|
Nominal
|
|
|
Carrying
amount of
hedging instruments
|
|
|
Change in fair
value used for
calculating
hedge
|
|
|
Changes
in the
fair value of the
hedging
instruments
recognized in
|
|
|
Ineffectiveness
recognized in
|
|
|
Amount
reclassified
from the hedge
reserve to profit
|
|
|
|
|
amount
|
|
|
|
Asset
(1)
|
|
|
|
Liability
(2)
|
|
|
|
ineffectiveness
|
|
|
|
OCI
(3)
|
|
|
|
profit
or loss (4)
|
|
|
|
or
loss (4)
|
|
Interest rate risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings and debt
|
|
|
60,000
|
|
|
|
-
|
|
|
|
(1,859
|
)
|
|
|
(765
|
)
|
|
|
(764
|
)
|
|
|
1
|
|
|
|
(75
|
)
|
Interest rate and foreign exchange risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings and debt
|
|
|
225,436
|
|
|
|
1,375
|
|
|
|
(3,063
|
)
|
|
|
(1,640
|
)
|
|
|
(1,629
|
)
|
|
|
11
|
|
|
|
-
|
|
Foreign exchange risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
|
68,317
|
|
|
|
494
|
|
|
|
(915
|
)
|
|
|
(420
|
)
|
|
|
(422
|
)
|
|
|
(2
|
)
|
|
|
(1,927
|
)
|
Borrowings and debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
|
353,753
|
|
|
|
1,869
|
|
|
|
(5,837
|
)
|
|
|
(2,825
|
)
|
|
|
(2,815
|
)
|
|
|
10
|
|
|
|
(2,002
|
)
|
|
|
December 31,
2019
|
|
|
|
Nominal
|
|
|
Carrying
amount of
hedging instruments
|
|
|
Change in fair
value used for
calculating
hedge
|
|
|
Changes
in the
fair value of the
hedging
instruments
recognized in
|
|
|
Ineffectiveness
recognized in
|
|
|
Amount
reclassified
from the hedge
reserve to profit
|
|
|
|
|
amount
|
|
|
|
Asset
(1)
|
|
|
|
Liability
(2)
|
|
|
|
ineffectiveness
|
|
|
|
OCI
(3)
|
|
|
|
profit
or loss (4)
|
|
|
|
or
loss (4)
|
|
Interest rate risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings and debt
|
|
|
123,000
|
|
|
|
-
|
|
|
|
(1,098
|
)
|
|
|
(1,459
|
)
|
|
|
(1,458
|
)
|
|
|
1
|
|
|
|
39
|
|
Interest rate and foreign exchange risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings and debt
|
|
|
23,025
|
|
|
|
-
|
|
|
|
(1,670
|
)
|
|
|
(284
|
)
|
|
|
(283
|
)
|
|
|
1
|
|
|
|
-
|
|
Foreign exchange risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
|
72,391
|
|
|
|
625
|
|
|
|
(2,552
|
)
|
|
|
(2,346
|
)
|
|
|
(2,344
|
)
|
|
|
2
|
|
|
|
(1,070
|
)
|
Borrowings and debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,545
|
)
|
Total
|
|
|
218,416
|
|
|
|
625
|
|
|
|
(5,320
|
)
|
|
|
(4,089
|
)
|
|
|
(4,085
|
)
|
|
|
4
|
|
|
|
(6,576
|
)
|
(1) Included
in the condensed consolidated interim statement of financial position under the line Derivative financial instruments - assets.
(2) Included
in the condensed consolidated interim statement of financial position under the line Derivative financial instruments - liabilities.
(3) Included
in equity in the condensed consolidated interim statement of financial position on the line Other comprehensive income.
(4)
Included in the condensed consolidated interim statement of profit or loss under the line Loss on financial instruments,
net.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
13.
|
Derivative financial instruments
(continued)
|
|
B.
|
Cash flow hedge (continued)
|
The following table details
the nominal amounts and carrying amounts of the cash flow hedged items by type of risk and hedged item, along with the changes
during the period used to determine and recognize the ineffectiveness of the hedge:
|
|
September 30,
2020
|
|
|
|
Carrying
amount of
hedged items
|
|
|
Line in the consolidated
statement of financial
position that includes
the carrying amount of
|
|
Change
in the fair value
of the hedged items used
to calculate the hedge
|
|
|
Cash flow
|
|
|
|
|
Asset
|
|
|
|
Liability
|
|
|
the hedged
items
|
|
|
ineffectiveness
(1)
|
|
|
|
hedge
reserve
|
|
Interest rate risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings and debt
|
|
|
-
|
|
|
|
(20,046
|
)
|
|
Borrowings and debt, net
|
|
|
764
|
|
|
|
1,762
|
|
Interest rate and foreign exchange risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings and debt
|
|
|
-
|
|
|
|
(229,127
|
)
|
|
Borrowings and debt, net
|
|
|
1,629
|
|
|
|
2,871
|
|
Foreign exchange risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
|
68,398
|
|
|
|
-
|
|
|
Loans, net
|
|
|
422
|
|
|
|
576
|
|
Total
|
|
|
68,398
|
|
|
|
(249,173
|
)
|
|
|
|
|
2,815
|
|
|
|
5,209
|
|
|
|
December 31,
2019
|
|
|
|
Carrying
amount of
hedged items
|
|
|
Line in the consolidated
statement of financial
position that includes
the carrying amount of
|
|
Change
in the fair value
of the hedged items used
to calculate the hedge
|
|
|
Cash flow
|
|
|
|
|
Asset
|
|
|
|
Liability
|
|
|
the hedged items
|
|
|
ineffectiveness
(1)
|
|
|
|
hedge
reserve
|
|
Interest rate risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings and
debt
|
|
|
-
|
|
|
|
(70,110
|
)
|
|
Borrowings and debt,
net
|
|
|
1,458
|
|
|
|
1,072
|
|
Interest rate and foreign exchange risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings and debt
|
|
|
-
|
|
|
|
(21,234
|
)
|
|
Borrowings and debt, net
|
|
|
283
|
|
|
|
(5
|
)
|
Foreign exchange risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
|
73,861
|
|
|
|
-
|
|
|
Loans, net
|
|
|
2,344
|
|
|
|
263
|
|
Total
|
|
|
73,861
|
|
|
|
(91,344
|
)
|
|
|
|
|
4,085
|
|
|
|
1,330
|
|
(1) Included
in the condensed consolidated interim statement of profit and loss or the line Loss on financial instruments, net.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
13.
|
Derivative financial instruments
(continued)
|
|
B.
|
Cash flow hedge (continued)
|
The following table details
the maturity of the derivative instruments used in cash flow hedges:
|
|
September 30,
2020
|
|
Maturity
|
|
Foreign
exchange risk
|
|
|
Interest
rate
swaps
|
|
|
Foreign
exchange and
interest
rate risks
|
|
|
Total
|
|
Cash flow hedge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less to 1 year
|
|
|
68,317
|
|
|
|
40,000
|
|
|
|
39,210
|
|
|
|
147,527
|
|
2 to 5 years
|
|
|
-
|
|
|
|
20,000
|
|
|
|
186,226
|
|
|
|
206,226
|
|
Total
|
|
|
68,317
|
|
|
|
60,000
|
|
|
|
225,436
|
|
|
|
353,753
|
|
|
|
December 31,
2019
|
|
Maturity
|
|
Foreign
exchange risk
|
|
|
Interest
rate
swaps
|
|
|
Foreign
exchange and
interest
rate risks
|
|
|
Total
|
|
Cash flow hedge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less to 1 year
|
|
|
74,471
|
|
|
|
63,000
|
|
|
|
23,025
|
|
|
|
160,496
|
|
1 to 2 years
|
|
|
-
|
|
|
|
40,000
|
|
|
|
-
|
|
|
|
40,000
|
|
2 to 5 years
|
|
|
-
|
|
|
|
20,000
|
|
|
|
-
|
|
|
|
20,000
|
|
Total
|
|
|
74,471
|
|
|
|
123,000
|
|
|
|
23,025
|
|
|
|
220,496
|
|
A foreign currency exposure
arises from a net investment either in a subsidiary that has a different functional currency from that of the Bank or in a financial
instrument in a foreign currency designated at FVOCI. The hedge risk in the net investment hedge is the variability in the US
dollar against any other foreign currency that will result in a reduction in the carrying amount.
The Bank’s policy is
to hedge the net investment only to the extent of the debt principal; therefore, the hedge ratio is established by aligning the
principal amount in foreign currency of the debt with the carrying amount of the net investment that is designated.
When the hedging instrument
is a forward foreign exchange contract, the Bank establishes a hedge relationship where the notional of the forward foreign exchange
contract matches the carrying amount of the designated net investment. The Bank ensures that the foreign currency in which the
hedging instrument is denominated is the same as the functional currency of the net investment. The only source of ineffectiveness
that is expected to arise from these hedging relationships is due to the effect of the counterparty and the Bank’s own credit
risk on the fair value of the derivative. As of September 30, 2020, The Bank had no position on its net investment hedged
portfolio.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
13.
|
Derivative financial instruments
(continued)
|
|
C.
|
Net investment hedge (continued)
|
The following table details
the notional amount and carrying amount of the derivative instruments used as net investment hedge at December 31, 2019 by
type of risk and hedged item, along with changes during the period used to determine and recognize the ineffectiveness of the
hedge:
|
|
December 31,
2019
|
|
|
|
Nominal
|
|
|
Carrying
amount of
hedging instruments
|
|
|
Change in fair
value used for
calculating
hedge
|
|
|
Changes
in the
fair value of the
hedging
instruments
recognized in
|
|
|
Ineffectiveness
recognized in
|
|
|
Amount
reclassified
from the hedge
reserve to profit
|
|
|
|
|
amount
|
|
|
|
Asset
(1)
|
|
|
|
Liability
(2)
|
|
|
|
ineffectiveness
|
|
|
|
OCI
(3)
|
|
|
|
profit
or loss (4)
|
|
|
|
or
loss (4)
|
|
Foreign exchange risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment
|
|
|
2,080
|
|
|
|
-
|
|
|
|
(23
|
)
|
|
|
(23
|
)
|
|
|
(23
|
)
|
|
|
-
|
|
|
|
(78
|
)
|
Total
|
|
|
2,080
|
|
|
|
-
|
|
|
|
(23
|
)
|
|
|
(23
|
)
|
|
|
(23
|
)
|
|
|
-
|
|
|
|
(78
|
)
|
Derivative instruments used
in net investment hedges at December 31, 2019 have a maturity of less than 30 days.
(1) Included
in the condensed consolidated interim statement of financial position under the line Derivative financial instruments - assets.
(2) Included
in the condensed consolidated interim statement of financial position under the line Derivative financial instruments - liabilities.
(3) Included
in equity in the condensed consolidated interim statement of financial position on the line Other comprehensive income.
(4) Included
in the condensed consolidated interim statement of profit or loss under the line of Loss on financial instruments, net.
The following table details
the nominal value and carrying amount of the net investment hedged items at December 31, 2019 by type of risk and hedged
item, along with changes during the period used to determine and recognize the ineffectiveness of the hedge:
|
|
December 31,
2019
|
|
|
|
Carrying
amount of hedged items
|
|
|
Line
in the consolidated
statement of financial
position that includes the
carrying amount of the
|
|
Change
in the fair value of
the hedged items used to
calculate the hedge
|
|
|
Cash
flow hedge
|
|
|
|
|
Asset
|
|
|
|
Liability
|
|
|
hedged items
|
|
|
ineffectiveness
(1)
|
|
|
|
reserve
|
|
Foreign exchange risk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment
|
|
|
1,889
|
|
|
|
-
|
|
|
Securities and other
financial assets, net
|
|
|
23
|
|
|
|
23
|
|
Total
|
|
|
1,889
|
|
|
|
-
|
|
|
|
|
|
23
|
|
|
|
23
|
|
(1) Included
in the condensed consolidated interim statement of profit or loss under the line Loss on financial instruments, net.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
Following is a summary of other
assets:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Accounts receivable
|
|
|
1,385
|
|
|
|
3,549
|
|
Interest receivable - deposits
|
|
|
21
|
|
|
|
26
|
|
IT projects under development
|
|
|
1,441
|
|
|
|
521
|
|
Other
|
|
|
3,892
|
|
|
|
4,761
|
|
|
|
|
6,739
|
|
|
|
8,857
|
|
The maturity profile of the
Bank’s deposits, excluding interest payable, s as follows:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Demand
|
|
|
361,230
|
|
|
|
85,786
|
|
Up to 1 month
|
|
|
961,323
|
|
|
|
1,285,949
|
|
From 1 month to 3 months
|
|
|
363,313
|
|
|
|
628,981
|
|
From 3 months to 6 months
|
|
|
987,204
|
|
|
|
593,431
|
|
From 6 months to 1 year
|
|
|
337,125
|
|
|
|
289,189
|
|
From 1 year to 2 years
|
|
|
45,000
|
|
|
|
5,000
|
|
|
|
|
3,055,195
|
|
|
|
2,888,336
|
|
The following table presents
additional information regarding the Bank’s deposits
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Aggregate amounts
of $100,000 or more
|
|
|
3,055,024
|
|
|
|
2,888,043
|
|
Aggregate amounts of deposits
in the New York Agency
|
|
|
535,286
|
|
|
|
240,003
|
|
|
|
Three
months ended September 30
|
|
|
|
2020
|
|
|
2019
|
|
Interest expense
on deposits made in the New York Agency
|
|
|
1,040
|
|
|
|
1,490
|
|
|
|
Nine
months ended September 30
|
|
|
|
|
2020
|
|
|
|
2019
|
|
Interest expense on deposits
made in the New York Agency
|
|
|
3,857
|
|
|
|
4,954
|
|
16.
|
Securities sold under repurchase
agreements
|
As
of September 30, 2020, and December 31, 2019, the Bank had financing transactions under repurchase agreements for $10.7
million and $40.5 million, respectively.
During the period ended September 30,
2020 and September 30, 2019, interest expense related to financing transactions under repurchase agreements totaled $407
thousand and $724 thousand, respectively. These expenses are included as interest expense – borrowings and debt line in
the consolidated statement of profit or loss.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
Borrowings consist of bilateral
funding and syndicated loans obtained from international banks. Debt instruments consist of public and private issuances under
the Bank's Euro Medium Term Notes Program (“EMTN”) as well as public issuances in the Mexican and Japanese markets.
The Bank's funding activities
include: (i) EMTN, which may be used to issue notes for up to $2.250 million, with maturities from 7 days up to a maximum
of 30 years, at fixed or floating interest rates, or at discount, and in various currencies. The notes are generally issued in
bearer or registered form through one or more authorized financial institutions; (ii) Short-and Long-Term Notes (“Certificados
Bursatiles”) Program (the “Mexican Program”) in the Mexican local market, registered with the Mexican National
Registry of Securities administered by the National Banking and Securities Commission in Mexico (“CNBV”, for its acronym
in Spanish), for an authorized aggregate principal amount of 10 billion Mexican pesos with maturities from 1 day to 30 years.
Some borrowing agreements include
various events of default and covenants related to minimum capital adequacy ratios, incurrence of additional liens, and asset
sales, as well as other customary covenants, representations and warranties. As of September 30, 2020, the Bank was in compliance
with all those covenants.
Borrowings and debt are detailed as follows:
|
|
September 30,
2020
|
|
|
|
Short-term
|
|
|
Long-term
|
|
|
|
|
Carrying amount
|
|
Borrowings
|
|
|
Debt
|
|
|
Lease
liabilities
|
|
|
Borrowings
|
|
|
Debt
|
|
|
Lease
liabilities
|
|
|
Total
|
|
Principal
|
|
|
376,635
|
|
|
|
49,450
|
|
|
|
1,215
|
|
|
|
583,336
|
|
|
|
1,046,890
|
|
|
|
17,857
|
|
|
|
2,075,383
|
|
Prepaid commissions
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,732
|
)
|
|
|
(6,708
|
)
|
|
|
-
|
|
|
|
(8,440
|
)
|
|
|
|
376,635
|
|
|
|
49,450
|
|
|
|
1,215
|
|
|
|
581,604
|
|
|
|
1,040,182
|
|
|
|
17,857
|
|
|
|
2,066,943
|
|
|
|
December 31,
2019
|
|
|
|
|
Short-term
|
|
|
|
Long-term
|
|
|
|
|
|
Carrying
amount
|
|
|
Borrowings
|
|
|
|
Debt
|
|
|
|
Lease
liabilities
|
|
|
|
Borrowings
|
|
|
|
Debt
|
|
|
|
Lease
liabilities
|
|
|
|
Total
|
|
Principal
|
|
|
1,573,663
|
|
|
|
22,000
|
|
|
|
1,145
|
|
|
|
723,419
|
|
|
|
802,676
|
|
|
|
18,769
|
|
|
|
3,141,672
|
|
Prepaid commissions
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,456
|
)
|
|
|
(1,906
|
)
|
|
|
-
|
|
|
|
(3,362
|
)
|
|
|
|
1,573,663
|
|
|
|
22,000
|
|
|
|
1,145
|
|
|
|
721,963
|
|
|
|
800,770
|
|
|
|
18,769
|
|
|
|
3,138,310
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
17.
|
Borrowings and debt (continued)
|
Short-term borrowings
and debt
The breakdown of short-term (original maturity of
less than one year) borrowings and debt, along with contractual interest rates, is as follows:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Short-term borrowings:
|
|
|
|
|
|
|
|
|
At fixed interest rates
|
|
|
74,078
|
|
|
|
607,500
|
|
At floating interest rates
|
|
|
302,557
|
|
|
|
966,163
|
|
Total borrowings
|
|
|
376,635
|
|
|
|
1,573,663
|
|
Short-term debt:
|
|
|
|
|
|
|
|
|
At fixed interest rates
|
|
|
5,000
|
|
|
|
22,000
|
|
At floating interest rates
|
|
|
44,450
|
|
|
|
-
|
|
Total debt
|
|
|
49,450
|
|
|
|
22,000
|
|
Total short-term borrowings
and debt
|
|
|
426,085
|
|
|
|
1,595,663
|
|
|
|
|
|
|
|
|
|
|
Maximum balance at any month-end
|
|
|
1,776,449
|
|
|
|
1,595,663
|
|
Range of fixed interest rates
on borrowings and debt in U.S. dollars
|
|
|
1.25%
to 2.43%
|
|
|
|
2.07%
to 2.52%
|
|
Range of floating interest rates
on borrowings in U.S. dollars
|
|
|
0.54%
to 2.15%
|
|
|
|
2.09%
to 2.35%
|
|
Range of floating interest rates
on borrowings in Mexican pesos
|
|
|
5.28%
to 6.74%
|
|
|
|
7.71%
to 8.31%
|
|
Range of fixed interest rates
on borrowings in Euros
|
|
|
1.00%
|
|
|
|
-
|
|
The outstanding balances of
short-term borrowings and debt by currency, are as follows:
|
|
September 30,
|
|
|
December 31,
|
|
Currency
|
|
2020
|
|
|
2019
|
|
US dollar
|
|
|
341,456
|
|
|
|
1,476,000
|
|
Mexican peso
|
|
|
17,578
|
|
|
|
119,663
|
|
Euro
|
|
|
67,051
|
|
|
|
-
|
|
Total
|
|
|
426,085
|
|
|
|
1,595,663
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
|
17.
|
Borrowings and debt (continued)
|
Long-term borrowings
and debt
The breakdown of borrowings
and long-term debt (original maturity of more than one year), along with contractual interest rates, plus prepaid commissions as
of September 30, 2020 and December 31, 2019, respectively, are as follows (excludes lease liabilities):
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Long-term borrowings:
|
|
|
|
|
|
|
|
|
At fixed interest rates with due dates from October 2020 to May 2022
|
|
|
69,577
|
|
|
|
65,435
|
|
At floating interest rates with due dates from June 2021 to August 2023
|
|
|
513,759
|
|
|
|
657,984
|
|
Total long-term borrowings
|
|
|
583,336
|
|
|
|
723,419
|
|
|
|
|
|
|
|
|
|
|
Long-term debt:
|
|
|
|
|
|
|
|
|
At fixed interest rates with due dates from May 2020 to March 2024
|
|
|
744,321
|
|
|
|
502,880
|
|
At floating interest rates with due dates from March 2022 to June 2023
|
|
|
302,569
|
|
|
|
299,796
|
|
Total long-term debt
|
|
|
1,046,890
|
|
|
|
802,676
|
|
Total long-term borrowings and debt
|
|
|
1,630,226
|
|
|
|
1,526,095
|
|
Less: Prepaid commissions
|
|
|
(8,440
|
)
|
|
|
(3,362
|
)
|
Total long-term borrowings and debt, net
|
|
|
1,621,786
|
|
|
|
1,522,733
|
|
|
|
|
|
|
|
|
|
|
Maximum outstanding balance at any month – end
|
|
|
1,630,226
|
|
|
|
1,527,126
|
|
Range of fixed interest rates on borrowings and debt in U.S. dollars
|
|
|
2.04% to 3.05%
|
|
|
|
2.56%
to 3.25%
|
|
Range of floating interest rates on borrowings and debt in U.S. dollars
|
|
|
0.9% to 2.05%
|
|
|
|
2.46%
to 3.36%
|
|
Range of fixed interest rates on borrowings in Mexican pesos
|
|
|
5.95%
to 9.09%
|
|
|
|
5.73%
to 9.09%
|
|
Range of floating interest rates on borrowings and debt in Mexican pesos
|
|
|
5.13% to 6.41%
|
|
|
|
8.14%
to 9.13%
|
|
Range of fixed interest rates on debt in Japanese yens
|
|
|
0.52%
|
|
|
|
0.52%
|
|
Range of fixed interest rates on debt in Euros
|
|
|
3.75%
|
|
|
|
3.75%
|
|
Range of fixed interest rates on debt in Australian dollars
|
|
|
3.33%
|
|
|
|
3.33%
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
|
17.
|
Borrowings and debt (continued)
|
Long-term borrowings and
debt (continued)
The balances of long-term borrowings
and debt by currency, excluding prepaid commissions, are as follows:
Currency
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
US dollar
|
|
|
1,015,421
|
|
|
|
1,097,611
|
|
Mexican peso
|
|
|
461,141
|
|
|
|
280,105
|
|
Japanese yen
|
|
|
70,052
|
|
|
|
67,831
|
|
Euro
|
|
|
62,125
|
|
|
|
59,465
|
|
Australian dollar
|
|
|
21,487
|
|
|
|
21,083
|
|
Total
|
|
|
1,630,226
|
|
|
|
1,526,095
|
|
Future payments of long-term
borrowings and debt outstanding as of September 30, 2020, are as follows:
Payments
|
|
Outstanding
|
|
2020
|
|
|
23,372
|
|
2021
|
|
|
336,750
|
|
2022
|
|
|
518,490
|
|
2023
|
|
|
103,876
|
|
2024
|
|
|
62,125
|
|
2025
|
|
|
585,613
|
|
|
|
|
1,630,226
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
|
17.
|
Borrowings and debt (continued)
|
Long-term borrowings and
debt (continued)
Reconciliation
– Movements of borrowings
The following table present
the reconciliation of movements of borrowings and debt arising from financing activities, as presented in the consolidated statements
of cash flows:
|
|
2020
|
|
|
2019
|
|
Balance as of January 1,
|
|
|
3,138,310
|
|
|
|
3,518,446
|
|
Net decrease (increase) in short-term borrowings and debt
|
|
|
(1,162,760
|
)
|
|
|
(826,881
|
)
|
Proceeds from long-term borrowings and debt
|
|
|
386,096
|
|
|
|
245,460
|
|
Repayments of long-term borrowings and debt
|
|
|
(246,982
|
)
|
|
|
(337,596
|
)
|
Payment of lease liabilities
|
|
|
(820
|
)
|
|
|
(747
|
)
|
Recognition of lease liabilities
|
|
|
-
|
|
|
|
20,965
|
|
|
|
|
27
|
|
|
|
-
|
|
Change in foreign currency
|
|
|
(43,888
|
)
|
|
|
326
|
|
Adjustment of fair value for hedge accounting relationship
|
|
|
962
|
|
|
|
5,623
|
|
Other adjustments
|
|
|
(4,002
|
)
|
|
|
444
|
|
Balance as of September 30,
|
|
|
2,066,943
|
|
|
|
2,626,040
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
|
17.
|
Borrowings and debt (continued)
|
Lease liabilities
Maturity analysis
of contractual undiscounted cash flows of the lease liability is detailed below:
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Due within 1 year
|
|
|
2,060
|
|
|
|
2,005
|
|
After 1 year but within 5 years
|
|
|
10,597
|
|
|
|
10,470
|
|
After 5 years but within 10 years
|
|
|
11,878
|
|
|
|
13,492
|
|
Total undiscounted lease liabilities
|
|
|
24,535
|
|
|
|
25,967
|
|
|
|
|
|
|
|
|
|
|
Short-term
|
|
|
1,215
|
|
|
|
1,145
|
|
Long-term
|
|
|
17,857
|
|
|
|
18,769
|
|
Lease liabilities included in the consolidated statement of financial position
|
|
|
19,072
|
|
|
|
19,914
|
|
Amounts recognized in the statement
of cash flows
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Cash outflow for leases
|
|
|
820
|
|
|
|
1,072
|
|
Amounts recognized in profit or loss
|
|
Three months ended September 30,
|
|
|
|
2020
|
|
|
2019
|
|
Interest on lease liabilities
|
|
|
(214
|
)
|
|
|
(227
|
)
|
Income from sub-leasing right-of-use assets
|
|
|
66
|
|
|
|
43
|
|
|
|
Nine months ended September 30,
|
|
|
|
2020
|
|
|
2019
|
|
Interest on lease liabilities
|
|
|
(651
|
)
|
|
|
(689
|
)
|
Income from sub-leasing right-of-use assets
|
|
|
188
|
|
|
|
193
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
Following is a summary of other
liabilities:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Accruals and other accumulated expenses
|
|
|
8,112
|
|
|
|
11,901
|
|
Accounts payable
|
|
|
3,753
|
|
|
|
2,526
|
|
Others
|
|
|
2,762
|
|
|
|
2,722
|
|
|
|
|
14,627
|
|
|
|
17,149
|
|
The following table presents
a reconciliation of profit and share data used in the basic and diluted earnings per share (“EPS”) computations for
the dates indicated:
|
|
Three months ended September 30
|
|
|
|
2020
|
|
|
2019
|
|
(Thousands of U.S. dollars)
|
|
|
|
|
|
|
|
|
Profit for the period
|
|
|
15,444
|
|
|
|
20,440
|
|
|
|
|
|
|
|
|
|
|
(U.S. dollars)
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
0.39
|
|
|
|
0.52
|
|
Diluted earnings per share
|
|
|
0.39
|
|
|
|
0.52
|
|
|
|
|
|
|
|
|
|
|
(Thousands of shares)
|
|
|
|
|
|
|
|
|
Weighted average of common shares outstanding
applicable to basic EPS
|
|
|
39,672
|
|
|
|
39,602
|
|
|
|
|
|
|
|
|
|
|
Effect of diluted securities:
|
|
|
|
|
|
|
|
|
Stock options and restricted stock units plan
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Adjusted weighted average of
common shares outstanding applicable to diluted EPS
|
|
|
39,672
|
|
|
|
39,602
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
|
|
For the nine months ended September 30
|
|
|
|
2020
|
|
|
2019
|
|
(Thousands of U.S. dollars)
|
|
|
|
|
|
|
|
|
Profit for the period
|
|
|
47,852
|
|
|
|
63,957
|
|
|
|
|
|
|
|
|
|
|
(U.S. dollars)
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
1.21
|
|
|
|
1.62
|
|
Diluted earnings per share
|
|
|
1.21
|
|
|
|
1.62
|
|
|
|
|
|
|
|
|
|
|
(Thousands of shares)
|
|
|
|
|
|
|
|
|
Weighted average of common shares outstanding applicable to basic EPS
|
|
|
39,645
|
|
|
|
39,566
|
|
|
|
|
|
|
|
|
|
|
Effect of diluted securities:
|
|
|
|
|
|
|
|
|
Stock options and restricted stock units plan
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Adjusted weighted average of common shares outstanding applicable to diluted EPS
|
|
|
39,645
|
|
|
|
39,566
|
|
|
20.
|
Fee and commission income
|
Fee and commission income from contracts with customers
broken down by main types of services according to the scope of IFRS 15, are detailed as follows:
|
|
Three months ended September 30, 2020
|
|
|
|
Syndications
|
|
|
Documentary and
standby letters
of credit
|
|
|
Other
Commissions, net
|
|
|
Total
|
|
Openning and confirmation
|
|
|
-
|
|
|
|
2,134
|
|
|
|
413
|
|
|
|
2,547
|
|
Negotiation and acceptance
|
|
|
-
|
|
|
|
11
|
|
|
|
-
|
|
|
|
11
|
|
Amendment
|
|
|
-
|
|
|
|
136
|
|
|
|
-
|
|
|
|
136
|
|
Structuring
|
|
|
63
|
|
|
|
-
|
|
|
|
-
|
|
|
|
63
|
|
Other
|
|
|
-
|
|
|
|
3
|
|
|
|
(149
|
)
|
|
|
(146
|
)
|
|
|
|
63
|
|
|
|
2,284
|
|
|
|
264
|
|
|
|
2,611
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts
expressed in thousands of U.S. dollars, unless otherwise indicated)
|
20.
|
Fee and commission income (continued)
|
|
|
Nine months ended September 30, 2020
|
|
|
|
Syndications
|
|
|
Documentary and
standby letters
of credit
|
|
|
Other
Commissions, net
|
|
|
Total
|
|
Openning and confirmation
|
|
|
-
|
|
|
|
5,919
|
|
|
|
933
|
|
|
|
6,852
|
|
Negotiation and acceptance
|
|
|
-
|
|
|
|
174
|
|
|
|
-
|
|
|
|
174
|
|
Amendment
|
|
|
-
|
|
|
|
406
|
|
|
|
-
|
|
|
|
406
|
|
Structuring
|
|
|
514
|
|
|
|
-
|
|
|
|
-
|
|
|
|
514
|
|
Other
|
|
|
-
|
|
|
|
36
|
|
|
|
(358
|
)
|
|
|
(322
|
)
|
|
|
|
514
|
|
|
|
6,535
|
|
|
|
575
|
|
|
|
7,624
|
|
|
|
Three months ended September 30, 2019
|
|
|
|
Syndicated loans
|
|
|
Documentary and
standby letters
of credit
|
|
|
Other
Commissions, net
|
|
|
Total
|
|
Openning and confirmation
|
|
|
-
|
|
|
|
2,098
|
|
|
|
494
|
|
|
|
2,592
|
|
Negotiation and acceptance
|
|
|
-
|
|
|
|
76
|
|
|
|
-
|
|
|
|
76
|
|
Amendment
|
|
|
-
|
|
|
|
193
|
|
|
|
(4
|
)
|
|
|
189
|
|
Structuring
|
|
|
480
|
|
|
|
-
|
|
|
|
-
|
|
|
|
480
|
|
Others
|
|
|
-
|
|
|
|
15
|
|
|
|
(537
|
)
|
|
|
(522
|
)
|
|
|
|
480
|
|
|
|
2,382
|
|
|
|
(47
|
)
|
|
|
2,815
|
|
|
|
Nine months ended September 30, 2019
|
|
|
|
Syndications
|
|
|
Documentary and
standby letters
of credit
|
|
|
Other
Commissions, net
|
|
|
Total
|
|
Openning and confirmation
|
|
|
-
|
|
|
|
6,175
|
|
|
|
923
|
|
|
|
7,098
|
|
Negotiation and acceptance
|
|
|
-
|
|
|
|
299
|
|
|
|
-
|
|
|
|
299
|
|
Amendment
|
|
|
-
|
|
|
|
467
|
|
|
|
(4
|
)
|
|
|
463
|
|
Structuring
|
|
|
2,917
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,917
|
|
Others
|
|
|
-
|
|
|
|
88
|
|
|
|
(572
|
)
|
|
|
(484
|
)
|
|
|
|
2,917
|
|
|
|
7,029
|
|
|
|
347
|
|
|
|
10,293
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
20.
|
Fee and commission income (continued)
|
The following table provides
information on the ordinary income that is expected to be recognized on the contracts in force:
|
|
Up
to 1 year
|
|
|
1
to 2 years
|
|
|
More
than 2
years
|
|
|
Total
|
|
Ordinary income expected to be recognized
on the contracts as of September 30, 2020
|
|
|
1,610
|
|
|
|
366
|
|
|
|
605
|
|
|
|
2,581
|
|
|
|
Up
to 1 year
|
|
|
1
to 2 years
|
|
|
More
than 2
years
|
|
|
Total
|
|
Ordinary income expected to be recognized
on the contracts as of September 30, 2019
|
|
|
1,574
|
|
|
|
109
|
|
|
|
1,129
|
|
|
|
2,812
|
|
21.
|
Business segment information
|
The Bank’s activities
are managed and executed in 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 systematic basis. The maximum decision-making operating authority of the
Bank is represented by the Chief Executive Officer and the Executive Committee, who review the internal management reports for
each division at least every six months. Segment profit, as included in the internal management reports is used to measure performance
as management believes that this information is the most relevant in evaluating the results of the respective segments relative
to other entities that operate within the same industry.
The Bank’s net interest
income represents the main driver of profits; therefore, the Bank presents its interest-earning assets by business segment, to
give an indication of the size of business generating net interest income. Interest-earning assets also generate gains and losses
on sales, mainly from financial instruments at fair value through OCI and financial instruments at fair value through profit or
loss, which are included in net other income. The Bank also discloses its other assets and contingencies by business segment,
to give an indication of the size of business that generates net fees and commissions, also included in net other income.
The Commercial Business Segment
encompasses the Bank’s core business of financial intermediation and fee generating 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, and through loan structuring and
syndication activities; ((iii) gain on sale of loans generated through loan intermediation
activities, such as sales in the secondary market and distribution in the primary market; (iv) gain (loss) on sale on financial
instruments measured at FVTPL; (v) reversal (provision) for credit losses, (vi) gain (loss) in other non-financial assets,
net; and (vii) direct and allocated operating expenses.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
21.
|
Business segment information (continued)
|
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, and financial instruments related to the investment management activities,
consisting of securities at FVOCI and securities at amortized cost. 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) on financial instruments at 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.
The following table provides
certain information regarding the Bank’s operations by segment:
|
|
Three
months ended September 30, 2020
|
|
|
|
Commercial
|
|
|
Treasury
|
|
|
Total
|
|
Interest income
|
|
|
37,886
|
|
|
|
1,808
|
|
|
|
39,694
|
|
Interest expense
|
|
|
(172
|
)
|
|
|
(16,914
|
)
|
|
|
(17,086
|
)
|
Inter-segment net interest income
|
|
|
(16,513
|
)
|
|
|
16,513
|
|
|
|
-
|
|
Net interest income
|
|
|
21,201
|
|
|
|
1,407
|
|
|
|
22,608
|
|
Other income (expense), net
|
|
|
2,929
|
|
|
|
(348
|
)
|
|
|
2,581
|
|
Total income
|
|
|
24,130
|
|
|
|
1,059
|
|
|
|
25,189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Impairment loss) gain on financial assets
|
|
|
(1,430
|
)
|
|
|
(113
|
)
|
|
|
(1,543
|
)
|
Reversal (impairment) on non-financial assets
|
|
|
140
|
|
|
|
-
|
|
|
|
140
|
|
Operating expenses
|
|
|
(6,507
|
)
|
|
|
(1,835
|
)
|
|
|
(8,342
|
)
|
Segment profit (loss)
|
|
|
16,333
|
|
|
|
(889
|
)
|
|
|
15,444
|
|
|
|
Three
months ended September 30, 2019
|
|
|
|
Commercial
|
|
|
Treasury
|
|
|
Total
|
|
Interest income
|
|
|
60,994
|
|
|
|
4,520
|
|
|
|
65,514
|
|
Interest expense
|
|
|
(165
|
)
|
|
|
(38,691
|
)
|
|
|
(38,856
|
)
|
Inter-segment net interest income
|
|
|
(33,893
|
)
|
|
|
33,893
|
|
|
|
-
|
|
Net interest income
|
|
|
26,936
|
|
|
|
(278
|
)
|
|
|
26,658
|
|
Other income (expense), net
|
|
|
3,407
|
|
|
|
(544
|
)
|
|
|
2,863
|
|
Total income
|
|
|
30,343
|
|
|
|
(822
|
)
|
|
|
29,521
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Impairment loss) gain on financial assets
|
|
|
(934
|
)
|
|
|
322
|
|
|
|
(612
|
)
|
Reversal (impairment) on non-financial assets
|
|
|
500
|
|
|
|
-
|
|
|
|
500
|
|
Operating expenses
|
|
|
(6,998
|
)
|
|
|
(1,971
|
)
|
|
|
(8,969
|
)
|
Segment profit (loss)
|
|
|
22,911
|
|
|
|
(2,471
|
)
|
|
|
20,440
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
21.
|
Business segment information (continued)
|
|
|
Nine
months ended September 30, 2020
|
|
|
|
Commercial
|
|
|
Treasury
|
|
|
Total
|
|
Interest income
|
|
|
136,690
|
|
|
|
6,500
|
|
|
|
143,190
|
|
Interest expense
|
|
|
(521
|
)
|
|
|
(72,538
|
)
|
|
|
(73,059
|
)
|
Inter-segment
net interest income
|
|
|
(69,282
|
)
|
|
|
69,282
|
|
|
|
-
|
|
Net interest income
|
|
|
66,887
|
|
|
|
3,244
|
|
|
|
70,131
|
|
Other income (expense), net
|
|
|
5,488
|
|
|
|
(1,770
|
)
|
|
|
3,718
|
|
Total income
|
|
|
72,375
|
|
|
|
1,474
|
|
|
|
73,849
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (impairment loss) on financial assets
|
|
|
1,356
|
|
|
|
(203
|
)
|
|
|
1,153
|
|
Reversal (impairment) on non-financial assets
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Operating expenses
|
|
|
(20,111
|
)
|
|
|
(7,039
|
)
|
|
|
(27,150
|
)
|
Segment profit (loss)
|
|
|
53,620
|
|
|
|
(5,768
|
)
|
|
|
47,852
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets
|
|
|
4,657,429
|
|
|
|
1,647,046
|
|
|
|
6,304,475
|
|
Segment liabilities
|
|
|
106,921
|
|
|
|
5,163,939
|
|
|
|
5,270,860
|
|
|
|
Nine
months ended September 30, 2019
|
|
|
|
Commercial
|
|
|
Treasury
|
|
|
Total
|
|
Interest income
|
|
|
193,809
|
|
|
|
15,789
|
|
|
|
209,598
|
|
Interest expense
|
|
|
(551
|
)
|
|
|
(126,438
|
)
|
|
|
(126,989
|
)
|
Inter-segment
net interest income
|
|
|
(110,959
|
)
|
|
|
110,959
|
|
|
|
-
|
|
Net interest income
|
|
|
82,299
|
|
|
|
310
|
|
|
|
82,609
|
|
Other income (expense), net
|
|
|
11,526
|
|
|
|
1,091
|
|
|
|
12,617
|
|
Total income
|
|
|
93,825
|
|
|
|
1,401
|
|
|
|
95,226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Impairment loss) gain on financial assets
|
|
|
(2,679
|
)
|
|
|
314
|
|
|
|
(2,365
|
)
|
Reversal (impairment) on non-financial assets
|
|
|
500
|
|
|
|
-
|
|
|
|
500
|
|
Operating expenses
|
|
|
(22,459
|
)
|
|
|
(6,945
|
)
|
|
|
(29,404
|
)
|
Segment profit (loss)
|
|
|
69,187
|
|
|
|
(5,230
|
)
|
|
|
63,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets
|
|
|
5,596,531
|
|
|
|
1,075,342
|
|
|
|
6,671,873
|
|
Segment liabilities
|
|
|
105,261
|
|
|
|
5,551,276
|
|
|
|
5,656,537
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
21.
|
Business segment information
(continued)
|
Reconciliation
on informatiln on reportable segments
|
|
|
|
|
|
|
Three
months ended
September 30
|
|
|
|
2020
|
|
|
2019
|
|
Profit (loss) for
the period
|
|
|
15,444
|
|
|
|
20,440
|
|
|
|
Nine
months ended
September 30
|
|
|
|
2020
|
|
|
2019
|
|
Profit (loss) for
the period
|
|
|
47,852
|
|
|
|
63,957
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
Assets from reportable segments
|
|
|
6,304,475
|
|
|
|
6,671,873
|
|
Other
assets - unallocated
|
|
|
6,719
|
|
|
|
9,319
|
|
Total assets
|
|
|
6,311,194
|
|
|
|
6,681,192
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Liabilities from reportable segments
|
|
|
5,270,860
|
|
|
|
5,656,537
|
|
Other
liabilities - unallocated
|
|
|
14,627
|
|
|
|
15,554
|
|
Total Liabilities
|
|
|
5,285,487
|
|
|
|
5,672,091
|
|
The Bank applied IFRS 16, as
of January 1, 2019, using the modified retrospective approach to recognize right-of-use assets for $17.4 million presented
within equipment and leasehold improvements and lease liabilities for $20.9 million. As of September 30, 2020, assets and
liabilities were allocated between Commercial and Treasury segments.
As a result of the adoption
of the new standard in the period 2019, certain amounts related to equipment and leasehold improvements and intangibles were reclassified
for presentation purposes in the consolidated financial statement.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
22.
|
Related party transactions
|
The detail of the assets and
liabilities with related private corporations and financial institutions is as follows:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Assets
|
|
|
|
|
|
|
|
|
Demand deposits
|
|
|
19,160
|
|
|
|
3,812
|
|
Loans, net
|
|
|
20,366
|
|
|
|
49,101
|
|
Total asset
|
|
|
39,526
|
|
|
|
52,913
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Time deposits
|
|
|
240,000
|
|
|
|
120,000
|
|
Total liabilities
|
|
|
240,000
|
|
|
|
120,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingencies
|
|
|
|
|
|
|
|
|
Stand-by letters of credit
|
|
|
28,300
|
|
|
|
20,000
|
|
Loss allowance
|
|
|
(59
|
)
|
|
|
(49
|
)
|
The detail of income and expenses with related parties
is as follows:
|
|
Nine
months ended September 30
|
|
|
|
2020
|
|
|
2019
|
|
Interest income
|
|
|
|
|
|
|
|
|
Loans
|
|
|
238
|
|
|
|
672
|
|
Total interest income
|
|
|
238
|
|
|
|
672
|
|
Interest expense
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
(819
|
)
|
|
|
(278
|
)
|
Borrowing
and debt (1)
|
|
|
-
|
|
|
|
(213
|
)
|
Total interest expense
|
|
|
(819
|
)
|
|
|
(491
|
)
|
|
|
|
|
|
|
|
|
|
Net interest income (expenses)
|
|
|
(580
|
)
|
|
|
181
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
Fees and commissions, net
|
|
|
115
|
|
|
|
-
|
|
Gain on financial
instruments, net
|
|
|
-
|
|
|
|
(1
|
)
|
Total other income, net
|
|
|
115
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
Depreciation of equipment and leasehold
improvements
|
|
|
-
|
|
|
|
(300
|
)
|
Other expenses
|
|
|
-
|
|
|
|
(106
|
)
|
Total operating expenses
|
|
|
-
|
|
|
|
(406
|
)
|
|
|
|
|
|
|
|
|
|
Net income from related
parties
|
|
|
(465
|
)
|
|
|
(226
|
)
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
22.
|
Related party transactions (continued)
|
|
|
Nine
months ended September 30
|
|
|
|
2020
|
|
|
2019
|
|
Interest income
|
|
|
|
|
|
|
|
|
Loans
|
|
|
1,010
|
|
|
|
2,560
|
|
Total interest income
|
|
|
1,010
|
|
|
|
2,560
|
|
Interest expense
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
(2,129
|
)
|
|
|
(917
|
)
|
Borrowing
and debt (1)
|
|
|
-
|
|
|
|
(645
|
)
|
Total interest expense
|
|
|
(2,129
|
)
|
|
|
(1,562
|
)
|
|
|
|
|
|
|
|
|
|
Net interest income (expenses)
|
|
|
(1,119
|
)
|
|
|
998
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
Fees and commissions, net
|
|
|
299
|
|
|
|
-
|
|
Gain on financial
instruments, net
|
|
|
-
|
|
|
|
(41
|
)
|
Total other income, net
|
|
|
299
|
|
|
|
(41
|
)
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
Depreciation of equipment and leasehold
improvements
|
|
|
-
|
|
|
|
(899
|
)
|
Other expenses
|
|
|
-
|
|
|
|
(351
|
)
|
Total operating expenses
|
|
|
-
|
|
|
|
(1,250
|
)
|
|
|
|
|
|
|
|
|
|
Net income from related
parties
|
|
|
(820
|
)
|
|
|
(293
|
)
|
|
(1)
|
This caption includes the financial cost relating to leases
and depreciation expense for the right-of-use assets that rises from the lease contract
with related parties where the Bank acts as a lessee through September 30, 2019.
|
The total compensation paid
to directors and the executives as representatives of the Bank amounted to:
|
|
Three
months ended September 30
|
|
|
|
2020
|
|
|
2019
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Compensation costs
to directors
|
|
|
450
|
|
|
|
544
|
|
Compensation costs to executives
|
|
|
620
|
|
|
|
565
|
|
|
|
Nine
months ended September 30
|
|
|
|
2020
|
|
|
2019
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Compensation costs
to directors
|
|
|
1,249
|
|
|
|
1,509
|
|
Compensation costs to executives
|
|
|
4,811
|
|
|
|
3,040
|
|
Compensation costs to directors
and executives, include annual cash retainers and the cost of granted restricted stock and restricted stock units.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in
thousands of U.S. dollars, unless otherwise indicated)
Bladex is not engaged in any
litigation that is significant to the Bank’s business or, to the best of the knowledge of Bank’s management, that
is likely to have an adverse effect on its business, consolidated financial position or its consolidated financial performance.
24.
|
Applicable laws and regulations
|
Liquidity index
Rule No. 2-2018 issued
by the Superintendence of Banks of Panama (SBP) establishes that every general license or international license bank must guarantee,
with a higher level of confidence, that it is in the position to face its intraday liquidity obligations in a period when liquidity
pressure may affect the lending market. For that purpose, the Superintendence of Banks of Panama has established a short-term
liquidity coverage ratio known as “Liquidity Coverage Ratio or LCR”. This ratio is measured through the quotient of
two amounts, the first one corresponds to the high-quality liquid assets and the second one corresponds to the net cash outflows
in 30 days.
As of September 30, 2020,
and December 31, 2019, the minimum LCR to be reported to the SBP was 50% and 25%, respectively. The Bank´s LCR as of
September 30, 2020 and December 31, 2019 was 166.69% and 131%, respectively.
Rule No. 4-2008 issued
by the SBP establishes that every general license or international license bank must maintain, always, a minimum balance of liquid
assets equivalent to 30% of the gross total of its deposits in the Republic of Panama or overseas up to 186 days, counted from
the reporting date. The formula is based on the following parameters:
Liquid
assets
|
x
100 = X% (Liquidity ratio)
|
Liabilities
(Deposits Received)
|
As
of September 30, 2020, and December 31, 2019, the percentage of the liquidity index reported by the Bank to the regulator
was 98.28 % and 100.36%, respectively.
Capital adequacy
The Banking Law in the Republic
of Panama and the Rules No. 01-2015 and 03-2016 require that the general license banks maintain a total capital adequacy
index that shall not be lower, at any time, than 8% of total assets and off-balance sheet irrevocable contingency transactions,
weighted according to their risks; and ordinary primary capital that shall not be less than 4.5% of its assets and off-balance
sheet transactions that represent an irrevocable contingency, weighted based on their risks; and a primary capital that shall
not be less than 6% of its assets and off-balance sheet transactions that represent an irrevocable contingency, weighted based
on their risks.
The primary objectives of the
Bank’s capital management policy are to ensure that the Bank complies with capital requirements imposed by local regulator
and maintains strong credit ratings and healthy capital ratios to support its business and to maximize shareholder value.
The Bank manages its capital
structure and adjusts it according to changes in economic conditions and the risk characteristics of its activities. To maintain
or adjust the capital structure, the Bank may adjust the amount of dividend payment to shareholders, return capital to shareholders
or issue capital securities. No changes have been made to the objectives, policies and processes from the previous periods. However,
they are under constant review by the Board.
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Tier 1 capital
|
|
|
1,040,359
|
|
|
|
1,026,125
|
|
|
|
|
|
|
|
|
|
|
Risk weighted assets
|
|
|
4,779,487
|
|
|
|
5,937,648
|
|
Tier 1 capital ratio
|
|
|
21.77%
|
|
|
|
17.28%
|
|
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands of U.S. dollars, unless
otherwise indicated)
|
24.
|
Applicable laws and regulations (continued)
|
Leverage ratio
Article No. 17
of the Rule No. 1-2015 establishes the leverage ratio of a regulated entity by means of the quotient between the ordinary
primary capital and the total exposure for non-risk-weighted assets inside and outside the statement of financial position established
by the SBP. For the determination of the exposure of off-balance-sheet operations, the criteria
established for credit and counterparty credit risk positions will be used. The exposure of the derivatives will be the fair value
at which it is recorded in the entity's assets.
The leverage
ratio cannot be lower, at any time, than 3%. The Bank will inform to SBP as often as the compliance with the leverage ratio is
determined.
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Ordinary capital
|
|
|
904,340
|
|
|
|
890,106
|
|
|
|
|
|
|
|
|
|
|
Non-risk-weighted assets
|
|
|
6,446,634
|
|
|
|
7,323,187
|
|
|
|
|
|
|
|
|
|
|
Leverage ratio
|
|
|
14.03%
|
|
|
|
12.15%
|
|
Specific credit provisions
Rule No. 4-2013, modified
by Rule No. 8-2014, states that the specific provisions are originated from the objective and concrete evidence of impairment.
These provisions must be established for credit facilities classified according to the risk categories denominated as: special
mention, substandard, doubtful, or unrecoverable, both for individual credit facilities as for a group of such facilities. In the
case of a group, it corresponds to circumstances that indicate the existence of deterioration in credit quality, although individual
identification is still not possible.
Banks must calculate and maintain
at all times the amount of the specific provisions determined by the methodology specified in this Rule, which takes into account
the balance owed of each credit facility classified in any of the categories subject to provision, mentioned in the paragraph above;
the present value of each guarantee available in order to mitigate risk, as established by type of collateral; and a weighting
table that applies to the net exposure balance subject to loss of such credit facilities.
Article No. 34 of
this Rule establishes that all credits must be classified in the following five (5) categories, according to their default
risk and loan conditions, and establishes a minimum reserve for each classification: normal 0%, special mention 20%, substandard
50%, doubtful 80%, and unrecoverable 100%.
If there is an excess in the
specific provision, calculated in accordance with this Rule, compared to the provision calculated in accordance with IFRS, this
excess will be accounted for as a regulatory credit reserve in equity and will increase or decrease with appropriations from/to
retained earnings. The balance of the regulatory credit reserve will not be considered as capital funds for calculating certain
ratios or prudential indicators mentioned in the Rule.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands of U.S. dollars, unless
otherwise indicated)
|
24.
|
Applicable laws and regulations (continued)
|
Based on the classification
of risks, collateral and in compliance with SBP Rule No. 4-2013, the Bank classified the loan portfolio as follows:
|
|
September 30, 2020
|
|
Loans
|
|
Normal
|
|
|
Special Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
|
Unrecoverable
|
|
|
Total
|
|
Corporations
|
|
|
2,026,636
|
|
|
|
19,874
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,046,510
|
|
Banks:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private
|
|
|
2,056,018
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,056,018
|
|
State-owned
|
|
|
422,409
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
422,409
|
|
|
|
|
2,478,427
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,478,427
|
|
Sovereign
|
|
|
41,318
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
41,318
|
|
Total
|
|
|
4,546,381
|
|
|
|
19,874
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,566,255
|
|
Allowance for loan losses IFRS (*):
|
|
|
37,919
|
|
|
|
4,573
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
42,492
|
|
|
|
December 31, 2019
|
|
Loans
|
|
Normal
|
|
|
Special Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
|
Unrecoverable
|
|
|
Total
|
|
Corporations
|
|
|
2,487,859
|
|
|
|
13,595
|
|
|
|
-
|
|
|
|
-
|
|
|
|
61,845
|
|
|
|
2,563,299
|
|
Banks:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private
|
|
|
2,692,787
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,692,787
|
|
State-owned
|
|
|
589,690
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
589,690
|
|
|
|
|
3,282,477
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,282,477
|
|
Sovereign
|
|
|
47,221
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
47,221
|
|
Total
|
|
|
5,817,557
|
|
|
|
13,595
|
|
|
|
-
|
|
|
|
-
|
|
|
|
61,845
|
|
|
|
5,892,997
|
|
Allowance for loan losses IFRS (*):
|
|
|
42,396
|
|
|
|
2,338
|
|
|
|
-
|
|
|
|
-
|
|
|
|
54,573
|
|
|
|
99,307
|
|
As
of September 30, 2020, and December 31, 2019, there are no restructured loans.
(*)
As of September 30, 2020, and December 31, 2019, there is no excess in the specific provision calculated in accordance
with Agreement No. 8-2014 of the SBP, over the provision calculated in accordance with IFRS.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands of U.S. dollars, unless
otherwise indicated)
|
24.
|
Applicable laws and regulations (continued)
|
For statutory purposes only, non-accruing loans are
presented by category as follows:
Non-accruing
|
|
September 30, 2020
|
|
loans
|
|
Normal
|
|
|
Special Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
|
Unrecoverable
|
|
|
Total
|
|
Impaired loans
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Non-accruing
|
|
December 31, 2019
|
|
loans
|
|
Normal
|
|
|
Special Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
|
Unrecoverable
|
|
|
Total
|
|
Impaired loans
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
61,845
|
|
|
|
61,845
|
|
Total
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
61,845
|
|
|
|
61,845
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Non-accruing loans:
|
|
|
|
|
|
|
|
|
Private corporations
|
|
|
-
|
|
|
|
61,845
|
|
Total non-accruing loans
|
|
|
-
|
|
|
|
61,845
|
|
|
|
|
|
|
|
|
|
|
Interest that would be reversed if the loans had been classified as non-accruing loans
|
|
|
-
|
|
|
|
1,379
|
|
Income from collected interest on non-accruing loans
|
|
|
-
|
|
|
|
631
|
|
Credit risk coverage - dynamic provision
The SBP by means of Rule No. 4-2013,
establishes the compulsory constitution of a dynamic provision in addition to the specific credit provision as part of the total
provisions for the credit risk coverage.
The dynamic provision is an
equity item associated to the regulatory capital but does not replace or offset the capital adequacy requirements established by
the SBP.
Methodology for the constitution
of the regulatory credit reserve
The Superintendence of Banks
of Panama by means of the General Resolution of Board of Directors SBP-GJD-0003-2013 of July 9, 2013, establishes the accounting
methodology for differences that arise between the application of the International Financial Reporting Standards (IFRS) and the
application of prudential regulations issued by the SBP; as well as the additional disclosures required to be included in the notes
to the consolidated financial statements.
Banco
Latinoamericano de Comercio Exterior, S. A. and Subsidiaries
Notes to the unaudited condensed consolidated interim financial
statements
(Amounts expressed in thousands of U.S. dollars, unless
otherwise indicated)
|
24.
|
Applicable laws and regulations (continued)
|
Methodology
for the constitution of the regulatory credit reserve (continued)
The parameters established in
this methodology are the following:
|
1.
|
The calculations of accounting balances in accordance with IFRS and the prudential standards issued
by the SBP will be carried out and the respective figures will be compared.
|
|
2.
|
When the calculation made in accordance with IFRS results in a greater reserve or provision for
the bank compared to the one resulting from the use of the prudential standards issued by the SBP, the Bank will account the IFRS
figures.
|
|
3.
|
When the impact of the use of prudential standards results
in a greater reserve or provision for the Bank, the effect of the application of IFRS will be recognized in profit or loss, and
the difference between IFRS calculation compared to the prudential standards calculation will be appropriated from retained earnings
as a regulatory credit reserve. If the bank does not have sufficient retained earnings, the difference will be presented as an
accumulated deficit account.
|
|
4.
|
The regulatory credit reserve mentioned in paragraph 3 of this Rule may not be reversed against the retained earnings
as long as there are differences between IFRS and the originated prudential regulations.
|
Considering that the Bank presents
its consolidated financial statements under IFRS, specifically for its expected credit reserves under IFRS 9, the line "Regulatory
credit reserve" established by the SBP has been used to present the difference between the application of the accounting
standard used and the prudential regulations of the SBP to comply with the requirements of Rule No. 4-2013.
As
of September 30, 2020, and December 31, 2019, the total amount of the dynamic provision and the regulatory credit reserve
calculated according to the guidelines of Rule No. 4-2013 of the SBP is $136.0
million for both periods, appropriated from retained earnings for purposes of compliance with local regulatory requirements.
This appropriation is restricted from dividend distribution in order to comply with local regulations.
The provision and reserve are
detailed as follows:
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Dynamic provision
|
|
|
136,019
|
|
|
|
136,019
|
|
Regulatory credit reserve
|
|
|
-
|
|
|
|
-
|
|
|
|
|
136,019
|
|
|
|
136,019
|
|
Capital reserve
In addition to capital reserves
required by regulations, the Bank maintains a capital reserve of $95.3 million, which was voluntarily established. Pursuant to
Article No. 69 of the Banking Law, reduction of capital reserves requires prior approval of SBP.
The Bank announced a quarterly
cash dividend of $0.25 US dollar cents per share corresponding to the third quarter of 2020. The cash dividend was approved by
the Board of Directors at its meeting held on October 20, 2020 and it was payable on November 25, 2020 to the Bank’s
stockholders as of November 9, 2020 record date.